That Elephant's Going To Do What? Where?

AvWeek's Bill Sweetman, who has been tracking the Joint Strike Fighter program for a long time, says people are missing the elephant that was in the room at the Senate Armed Services Committee hearing on JSF yesterday, and that elephant is about to take a dump all over Defense Secretary Robert Gates' office carpet. It's called the acquisition "death spiral": as a program's costs go up the unit numbers purchased drop, hence per unit costs climb even more, fewer bought, etc. etc.

We've raised this issue here before. If the price of a unit of goods doubles, economic theory, and Pentagon acquisition history, teaches us that the quantity bought drops. Yesterday, Pentagon cost assessment and program evaluation director Christine Fox told the SASC that each JSF will now cost at least $80-$95 million, compared to an estimated $50 million back in 2002.

Sweetman thinks that's still a low ball figure. GAO puts the current per aircraft price tag at $112 million. The reason that elephant's going to do his business, Sweetman says, is that everybody is dividing the total production costs of the JSF by the planned Pentagon buy of 2,443 aircraft and foreign buys of around 700 aircraft. Those numbers are no longer realistic. Yet, as he notes, nobody at the hearing was willing to delve into aircraft production rates or total buys.

The winner in all of this has got to be Boeing, Sweetman says, who will be pushing the virtues of an $80 million F/A-18E/F Super Hornet. He also thinks some expected JSF customers, such as the Israelis, will take a new look at the F-15E.

For one, Marine Corps commandant Gen. James Conway must be spitting mad about right now. His service has held off buying new attack jets for a long time expecting the vertical take-off and landing F-35B would soon be on line. I'll be curious to see how long he holds out before buying more Hornets.

-- Greg

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