Pentagon F-35 program chief lashes Lockheed, Pratt

Sounds more like posturing.

Bogdan also shot down LM's continued claims of a $67M price including engine, saying that it will be more like $90M.

"THE Joint Strike Fighters to be bought for the RAAF will cost about $90 million each -- much more than the $67m claimed by its manufacturer, says the American general appointed by the Pentagon to straighten out the struggling program."

http://www.theaustralian.com.au/nationa ... 6587211618

ELP Blog implies the following quotes are in the full article (behind a paywall.)

Bodgan says: "You hear Lockheed Martin keep talking about $65m, $67m. Well guess what. That's the cost back in 2004 or 2003."

"Who cares about that. I want to know what it costs the day I buy it," he said.

I have read the article, though I don't have it in front of me. Those quotes sound close enough but are also misleading.

The $90million price is in 2020 dollars, not 2013 dollars. So while $67 million is too low, the $90 million number is inflated.


If they can really sell complete F-35s for $90 million in 2020 dollars they will be in good shape.

Hobo -

FYI, the noted $67m 'estimate' (in around 2005 dollars) is apparently for the URF Flyaway portion of the Total Unit Procurement Cost.

The $90m 'estimate' (for 2020 dollars) would be the inflation-adjusted based on 2% avg annual inflation.

i.e., $67m in 2005 = $90m in 2020 @ 2% inflation.

This is the SAME price-quote estimate for a 2020 URF cost, however just noted in different year dollars for better clarity sake, that's all.

However... once again (revision time), we can most likely throw these numbers out the window because they are pretty meaningless going forward.

That is, this previously quoted '2005 dollar' URF estimate was conceived based on the original schedules being met and was not taking into account the multiple Restructurings to come down the road, nor other orders being modified, or delayed, or reduced, etc.

Any further Program restructurings, order delays, reductions, etc, will only further disqualify said previously conceived URF 'estimate' from being an accurate quote.

So when someone says '$67m in 2005 dollars' or '$90m in 2020 dollars', they are talking about an hypothetical URF cost 'estimate' only and NOT a 'complete unit Procurement cost' estimate (ie, the PUC, or unit Weapon System Cost).

Unfortunately though, as said, these quote estimates themselves are pretty much invalid anyway, as most likely the assumed back-ended buys will not be lumped onto the still expected original FRP production rates -- as highly dubious as those expected FRP rates and maintained schedules are as well.

More realistically? It would probably be fortunate if a FY2020 unit Weapon System Cost (for a mature and design-fixed block IV?) would be priced at say $195m-$200m ea, in Then Year dollars (say @ 2.25% annual inflation?), under the continuing reduced order rates to follow.

Hope that helps clarify some of the still ongoing F-35 unit cost estimate confusion.

ddoming wrote:Couldn't resist commenting, signed up just for that...

B-2 initial order: 132
B-2 final buy: 22

F-22 initial order: 750
F-22 final buy: 187

No exports allowed, no more production, just recoup your R&D expenses and live off upgrades, if any...

What I mean is, you want anyone to plan strategically "for the next 40 years" when your customer has such a history? I would do the same on their situation... try to profit while I can.

And therein lies the problem with private defence companies.

bigjku wrote:

uclass wrote:

luke_sandoz wrote:Must be part of that greedy 1% Obama is always whining about.

Well there may be a valid point. Why did the AMRAAM D end up costing the same as a Meteor, which is a brand-new, ground-up missile rather than simply an enhanced variant of an existing missile?

Someone is going to have to explain this logic to me. As far as I can tell the UK alone will spend 1 billion pounds on development and demonstration of this weapon. That is aside from the cost of building the rounds themselves. If the UK bought 1,000 rounds and paid nothing else at all (unrealistic) they would "cost" 1 million pounds a piece by the accounting you are applying to the AIM-120D. That is damn near the same as AMRAMM-D before you manufacture the freaking round itself.

They are both unit costs. Check the references listed on wikipedia.

http://www.bga-aeroweb.com/Defense/AMRAAM.html

http://www.nao.org.uk/publications/0304 ... rchfor=yes

http://arstechnica.com/tech-policy/2013 ... -building/

With incompetent spending like this across all forms of US government, no wonder we're in debt.

I have no problem with spending on defense, I just want to make sure we get our money's worth.

I do have a big problem when our people waste money or get bamboozled.

I'm not saying the F-35 program is trying to swindle us out of our money, but we should make sure we get our money's worth for the program.

And why do they divide R&D costs into each plane

Why not seperate R&D costs as it's own thing, and the cost of a plane be it's own thing?

Wouldn't that make the numbers easier to read / stomach?

I prefer this definition: http://www.f-16.net/index.php?name=PNph ... nao#238655

Management of Australia’s Air Combat Capability—F-35A Joint Strike Fighter Acquisition ANAO Audit Report No.6 2012–13 | 24 Sep 2012

http://www.anao.gov.au/~/media/Files/Au ... 0OCRed.pdf (4.7Mb)

"...As at June 2012, the JSF Program Office estimated the Unit Recurring Flyaway (URF) cost of a CTOL F-35A aircraft for Fiscal Year 2012 to be US$131.4 million. That cost includes the baseline aircraft configuration, including airframe, engine and avionics. The URF cost is estimated to reduce to US$127.3 million in 2013, and to US$83.4 million in 2019. These expected price reductions take into account economies of scale resulting from increasing production volumes, as well as the effects of inflation. The estimates indicate that, after 2019, inflation will increase the URF cost of each F-35A by about US$2 million per year. However, these estimates remain dependent upon expected orders from the United States and other nations, as well as the delivery of expected benefits of continuing Will-Cost/Should-Cost management by the US Department of Defense...."

http://www.f-16.net/attachments/anaourf ... ic_810.gif

geogen wrote:Hobo -

FYI, the noted $67m 'estimate' (in around 2005 dollars) is apparently for the URF Flyaway portion of the Total Unit Procurement Cost.

