Wednesday, April 20, 2011

Fan accounting and the F-35.

I continue to be amazed at the 'fan accounting' regarding the F-35.  Want an example of the confusion involved and why I find Bill Sweetman (I like the guy but his fixation on the F-35 is not giving me the answers that I would normally expect) so infuriating?

This discussion on Information Dissemination sheds the light.
First Galrahn (author of the article)...
Joint Strike Fighter is an acquisition tragedy. The estimate for the per unit F-35 is only $25 million more than the F-22, and that is before a single F-35 is operational. This program is also part of Secretary Gates legacy, and it isn't pretty.

Then the rest of the comments...

Scott Brim, USAF Partisan 
The R&D costs for the F-22 are now sunk costs, while the current marginal unit cost for additional F-22 airframes is reputed to be roughly $160 million.

Someone please correct me on that last figure for the F-22's marginal unit cost, if you have updated information.
Paul Wayner 
I must be misreading something, isn't the Unit Cost for the F-22 listed as 67000/188~=358.2 while the F-35 is 379392/2457~=154.4? 
 
 
Scott Brim, USAF Partisan 
The R&D costs for the F-22 are now sunk costs, while the current marginal unit cost for additional F-22 airframes is reputed to be roughly $160 million.

Someone please correct me on that last figure for the F-22's marginal unit cost, if you have updated information.

Paul Wayner  
$160M marginal cost for the F-22 sounds right although the marginal cost for the F-35 looks below $100M (from those numbers). 
 
Scott Brim, USAF Partisan  
The F-35's marginal cost is less than the F-22s, but the F-35 cannot come close to covering the F-22's air superiority mission when operating in the kind of high threat environment that will exist in the 2020 timeframe and beyond.
On one simple blog post we go from the author of the story stating that the F-35 is a tragedy...then when his readers comment we finally arrive at the truth.

The F-35 costs less than the F-22 and the costs are being driven down.

The F-35 discussion is no longer fact driven.  Its all spin by its critics all the time.

My complaint is simple.  If the biggest blogs on the net (talking Information Dissemination and ARES) aren't giving their readers the right answers then how can we ever learn the truth?

UPDATE:
If you read the article then you'll also note the cost increase in the LHA-6 program for the third ship.  If I'm not mistaken then that increase has everything to do with a design change adding a well deck to the ship...not an increase in production costs.

6 comments :

  1. IF I understand the SARS Cost Summary, it says the increase in LHA-6 was due to an increase from two to three hulls (not necessarily the wet well). Last fulll report pointed to these issues:
    Other Program Issues
    The LHA 6 is likely to experience further cost
    growth. Costly postdelivery rework of the ship’s deck may be necessary to cope with the intense, hot downwash of the Joint Strike Fighter aircraft. The heat from these aircraft could warp the LHA 6 deck or damage deck equipment. The Navy is planning to conduct aircraft tests on the LHD 1 during the fall of
    2010, and will then determine whether the LHA 6
    and other Joint Strike Fighter-capable ships need to modify their flight decks. The program office does not expect the Navy to finalize a solution for the LHA 6 prior to ship delivery, which could lead to expensive rework on the new ship if the deck surface has to be modified.

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  2. When are you gonna present the facts to support the F-35?

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  4. Alot of the confusion comes from different number at different points being thrown around by politicians and other officials.

    For example, with this:
    Scott Brim, USAF Partisan
    The R&D costs for the F-22 are now sunk costs, while the current marginal unit cost for additional F-22 airframes is reputed to be roughly $160 million.
    Someone please correct me on that last figure for the F-22's marginal unit cost, if you have updated information.
    -------------------------

    What Scott is refering to is that as a matter of accounting setup costs, R&D costs, tooling costs... has already been absorbed by all the currently existing F-22's that means those costs won't factor into the cost to purchase additional F-22s. It only costs ~$160M to make new F-22s because you have alot of costs that you pay regardless of the number of planes produced. Those have already been captured and paid for by the existing planes... those production cost were half the cost of each of the current planes... this is how costs per unit comes down the greater the number of anything is purchased.

    F35 is still cheaper, it just has more outstanding costs. What's happend is that the additional R&D of the F35 is slowly pushing its total production cost and cost per unit higher to the point where the cost per unit of a F35 is close to that of a new F22. The F22 simply has the accounting advantage of having its fixed costs paid for, leaving only the variable costs of material and overhead of labor.

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  5. @Jeffrey: If only the politicians could see that we might have got more F-22s. :-(

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  6. I still think the F35 is a worthwhile program, I just think the F22 was also worthwhile and deserved more purchases. It never should have been one at the expense of the other.

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