New Concurrency Cost Estimate Drops by $500M

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quicksilver

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Unread post09 Jun 2013, 13:24

popcorn wrote:
maus92 wrote:One thing seems to be working: make the contractor responsible for sharing the risk, and not taking profits on remediation, and magically the costs goes down. Funny how that works.


Just to be clear.. you're saying that the reduction is due to LM taking a $500M hit to it's profits on LRIP1to LRIP5?


Shack.

And, as the official government report states, prior estimate submissions reflected USG use of parametric cost models that have proven to be wholly inaccurate -- not unlike their O&S and CPFH models.
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Unread post11 Jun 2013, 01:35

gtx wrote:And it will most likely continue to drop...but don't tell the anti-F-35 crowd. They won't like it.


Yup.

http://www.aviationweek.com/Article.asp ... 586508.xml

As of last year, Pentagon officials estimated the total concurrency cost for the first 90 aircraft, including all on contract in low-rate, initial production (LRIP) lots 1-5, at $1.71 billion. However, since the first report was issued to Congress on these costs last September, the F-35 Joint Program Office, in concert with experts from Lockheed Martin, have reviewed more closely the “actuals,” or costs already known from work on earlier LRIPs, as well as refined how models of retrofits from past fighter programs (the F-22 and F/A-18E/F, for example) are applied to the F-35 moving forward, according to an official from the F-35 Joint Program Office (JPO).

The estimates are projected out through LRIP 10, when the development — and presumably retrofit discoveries — will end. Across all 10 LRIPs, the projected estimates drop by $820 million.
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popcorn

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Unread post11 Jun 2013, 01:36

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Unread post11 Jun 2013, 04:55

smsgtmac wrote:
maus92 wrote:One thing seems to be working: make the contractor responsible for sharing the risk, and not taking profits on remediation, and magically the costs goes down. Funny how that works.

That is called a "Post Hoc Ergo Propter Hoc" fallacy. Because A happened before B does not mean A caused B.
More likely is that the lower LM cost estimates have been proven, once again, to be more accurate than the CAPE B.S. estimates and that with actuals coming in, the government has to lower their previously higher estimates to keep from looking stupid. I took Sweetman and his 'Cracks of Doom' article to task on this in late 2011, and updated six months ago (http://elementsofpower.blogspot.com/201 ... redux.html).

Looks like I should maybe update and bump again with a hat tip to F-16.net
:D


Except of course, LRIPs I-III all exceeded their target prices, and LRIP IV F-35s are exceeding their target for the first jets built under that contract. So while CAPE and some other government estimators have erred on the high side, the jets are still coming in over their target price. It may change in LRIP V where real incentives could influence outcomes, but then again WW might be on to something.
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Unread post12 Jun 2013, 01:54

maus92 wrote:
smsgtmac wrote:
maus92 wrote:One thing seems to be working: make the contractor responsible for sharing the risk, and not taking profits on remediation, and magically the costs goes down. Funny how that works.

That is called a "Post Hoc Ergo Propter Hoc" fallacy. Because A happened before B does not mean A caused B.
More likely is that the lower LM cost estimates have been proven, once again, to be more accurate than the CAPE B.S. estimates and that with actuals coming in, the government has to lower their previously higher estimates to keep from looking stupid. I took Sweetman and his 'Cracks of Doom' article to task on this in late 2011, and updated six months ago (http://elementsofpower.blogspot.com/201 ... redux.html).

Looks like I should maybe update and bump again with a hat tip to F-16.net
:D


Except of course, LRIPs I-III all exceeded their target prices, and LRIP IV F-35s are exceeding their target for the first jets built under that contract. So while CAPE and some other government estimators have erred on the high side, the jets are still coming in over their target price. It may change in LRIP V where real incentives could influence outcomes, but then again WW might be on to something.


Well, since I was clearly referring to the LM 'should-cost' projections (at the link and 2011 graphic from same below) and the nearness (high or low) to actuals incurred compared to other estimates, AND since the 'should cost' curve is subject to change based upon Customer or political decisions (like stretching SDD or delaying early buys) AND you fail to define type and $ quantity of "Target prices" with sources, I can't really comment as to how (in increasing order of probability) 'right', 'wrong' or 'irrelevant' your assertions are. Quite frankly, by lacking specificity and sources your assertion comes off to me as kind of 'whiney'.

