“The operating costs of the F-35 are high because they are designed to be” interview with Dan Grazier from the Project On Government Oversight

Dan Grazier is a US Marine Corps veteran, journalist and is now part of the Project On Government Oversight (POGO), a nonpartisan independent watchdog that investigates and exposes waste. We grilled him on the real cost of the F-35, what went wrong and what can be learnt for future military aircraft projects.

What is the real price of a F-35A/B/C? How does it differ from quoted prices and why does it?

A U.S. Marine Corps F-35B Lightning II assigned to Marine Medium Tiltrotor Squadron 164 (Reinforced), 15th Marine Expeditionary Unit (MEU), takes off from the flight deck of amphibious assault ship USS Makin Island (LHD 8) during a U.S. Air Forces Central (AFCENT) Agile Combat Employment (ACE) event, March 1. (U.S. Marine Corps photo by Cpl. Patrick Crosley)

“The real costs of all the F-35 variants can be found in the service’s budget documents, all of which are available online. The F-35A cost $110.3 million per aircraft in 2020, the F-35B $135.8 million, and the F-35C $117.3 million. These costs differ significantly from the advertised prices. The difference is that all the costs necessary to build each aircraft are spread across multiple budget years. The services budget for advance procurement to purchase components in earlier years, but then claim that the money spent in the actual production year is the total cost which is definitely not the case. This is a deliberate public relations ploy to make the F-35 look better on paper and make it appear as though the program is meeting its cost goals.”

How are quoted cost manipulated?

“Besides the advance procurement budgetary trick, the Pentagon also fails to factor in all of the other costs that go into producing a functional aircraft for the rosy figures quoted so often in the press. They don’t mention the research and development costs that should be distributed across each aircraft purchased, the cost to construct the specialized facilities wherever F-35s are based, and now the costs to “modernize” the F-35. It’s important for everyone to understand that much of the work the program managers claim is to upgrade the F-35 now is really to complete design work that was supposed to be included in the original R&D effort but was deferred in an attempt to stay within their budget and schedule forecasts.

Why is the F-35’s price per flight hour so high?

“The operating costs are high because they are designed to be so. From the very beginning of the program, the F-35 was set up to operate as a “total system performance responsibility” enterprise which meant that the services were intentionally surrendering a great deal of control over the maintenance and operations of the weapon they were buying to the contractors. This incentivised the contractors to design the aircraft in such a way that only their personnel could perform many of the maintenance actions on the aircraft. It is nearly always more expensive to use contractor personnel to perform work for the government, which certainly drives up the cost-per-flight-hour. It also means that the government has only one source bidding for these contracts, so there is little incentive to lower costs.”

“The operating costs are high because they are designed to be so.” so, this is a deliberate thing, did Lockheed know from early on it would not be the ‘affordable’ aircraft promised?

“That is perhaps a better question for them to answer. What we do know is that the real money to be made in a program like this is in the long-term sustainment contracts. It makes perfect business sense for a company’s leaders to take all the steps possible to ensure they receive those contracts.”

Is the F-35 a worse-run programme than other combat aircraft? Which other projects stand out as being badly run?

“That’s a difficult question to answer and probably isn’t the right one to ask at this point. I actually sympathise with the people running the program today. In many ways, they are victims of circumstance. They inherited a deeply flawed program and are now trying to make the best of things. The problems we see today with the F-35 stem from a flawed concept. The total system performance responsibility scheme is an obvious example. The F-35 should put the nail in the coffin on the idea that you can design and build a multi-role aircraft. That really bad idea, and people knew it was a bad idea as they were scratching out concept for the F-35 in the 1990s, was then compounded by trying to build an aircraft that could meet the needs of three different services, and then compounded again by trying to meet the needs of 8 different partner nations. With that level of complexity built into the basic concept of the F-35, the cost increases and schedule delays were absolutely inevitable. The real villains of the F-35 saga aren’t the people in charge today. Rather it is the people who made the decisions two decades ago that the people today have to live with. Of course, that does not absolve the people today who compound those bad decisions by not providing honest assessments about the F-35 to Congress and the American people. There are still decisions to be made in the years ahead about the future of the program. Without the whole truth, more bad decisions will pile on top of those already made.”

Which other military aircraft programmes stand out as well or badly run?

Boeing Flight Test & Evaluation – Boeing Field – KC-46, VH004, EMD2, PDL, Pilot Director Lights test, boom deployed

“At the moment, the KC-46 is a definite standout. The Air Force set out to build a direct replacement for the existing aerial refuellers. They were essentially trying to reinvent the wheel, not produce a design with new capabilities. They even began with a proven airframe in the 767 and still managed to bungle the effort by trying to add futuristic solutions like the remote boom operator station when the existing setups in the KC-135 and KC-10 work perfectly well.”

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Some in the Air Force want a new lightweight fighter to replace the F-16, what are the key lessons that should inform such a projects should it happen?

