F-35 Acquisition Cost increases to $406.5B in new SAR

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maus92

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Unread post11 Jul 2017, 01:41

"The cost of the F-35 jet program, already the most expensive U.S. weapons program ever, is estimated to climb further as the plane’s production period gets extended, according to figures submitted to Congress on Monday.

Total acquisition costs for Lockheed Martin Corp.’s next-generation fighter may rise about 7 percent to $406.5 billion, according to figures in a document known as a Selected Acquisition Report. That’s a reversal after several years of estimates that had declined to $379 billion recently from a previous high of $398.5 billion in early 2014...."

Looks like Gilmore was on to something (rotten in Ft. Worth.)

https://www.bloomberg.com/news/articles ... n-estimate

Additional funding for FY15-17 jets is also contained in the latest UCA.
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SpudmanWP

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Unread post11 Jul 2017, 02:02

How about we wait till the SAR is released to make any definitive analysis.

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blindpilot

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Unread post11 Jul 2017, 03:09

A couple thoughts on this.

First, is anyone familiar with this bump from 2443 to 2456 total ac procured, just because Congress added 13 Bees to an annual procurement? I have always assumed such changes were moving delivery to the left. I didn't hear of the USMC asking for more than the total B+C with Navy equals 680 ac. I am not aware of this "secret +13 buy," or even of that request, in unfunded wish lists, or whatever. So apparently the Navy(with Marines) is buying 693 ac now?

Secondly, any time you move delivery to the right, it will effect total program costs on your spreadsheet. I'm paying more attention to near term per aircraft prices being actually negotiated and booked. This SAR also picks up some of the previously(2015) uncounted, plus 6 year, life cycle out to 2070, in then year dollars. It works like this. Let's use round numbers to make it easy to see. If a gallon of JP8 costs $4 in 2064 and $4.40 in 2070, and you move 1,000,000 gals right 6 years, those gallons will cost $400,000 extra in "then" 2064/70 dollars, just because they were bought 6 years later. Assuming of course anyone has the remotest idea how much JP8 will cost next year, much less in 2070.

So - Third, Does anyone (Maus?) know what the inflation rate and cost of JP-8 (or will it be ?electro quantum methane?) is going to be in 2070? If so, I'd like to buy/short a hedge investment for my new great grandson to use to become a billionaire, to help my great great grandkids along.) The near term reality is the only true sign of costs, and those are still going down. I admit however, I do not know how much a Laser Gun is going to cost in the 2030's, and what the retrofit concurrency costs will be for those - (eeww! 2000 Laser Guns are gonna cost a lot I bet!). Hey Maus. (or the author of the estimate or Senator McCain) I'm game. Wanta bet a thousand dollars on the cost of anything(you pick the commodity) will be in 2070. We can escrow the bet, and bequeath it to our progeny. (my first bet is that the $2,000 pot will be worth a tidy sum in 54 years, of course it might only buy a loaf of bread .. so who knows?)

These 50+ year life cycle estimates are near worthless and only good for short term insights as to the impact down the road, on decisions being made now. If you push procurement out to the right several years, and 2030 something becomes 2040 something, the total costs will go up. Guaranteed. Now run an estimate on moving it left.

MHO
BP
Last edited by blindpilot on 11 Jul 2017, 04:06, edited 2 times in total.
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Dragon029

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Unread post11 Jul 2017, 03:20

From the article:

Total acquisition costs for Lockheed Martin Corp.’s next-generation fighter may rise about 7 percent to $406.5 billion, according to figures in a document known as a Selected Acquisition Report. That’s a reversal after several years of estimates that had declined to $379 billion recently from a previous high of $398.5 billion in early 2014.

The Pentagon’s F-35 program office said in a statement that the $27.5 billion increase is reflected in current “then-year” dollars that cover research, development, procurement and military construction. The separate roughly $1.1 trillion long-term operations and support estimate to keep the aircraft flying until 2070 increased by $35.3 billion.