....and if WW has ever been "on to something" it was after he tripped and fell on it. :wink:
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maus92

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Unread post12 Jun 2013, 17:17

smsgtmac wrote:
I can't really comment as to how (in increasing order of probability) 'right', 'wrong' or 'irrelevant' your assertions are. Quite frankly, by lacking specificity and sources your assertion comes off to me as kind of 'whiney'.



Really? I expected someone as well informed as yourself to be aware of previously reported data. It's in the May 6/13 2013 AvWeek. Nice chart (print edition only.) The whiney comment I'll ignore, it's beneath you.
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Unread post12 Jun 2013, 21:09

maus92 wrote:One thing seems to be working: make the contractor responsible for sharing the risk, and not taking profits on remediation, and magically the costs goes down. Funny how that works.


I think that is a bit of a stretch. Contract prices were already decreasing year by year in LRIP lots I~III, which can be correlated to increasing manufacturing experience and a decrease in out of station work. Certainly risk sharing does place greater effort on the part of contractor to keep prices down... but claiming its the main reason just plays into the simplistic "corporations are bad" theme which is just lazy, incorrect analysis.
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Unread post18 Jul 2013, 16:05

http://www.aviationweek.com/Article.asp ... 24.xml&p=1

Estimates To Retrofit F-35s Decline
By Amy Butler Source: Aviation Week & Space Technology

July 15, 2013

The Pentagon expects to pay $480 million less than expected only nine months ago for retrofits to the first 90 F-35 fighters based on revised cost projections of changes anticipated to emerge through the end of development in 2017.

The updated cost figures were sent to Congress in May in its second review of so-called “concurrency costs” for the Lockheed Martin F-35. Because the program was crafted in 2001 to conduct production in parallel with testing activities, officials are tracking these concurrency costs, for retrofits that must be made to bring early production jets to an operational standard based on findings in ongoing testing. One example is a fix to the fuselage Station 496 bulkhead, found to be experiencing unexpected cracking.

As of last year, Pentagon officials estimated the total concurrency cost for the first 90 aircraft—including all aircraft on contract in low-rate, initial production (LRIP) Lots 1-5—was $1.71 billion. However, since the first report was issued to Congress on these costs last September, the F-35 Joint Program Office, in concert with experts from Lockheed Martin, have reviewed more closely the “actuals,” or costs already known from work on earlier LRIPs, as well as refined how models of retrofits from past fighter programs (F-22, F/A-18 E/F, for example) are applied to the F-35, according to an official from the F-35 Joint Program Office (JPO).

The estimates are projected out through LRIP 10, when the development—and presumably the retrofit discoveries—will end. Across all 10 LRIPs, the projected retrofit estimates come down by even more, or $820 million.

These are, however, still projections. Only about 35% of flight trials are complete and Lockheed Martin still has much to do with testing the structural durability of each of the variants over multiple lifetimes of use.

For each LRIP that is on contract (Lots 1-5), the estimates are clearer owing to the percentage of known issues that will be addressed with retrofits. The JPO and Lockheed Martin are nearing closure on contracts for LRIPs 6-7, and so those do not yet have firm projections for such known costs. However, the report notes that 80 retrofits are already known to be necessary in the 36 aircraft expected for retrofit in LRIP 6.

Even for the two F-35As in LRIP 1, long delivered to the U.S. Air Force, not all retrofit costs are known. Estimators included figures for each lot for “to-be-discovered” retrofits. They based these estimates on models of previous fighter programs and inflation estimates.

The largest anticipated per-unit retrofit cost is for aircraft in LRIP 2, which included 12 US jets, at $16.7 million, based on the May numbers. The estimate from last year projected each unit to cost about $25.8 million.

The cost is expected to slowly decrease until LRIP 10, when each unit is projected to require $760,000 to retrofit over last fall's estimate of $1.1 million per aircraft
.

The retrofit estimates include non-recurring engineering for the fixes. Though foreign F-35 buyers will not have to pay for these non-recurring costs (those are included in the U.S.-specific development contract), they will have to pick up the tab for the actual retrofits if they decide to install them on their aircraft, according to the JPO official. Additionally, the U.S. services have the discretion on which retrofits to install. The program office is categorizing them by those that are essential to operate the aircraft (such as safety or durability issues) versus those that are “nice to have,” the JPO official says.