The $90m 'estimate' (for 2020 dollars) would be the inflation-adjusted based on 2% avg annual inflation.

i.e., $67m in 2005 = $90m in 2020 @ 2% inflation.

This is the SAME price-quote estimate for a 2020 URF cost, however just noted in different year dollars for better clarity sake, that's all.

However... once again (revision time), we can most likely throw these numbers out the window because they are pretty meaningless going forward.

That is, this previously quoted '2005 dollar' URF estimate was conceived based on the original schedules being met and was not taking into account the multiple Restructurings to come down the road, nor other orders being modified, or delayed, or reduced, etc.

...
...
...

You are using a lot of words to say very little, and most of what you said was wrong.

The point is that Bogdan just re-affirmed $90 million price in 2020 year dollars, even as he attacked LM for making misleading price claims.

That suggests strongly that he believes the program is on track to meet the $90 mil target.

What is clear is that when the aircraft are acquired in 2020 or whenever, it will not be $67M in the year the purchase order is signed. LM is being at best coy, but probably more disingenuous when it continues to use a figure that it knows is incorrect in current economic context. This has always been an irritant to the program office. Bogdan just made the irritation public information.

No they are not because the buyers know exactly what the numbers represent and are used to baseline dollar figures. It’s the only way to judge how a program is keeping costs on an even keel. Without it, people would see the yearly (or more) changes and LM & the JPO would have to explain (everytime) about inflation, exchange rates, etc.

It is also needed when comparing the price of one fighter with the price of another. For example, a recent comparison of today’s fighters with a proposed KF-X was a total failure as it compared costs from different years, build cycles, etc. It compared:

-- An LRIP6 F-35 (FY2012) which included many non-F-35 components like FMS Simulators, stand-up costs, etc
-- An average T1/T2 Eurofighter cost (year not given)
-- An FY2008 Rafale
-- An FY2012 F-18
-- An unknown year or build rate KF-X cost
-- (All costs from wiki)

Well, when the PEO says things like: "You hear Lockheed Martin keep talking about $65 million, $67 million. Well, guess what? That's the cost back in 2004 or 2003. Who cares about that? I want to know what it costs the day I buy it," then it is clear that Bogdan feels that clarification is necessary - and he is taking heat from the usual suspects in response.

Pentagon Escalates Rhetoric Against Lockheed Over F-35
By David Lerman & Brendan McGarry - Feb 27, 2013
Bloomberg

"Pentagon officials are offering increasingly blunt criticism of Lockheed Martin Corp. (LMT), the world’s largest defense company, in efforts to curb the escalating cost of its F-35 Joint Strike Fighter."

"The broadside underscored the Pentagon’s growing frustration with its lead contractors on the F-35, the most expensive U.S. weapons system. ..... The aircraft program may face cutbacks because of sequestration, the across- the-board federal budget reductions scheduled to begin taking effect tomorrow."

"The public criticism is designed to prod Bethesda, Maryland-based Lockheed and Pratt & Whitney to change their behavior, said Raymond Jaworowski, an aerospace analyst at Forecast International of Newtown, Connecticut.

“When you hear comments like this from military program officials, it’s generally a way to put pressure on the contractors in hopes of getting increased contract performance or better prices in negotiations,” Jaworowski said in an interview. “What stands out about this is that Bogdan has been consistently critical and more than once taken occasion to make public criticism of the program. That is a bit unusual.”"

http://www.bloomberg.com/news/2013-02-2 ... -f-35.html

He's clearly posturing to put pressure on the program.

When it comes down to signing contract, they talk about current year dollars.

maus92 wrote:Pentagon Escalates Rhetoric Against Lockheed Over F-35
By David Lerman & Brendan McGarry - Feb 27, 2013
Bloomberg

"Pentagon officials are offering increasingly blunt criticism of Lockheed Martin Corp. (LMT), the world’s largest defense company, in efforts to curb the escalating cost of its F-35 Joint Strike Fighter."

"The broadside underscored the Pentagon’s growing frustration with its lead contractors on the F-35, the most expensive U.S. weapons system. ..... The aircraft program may face cutbacks because of sequestration, the across- the-board federal budget reductions scheduled to begin taking effect tomorrow."

"The public criticism is designed to prod Bethesda, Maryland-based Lockheed and Pratt & Whitney to change their behavior, said Raymond Jaworowski, an aerospace analyst at Forecast International of Newtown, Connecticut.

“When you hear comments like this from military program officials, it’s generally a way to put pressure on the contractors in hopes of getting increased contract performance or better prices in negotiations,” Jaworowski said in an interview. “What stands out about this is that Bogdan has been consistently critical and more than once taken occasion to make public criticism of the program. That is a bit unusual.”"

http://www.bloomberg.com/news/2013-02-2 ... -f-35.html

Not unusual -- 'unheard of' at critical juncture in the program (in terms of current economics). He will get skewered by the service(s) three and four stars; the difference is they will do it behind closed doors.

quicksilver wrote:Not unusual -- 'unheard of' at critical juncture in the program (in terms of current economics). He will get skewered by the service(s) three and four stars; the difference is they will do it behind closed doors.

IMO opinion LtG Bogdan would be more concerned about being skewered by Congress. Those 3 and 4 star officers would be under budget pressure just like him, and so less likely to be critical of his performance in a challenging program.