How We Tamed the F-35’s Spiraling Costs

[SpudmanWP]

How We Tamed the F-35’s Spiraling Costs — and Created a Model for Controlling Waste

BY ASH CARTER
FORMER SECRETARY OF DEFENSE
2019-07-11

My late friend Sen. John McCain once called me to complain about an inexcusably large cost overrun on an aircraft carrier. “Ash,” he said, “how am I supposed to support the DOD budget the way you want when the voters are reading about this kind of thing?”

McCain’s words stung, but he had a fair point. The Department of Defense asks for and receives nearly three quarters of a trillion dollars every year to defend America. Contending with multiple threats from China, Russia, Iran, North Korea, and terrorists can’t be done on the cheap. But it’s unreasonable to expect taxpayers to fork over that amount of money unless it’s managed responsibly.

...

The poster child for poor program management in recent Pentagon history was the F-35 joint strike fighter (JSF). In 2009, when I became the “acquisition czar,” development of the plane was taking twice as long, and costing twice as much, as it was supposed to. The entire effort – and thus America’s air superiority for decades to come – was in jeopardy.

...

But the critical step was not to confront but to align the Pentagon’s incentives with those of industry to control costs in production. Nearly 2,500 of these planes were to be built for the U.S. military and more than 1,000 for allies, so costs had to be controlled. To do that, we developed a contract in which the company could keep half of every million dollars saved under the agreed target cost; the other half was returned to the Treasury. On the other hand, for every $1 million over cost, the contractor was responsible for half – and the full amount for any overrun exceeding 20 percent.

More at the JUMP
https://www.defenseone.com/ideas/2019/0 ... te/158344/

[XanderCrews]

My late friend Sen. John McCain once called me to complain about an inexcusably large cost overrun on an aircraft carrier. “Ash,” he said, “how am I supposed to support the DOD budget the way you want when the voters are reading about this kind of thing?”

McCain’s words stung, but he had a fair point.

I like the premise but the characters seem completely unbelievable.

But it’s unreasonable to expect taxpayers to fork over that amount of money unless it’s managed responsibly.

Is this a joke?

[quicksilver]

The use of a production learning curve — long studied and documented across many industries — as evidence of the efficacy of their ‘fixes’ is almost laughable. For example, the high cost of LRIP-1 jets had mostly to do with the fact that only two jets were built.

While it has been said that ‘success has many fathers’, I am reminded of another offering in military aviation — ‘first one to the whiteboard wins.’ I wonder what Frank Kendall thinks...

An academic treatment of production learning curves at this link —
https://hbr.org/1964/01/profit-from-the-learning-curve

[XanderCrews]

The use of a production learning curve — long studied and documented across many industries — as evidence of the efficacy of their ‘fixes’ is almost laughable. For example, the high cost of LRIP-1 jets had mostly to do with the fact that only two jets were built.

While it has been said that ‘success has many fathers’, I am reminded of another offering in military aviation — ‘first one to the whiteboard wins.’ I wonder what Frank Kendall thinks...

An academic treatment of production learning curves at this link —
https://hbr.org/1964/01/profit-from-the-learning-curve

Of all the signs that the JSF program has finally arrived politicians claiming credit is surely the most obvious

F-35 is officially successful

[quicksilver]

Of all the signs that the JSF program has finally arrived politicians claiming credit is surely the most obvious

F-35 is officially successful

Amen.

Someone I once knew put it like this —

There are three phases in a MDAP:

1. “It’ll never work...”
2. “It’s too expensive”
3. “I supported it from the beginning”

[blain]

I have no respect for someone who let Joe Biden nuzzle up to his wife during his swearing in ceremony.

[USMilFan]

The use of a production learning curve — long studied and documented across many industries — as evidence of the efficacy of their ‘fixes’ is almost laughable. For example, the high cost of LRIP-1 jets had mostly to do with the fact that only two jets were built....

And therefore, at least in this case, it turns out that size does matter - lot size, that is. And it matters more than anything else.

"The entire effort – and thus America’s air superiority for decades to come – was in jeopardy."

I'm comforted to know that Ash Carter rescued American air superiority for decades to come by ignoring the tens of billions that could have been saved by keeping F-35 lot sizes at their original levels. Instead, he brilliantly focused on saving perhaps a few billion by writing incentive clauses into F-35 procurement contracts. What a novel idea. The man is truly visionary.