F-35 Cancelled, then what ?

[Turbine D]

a1bill,

Thanks for sending the Australian audit office report, it was informative to me in that I didn't know certain things weren't being done in the most expensive US Defense program. I don't mean to be antagonistic, but more explanatory from what I read of the report. There is one key section that I will save for a separate post as I think it is the most important discussion item of the entire report, besides the learning curve chart in 5.68, Figure 5.3 .

It is a report, not an audit, it is a good historical document of what has happened, written from the viewpoint of the Australian participation in the F-35 program. At various points of the report, there is considerable emphasis of the fact that Australia isn't responsible for cost overruns, and substantial cost increases as the development program has progressed. This is evident starting at paragraph 30, 34 and 71. Luckily for Australia, the bad news of the program thus far has been avoided, escalating costs. It goes on to say there is "potential" for the program to continue with the revised (goalposts have moved) cost and program parameters, maybe.

It goes on to say in 5.50, Figure 5.0 that the program fell short of plan and management interventions failed to reduce the declining cost and schedule performance and couldn't guarantee that new technical problems wouldn't continue the downward trend. Overall, the effect has been to extend the time for start of Full-rate Production of the F-35 by 7 years, e.g., 2012 to 2019.

The learning curve chart depicted in 5.68, Figure 5.3, showing the latest "estimates", developed by the US DoD JPO for the F-35 Unit Reoccurring Flyaway costs are imaginary at best, based on what has taken place and the pseudo learning curve. If this is where you apparently believe the $85M cost will come from, it will not happen.

Learning curves are interesting in that profit and loss businesses use them extensively to determine where a breakeven point occurs for new products transitioning from development to full production. It is important that a learning curve is established with exceptional knowledge of the product development and cost makeup, how actual development is progressing and therefore the curve is drawn with real meaningful goals, e.g., on such and such a date the product will cost XXX$$$s. If you are above the line and can't get to the line by that date, then you have to redraw the curve extending the time and date to breakeven. Now the Government isn't a profit and loss business and doesn't have to explain much to their stockholders (Congress) who doesn't understand much about profit and loss businesses at all. So, there you have it, an assumed $85M price balloons to $130M in a heartbeat and will go higher with performance running above the curve line.