Winter said an estimated increase in the program’s total procurement cost to $346.2 billion from $319.1 billion last year was “largely driven” by the adjustments to the jet’s production schedule. The U.S. Air Force reduced its maximum annual rate of aircraft purchases to 60 per year from 80, a move which extended the planned procurements by six additional years from fiscal 2038 to fiscal 2044, he said. The Air Force is the largest single buyer of the fighter.
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Unread post11 Jul 2017, 03:45

'BP' the slowtony article says: "...The acquisition report also informed Congress that the Pentagon is adding 13 Marine Corps “B” model short-takeoff-and-vertical landing versions of the fighter that will increase the total quantity of U.S. jets purchased to 2,456 from the long-standing goal of 2,443...." We have to guess the SAR says that exactly; otherwise dunno.
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Unread post11 Jul 2017, 04:26

Marines Add 13 Bs To F-35 Buy; Acquisition Costs Rise
10 Jul 2017 Colin Clark

"WASHINGTON: At a time when much of the talk about the F-35 program has centered on trimming its overall numbers of 2,443, we learned today that the Marines plan to increase how many of the hovering B models they buy.

Close observers of the program might not be too surprised by the Marines’ decision. At the Paris Air Show, outgoing aviation commandant Lt. Gen. Jon Davis said he wanted to add 13 F-35Bs to his service’s program. Now they’ve done it. That brings the overall size of the F-35 program to 2,456. The new figure was included in the annual Selected Acquisition Report, a deep dive into the financial state of large defense programs....

...The program’s acquisition costs rose to $406.5 billion from $379 billion in then-year dollars, a rise of 6.8 percent. But in base year fiscal 2012 dollars the costs rose to $324.6 billion from last year’s estimate of $313.3 billion, a rise of just 3.5 percent. Pick the dollars and then critique the program as you will.

The bottom line is, as the SAR notes, “actual negotiated prices continue to be below SAR estimates.”..."



Source: http://breakingdefense.com/2017/07/mari ... osts-rise/
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Last edited by spazsinbad on 11 Jul 2017, 08:11, edited 2 times in total.
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blindpilot

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Unread post11 Jul 2017, 04:51

spazsinbad wrote:'BP' the slowtony article says: "...The acquisition report also informed Congress that the Pentagon is adding 13 Marine Corps “B” model short-takeoff-and-vertical landing versions of the fighter that will increase the total quantity of U.S. jets purchased to 2,456 from the long-standing goal of 2,443...." We have to guess the SAR says that exactly; otherwise dunno.


Right. That's what I'm talking about. Now I have seen numerous reports that indicate edit corrctn] 353 Bee's (340+13) and 327 C's (80-13=67 USMC C's +260 USN C's or still 680+13-13. I assumed those reports were accurate. Still 2,443. If the report actually costs an additional 13 ac to the right end ... ??? I don't know... and it's still 2443? I just assumed it is? ... then ... at least ONE error in the SAR if slowtony is reporting accurately, and there are not now 2,456 planned?

In any case guessing "then year" prices 50 years from now is an absolute joke. F-4E Phantoms ran about $2.5M in 1967.

Confused,
BP

[Math EDITED to match Spaz's source quotes]
Last edited by blindpilot on 11 Jul 2017, 20:02, edited 2 times in total.
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Unread post11 Jul 2017, 05:41

spazsinbad wrote:
The bottom line is, as the SAR notes, “actual negotiated prices continue to be below SAR estimates."...


Yup.

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Unread post11 Jul 2017, 05:45

It seems to me that the USMC are buying an extra 13 F-35Bs overall to add to their grand total buy as per BrakeDaFence:
"...At the Paris Air Show, outgoing aviation commandant Lt. Gen. Jon Davis said he wanted to add 13 F-35Bs to his service’s program. Now they’ve done it. That brings the overall size of the F-35 program to 2,456. The new figure was included in the annual Selected Acquisition Report...."


The latest grand total for USMC was .... F-35Bs and now ADD 13 to reach ... + 13 = .... Then we assume that the same number of USMC F-35Cs will be purchased per the USN/USMC agreement = .... (I do not carry these numbers in me head).

SAR 2016 says as per graphic:
TOTAL US Armed Forces = 2,456 F-35 aircraft DEATH SPIRAL!
F-35A 1,763
F-35B - 353
F-35C - 340 ------------- TOTAL USN/USMC F-35Bs & F-35Cs = 693
_____________________________________________________

This is the earlier AMENDED plan from original agreement to this one in 2015:
Marine Aviation Plan 2015

“...The Marine Corps will procure a total of 353 F-35Bs & 67 F-35Cs...” [260 USN + 67 USMC F-35Cs = 327 F-35Cs]
Total USN and USMC F-35Bs/ F-35Cs = 680"
Source: https://marinecorpsconceptsandprograms. ... 20Plan.pdf