“A new lightweight fighter should begin with the same design principles of the original lightweight fighter program from the 1960s. It should be designed for that specific mission. Every effort should be made to keep the design as simple as possible. The aircraft should be designed in such a way that all but depot-level maintenance can be performed by uniformed crews in the field. The government should not sign a contract for the aircraft that does not include the government obtaining all the data rights. If foreign countries want to purchase the final product, the modifications they want should be made to the aircraft after it goes into production for the Air Force.”

Is the US structurally unable to run a swift economical military aircraft project, if so why?

“I think the challenge is overcoming cultural issues rather than anything structural. The military and by extension the defense industry, have an overall go-along to get-along culture. No one gets promoted by being the person who stands up and says there is a major problem with a pet project of their service or in any way impedes the free-flow of money from the Treasury to the defense contractors via the Pentagon. The defense contractors want to sell products to the military that are going to make them a lot of money, not just at the time of delivery, but throughout the product’s lifespan. Many of the people in uniform want to take their retirement and then get an even bigger paycheck on top of that through a sinecure in the defense industry. They know that if they stand in the way of a project, no nice person wearing a suit is going to come calling when retirement time comes around.”

Dan Grazier
Jack Shanahan Military Fellow, Center for Defense Information
Straus Military Reform Project

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An F-35B Lightning II assigned to the United Kingdom’s 617 Squadron taxis into position on the flight deck of HMS Queen Elizabeth at sea on 23 September, 2020. Marine Fighter Attack Squadron (VMFA) 211 “The Wake Island Avengers” joined the United Kingdom’s 617 Squadron “The Dambusters” onboard the 65,000-ton carrier as she sailed for exercises with NATO allies in the North Sea.

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  1. Brian

    First time I have heard about the “total system performance responsibility” enterprise.
    Looks like the system will not allow a light weight fighter to be built today.

    • Waldo Isme

      There were several other large TSPR acquisitions that ran up huge overruns. If you look at LMs cost and schedule history on the SBIRS you will see mind boggling growth. That said, current media accounts of SBIRS (highly classified) mission performance have been positive.

  2. nzaircraftfan

    This is typical of the military you can pretty much sell them anything. A lot of the people who make the decisions really don’t care as they are moving on to another department in a couple of years and just waiting for their next promotion. No one gets blamed for these crazy ideas I see it all the time in NZ army. Money wasted on useless projects.

  3. Eric

    Nicholas Moran, a former US Army tank officer and consultant for the World of Tanks computer game, has asserted the M-4 Sherman was the “best” tank of WWII. Not necessarily on technical specifications, but because it was good enough and could be produced in quantity, shipped to where it was needed, driven to where the battle was, and maintained in between engagements.

    A Sherman that actually showed up to the battle was much more valuable than one of its (nominally technically superior) German adversaries that broke down in transit, or was sitting in the maintenance depot because of time-consuming repairs and/or a lack of spare parts.

    Unfortunately, the perverse incentives of the modern military-industrial complex make replicating this approach almost impossible.

    Perhaps it doesn’t matter from a military standpoint (the horrific waste of resources that could be put to better use is a separate question) since a large-scale conventional war (larger than Gulf Wars 1 or 2) is unlikely. But it will be costly for the US military to relearn this lesson if they are dragged into a large-scale deployment.

    • phuzz

      I’ve read similar arguments in favour of the T-34. As Stalin (probably never) said, ‘Quantity has a quality all of it’s own’.

  4. Jim

    See the recent The Aviationist websites article on the Italians’ KC-767s that apparently have a remote vision system that works. Is it better than that of the KC-46, or is the Italian Air Force less picky that USAF?

    • ToadyX

      The RVS on Italian and Japanese KC-767s are an earlier version with less fidelity. Only the USAF, to my knowledge, requires
      the cameras to work when pointed directly at the rising or setting sun. The USAF also requires a system that results in far fewer fuselage strikes with the boom to reduce stealth skin repairs. The KC-46, when perfected, will result in the fewest boom strikes of any tanker currently in production (although the A330MRTT has a similar system in testing so its performance ought to be extremely similar).

      RVS was a Boeing developed solution under the contract (Airbus adopted the same solution for their KC-X bid), but the USAF contracted for future autonomous tanking ability which drove both manufacturers to same solution.

      Most of the KC-46 project problems can be attributed to less-than-satisfactory work by Boeing at many stages in development and construction.

  5. Pingback: Monday NatSec Roundup - Lawyers, Guns & Money
  6. RepubAnon

    It seems foolish to design military hardware intended for use in a war zone that can only be maintained by civilian contractors. What happens if fighting breaks out, and the civilian contractors decide they don’t want to go into the danger zone? Yes, they can be fired, and the contractor fined – but the necessary equipment will still be in the depot awaiting repair rather than in the field where it is needed.

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