?>

Annual Reports to Congress Detail JSF Cost Growth

by: Matthew Potter
April 2, 2012

Category: Boeing, Business Line, Companies, Congress, Department of Defense, development program, Events, Federal Budget Process, Lockheed Martin, Military Aviation, missile defense, production program, Raytheon, Services, U.S. Air Force, U.S. Army | RSS 2.0

Each year the Pentagon submits reports on their major programs to Congress. These are called the Selected Acquisition Reports (SAR) and detail program’s costs and schedules. The SAR reports give a good picture of where the bulk of U.S. investment funds are going.

This year they were dominated by the one for the F-35 Joint Strike Fighter (JSF) made by Lockheed Martin (LMT).

This year the F-35 has been split into two programs to explain cost with the F135 engine made by Pratt & Whitney, part of United Technologies (UTX), being detailed separately. For this report the total price of the program which is for acquisition only the aircraft cost increased just over three percent to $331.8 billion. The majority of this increase was driven by plans to reduce production quantities in the near term causing a higher price.

The engine estimate increased almost ten percent to $63.9 billion because of an increase in the price of the initial sparing package for the system. The reduction in production quantities increased cost by just under a billion dollars.

The JSF has made some progress in testing and development. The initial low rate production contracts are delivering aircraft. The costs are going to increase in the short term due to the decision to stretch out production and reduce the near term quantities. This means a higher individual price for the aircraft.

Overall there was some increase to the total planned spending because the Pentagon is predicting higher inflation in the next several years. This causes annual growth in program’s budgets to reflect this growth.

Interestingly three programs were reported as having their planned production cut significantly. These are Raytheon’s (RTN) AIM-9X air-to-air missile, Boeing’s (BA) C-130 Aviation Modernization Program (AMP), and the Joint Land Attack Cruise Missile Defense Elevated Netted Sensor System (JLENS) also made by Raytheon. JLENS is a tethered aerostat that provides sensors and data link capability to support air defense systems for the Army.

There is probably no near term solution to the JSF cost increase until steady state production is reached and quantities become economic. By then development will be almost complete and the design fairly mature. That though could be several years.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Tags: , , , , , , , , ,


| Give a Comment | trackback

No Comments

Leave a Reply

You must be logged in to post a comment.

    Like Us On Facebook

  • Search This Site

    Custom Search
  • Upcoming Events

  • FREE Business Downloads

  • Widget Area

    This is widget area, add your widget here from your widget on appereance on your admin panel

>