OK - NOW MY HEAD HURTS.... The original plan was this back in 2011 was the USMC by signed agreement with USN would:
"...CNO Adm. Gary Roughead and Marine Corps Commandant James Amos today signed a "tactical aviation integration" agreement whereby the Marines will purchase some F-35Cs to operate from Navy aircraft carriers. The plan is for the Marines to buy 80 F-35C carrier versions and another 340 F-35B STOVL aircraft...." 14 May 2011 AvWEAK Amy Butler


DON"T QUOTE ME: the SAR 2016 (seen Jul 2017) has added 13 F-35Cs to the grand total of F-35Cs INCORRECTLY!
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Unread post11 Jul 2017, 08:58

spazsinbad wrote: ...
OK - NOW MY HEAD HURTS.... ..


Hey, I already said I was confused ... you aren't helping much here ROFL

:drool: :drool: :shock: :| :D :D
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Unread post11 Jul 2017, 09:03

YEAH BUT.... the SAR 2016 (seen Jul 2017) has added 13 F-35Cs to the grand total of F-35Cs INCORRECTLY!

Dec 2015 SAR Total.... 2,457 [youse yanks are hopeless] :mrgreen: :doh: https://fas.org/man/eprint/F35-sar-2016.pdf (0.68Mb)
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Unread post11 Jul 2017, 16:25

spazsinbad wrote:YEAH BUT.... the SAR 2016 (seen Jul 2017) has added 13 F-35Cs to the grand total of F-35Cs INCORRECTLY!

Dec 2015 SAR Total.... 2,457 [youse yanks are hopeless] :mrgreen: :doh: https://fas.org/man/eprint/F35-sar-2016.pdf (0.68Mb)


Yeah well if you Aussies were on the ball, you'd jump in and say, "We'll take any round off errors and can you change the C's to B's like the Gyrenes did?" and then you'd have a squadron fur ya flat tops paid outa our budget! Crumbs from the big table and all ... LOL :D :D

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Unread post11 Jul 2017, 16:34

Yeah BUT we don't have the TRUMPinator in charge - just a second rate NBN enthusiast and I'm still waiting - drum roll....
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Unread post11 Jul 2017, 18:09

SpudmanWP wrote:How about we wait till the SAR is released to make any definitive analysis.

http://www.esd.whs.mil/FOIA/Reading-Roo ... Room-List/



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Unread post11 Jul 2017, 21:17

https://www.flightglobal.com/news/artic ... by-439224/



Lower buys raises overall F-35 acquisition costs by 7%


11 July, 2017
BY: Leigh Giangreco


Lower procurement rates for the Lockheed Martin F-35 have reversed the program’s positive gains since 2015, raising overall development and procurement costs by almost 7% through Fiscal 2044. After years of stabilizing and reducing total program costs under Joint Program Office executive officer Lt Gen Christopher Bogdan, lower planned procurement rates over the next 27 years drove overall, inflation-adjusted costs from $379 billion to $406.5 billion, according to a Selected Acquisition Report (SAR) summary released on 11 July. The US Air Force decreased its maximum annual aircraft procurement rate from 80 F-35As per year to 60. The change extended planned purchases of F-35s by the Department of Defense by six more years from Fiscal Year 2038 to 2044.

The decreased production quantities and six-year procurement phase extension not only led to higher program costs, but an increase in unit recurring flyaway estimates over the program’s lifetime and an increase in average procurement unit cost and program acquisition unit costs, according to the JPO. The JPO maintains that research, development, test and evaluation costs have remained steady and that negotiated near term unit recurring flyaway costs continue to decline. At the start of the JSF program, the June 2002 SAR estimated total acquisition costs at $226.4 billion, or $312.3 billion in current dollars. The US Marine Corps, Navy and USAF had also planned to order 2,866 aircraft in 2002, but the navy later lowered its buy, reducing the total F-35 purchase to 2,443 aircraft today. The overall cost estimate was released a day after the DOD awarded Lockheed a $4.49 billion undefined contract adjustment with a $5.57 billion ceiling for the 11th lot of low-rate initial production (LRIP). The deal is a placeholder while the JPO negotiates final LRIP lot 11 prices with Lockheed for 90 airframes and with Pratt & Whitney for F135 engines.

The JPO says the negotiations for Lot 11 should result in a lower price than finalized in LRIP lot 10, which resulted in a $94.6 million flyaway unit cost for the F-35A.
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