Lawmakers requested these concurrency cost reports as a result of concerns that these estimates were very high, adding significantly to the per-unit price of the actual aircraft. Based on the contracted target cost for LRIP 5 aircraft, the F-35A is estimated at $105 million, the F-35B at $113 million and the F-35C at $125 million. Based on the revised concurrency estimates, the Pentagon can expect to pay an additional $10 million per aircraft for retrofits, about 10% of the price of the F-35A.

Air Force Lt. Gen. Christopher Bogdan, F-35 program executive officer, said last winter he expects to be able to stabilize the price of the F-35A, the predominant model sought for export, at between $80-90 million. At that point, in full-rate production, there should be virtually no retrofits required.
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Unread post21 Dec 2017, 23:54

F-35 concurrency cost drops by 24 percent over 11 months
December 21, 2017 | Lee Hudson

"A new cost estimate on F-35 concurrency reveals a 24 percent drop or a reduction of $400 million over an 11-month period.

Two primary factors have driven the cost-estimate reduction. The first is due to the removal of third-life testing teardown and inspection because that activity occurs at the end of the system development and demonstration phase, while the second component is attributed to originally forecasted issues that did not occur, according to F-35 spokeswoman Brandi Schiff.

The F-35 joint program office considers SDD completed, however, a new strategy was established called continuous capability development and delivery to give the program a mechanism to correct deficiencies.

Specifically, a September report to Congress notes third-life teardown and inspection costs have decreased by 89.7 percent or from $390 million to $40 million, which is beyond the scope of the concurrency efforts. The F-35 joint program office is mandated by Congress to submit a semi-annual report on concurrency cost.

"Concurrency is a temporal issue and as we complete more and more testing, the risks and impact of concurrency will decline," Schiff wrote in a Dec. 20 statement to Inside Defense. "The majority of technical risks that drive changes and costs will have been discovered."

For instance, in the most recent concurrency report to Congress the number of forecasted issues and known issues is leveling out, which is due to design maturation, according to Schiff.

"The Department of Defense established the F-35 program with a planned amount of overlap between the development and production of aircraft," Schiff wrote. "These concurrent actions led to aircraft built during early production lots to undergo modifications due to discoveries made during qualification, flight, and ground tests, or as a result of engineering analysis."

The Pentagon incentivized both Lockheed Martin and Pratt & Whitney by sharing the costs to incorporate concurrency changes as soon as possible in the production line. Additionally, the JPO established a "Modifications War Room" that develops and maintains a comprehensive modification database for strategic planning, according to Schiff.

Inside Defense reported in May 2015 the F-35 concurrency cost estimate increased by about 2 percent compared to the previous year's figure. The increase came after two consecutive years of declining concurrency-cost estimates."

Source: https://insidedefense.com/daily-news/f- ... -11-months
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Unread post06 Feb 2018, 20:24

I just got my FOIA back and I have the detailed report.

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viewtopic.php?p=387644#p387644

download/file.php?id=26535
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Unread post06 Feb 2018, 21:30

For whatever reason the PDF was not OCR text readable but now it is so this is the Conclusion:
"...Conclusion
Lockheed Martin (LM) continues to work collaboratively with the F-35 JPO to process and incorporate changes as expediently and efficiently as possible. Toward that end, LM and the F-35 JPO continue to utilize a Modifications War Room, initiated in 2015, that maintains a comprehensive modification database for strategic long range planning. From a near-term perspective, the database prioritizes and tracks modifications by individual aircraft to include the inherent capability associated with that modification. As can be seen by the declining costs shown in Figures 1 through 3, the program continues to make strong, continuous progress in maturing and stabilizing the air system hardware design.

Contract language remains in place to reduce concurrency costs to the Government. The completed LRIP 5-10 contracts contain clauses that implement 50/50 cost sharing with no fee for specified changes known before contract award that will not be incorporated until after aircraft delivery. This cost sharing approach is intended to motivate LM to incorporate concurrency changes as quickly as possible in the production line.

The F-35 JPO projects that known costs will continue to converge toward the total projected estimate until development has completed. Estimates will be reviewed and updated on a semi-annual basis. These will contain adjustments as a result of retiring, realizing, rescheduling, or adding changes as the program progresses...."
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Unread post10 Aug 2018, 14:36

"When a fifth-generation fighter meets a fourth-generation fighter—the [latter] dies,”
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