F-35’s $10 Billion Funding Gap Hints at a Jet Too Costly to Fly

(Bloomberg) -- The Pentagon’s five-year budget plan for the F-35 falls short by as much as $10 billion, the military’s independent cost analysis unit has concluded, a new indication that the complex fighter jet may be too costly to operate and maintain.

The Defense Department’s blueprint for the next five fiscal years calls for requesting $78 billion for research and development, jet procurement, operations and maintenance and military construction dedicated to the F-35 built by Lockheed Martin Corp. But the cost analysis unit estimates $88 billion will be needed.

The estimated shortfall was set out in a four-page review dated June 17 and marked “For Official Use Only.” The document, obtained by Bloomberg News, provides the first comprehensive estimate through 2077 for the Pentagon’s costliest weapons program since it underwent a major reorganization in 2012.

Flying Supercomputer

The F-35’s total “life cycle” cost is estimated at $1.727 trillion in current dollars. Of that, $1.266 trillion is for operations and support of the advanced plane that’s a flying supercomputer.

“As the five-years numbers are estimates, we do not have a reaction,” said Brandi Schiff, a spokeswoman for the Defense Department’s F-35 program office.

The projected shortfall is “an issue to address” during preparation of the next five-year defense budget plan, Pentagon spokesman Chris Sherwood said in an email. “The department has a range of options regarding the F-35 program and will consider these issues.”

The shortfall “includes research and development, military construction, procurement and system operations and maintenance,” Sherwood said.

He added that the projected cost increase isn’t due to any expected major increase in the unit cost of the aircraft. In fact, the cost analysis office projects that the average procurement cost for an F-35, including its engines, is dropping from a planned $109 million to $101.3 million in 2012 dollars. By contrast, it found that estimated support costs once the planes are built have increased about 7% over a 2012 estimate.

Presidential Challenge

That will present a daunting budgeting challenge to the next president, whether Donald Trump is re-elected or Democrat Joe Biden defeats him.

The Pentagon anticipates a flat budget with virtually no growth at least through fiscal 2023. That’s at the same time it’s ramping up the costly modernization of nuclear weapons systems, stepped-up shipbuilding and moving the F-35 program into full-rate production next March. The current five-year plan calls for requesting funding for 96 jets by 2025, up from 79 requested for fiscal 2021.

The F-35 program “had a good stretch where it stayed within its revised cost estimates, but this shows that the programs costs are once again growing faster than expected,” said Todd Harrison, a defense budget analyst with the Center for Strategic and International Studies. He said it underscores “that DoD is facing some serious budget challenges over the next four years, regardless of who wins the White House.”

Byron Callan, a managing director and defense analyst with Capital Alpha Partners LLC, said “something will have to give. If the estimate is correct, DoD may have to find funding from other programs or cut its purchases of the F-35.”

Among other findings by the Pentagon cost analysis unit:

• “There remains uncertainty” about the F-35’s long-term costs because so far the planes have flown only about 2% of the total flight hours called for over their life cycle.
• The reasons that aircraft procurement costs have dropped “remarkably” since 2012 include inflation that has been less than expected, an increase in foreign sales of 138 planes, or 18%, and contractor fees to Lockheed that were less than projected.
• The “government should take steps to correct” a lack of sufficient data to understand the sustainment costs for the plane’s Pratt & Whitney engines.
• The Defense Department’s goal to reduce the F-35’s average cost per hour of flying to $25,000 by 2025 from the current estimate of $35,000 “is likely to prove unachievable” due to “a lack of defined actions” to reduce expenses.

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