The High Cost of Upgrades

jkitfield@njdc.com

Despite the high-tech warfare that NATO waged in the skies over Yugoslavia earlier this year, the U.S. aircraft that were the vanguard of Operation Allied Force are generally more than a decade old. Most represent technology that dates back to the 1970s and 1960s. Some of the B-52 bombers that took part were older than the pilots flying them.

Finding a way to affordably modernize the vast fleet of military aircraft on which the United States relies so heavily has become the Pentagon's toughest procurement challenge. Indeed, Defense Department officials are struggling mightily to purchase state-of-the art new aircraft and simultaneously cope with the maintenance and repair demands of a rapidly aging fleet that not only conducted a major theater air war in the Balkans, but attacked Iraqi air defenses almost daily.

"Except for a few replacement F-16s, we are not producing any new fighters today. So until the F-22 enters service around 2004, the average age of our fighter fleet will increase one year for every calendar year that passes, and we're already flying the oldest fleet of aircraft the Air Force has ever operated," Gen. Richard Hawley, the outgoing commander of the Air Force's Air Combat Command, said in a recent interview with defense reporters.

When they are used as heavily as the fighters now in service, Hawley says, older aircraft break more often and in unexpected ways, and they require significantly more maintenance and repair work. "That makes us a little less resilient as an Air Force, but I think we'll have to live with that. I don't think we could significantly accelerate either the F-22 or the Joint Strike Fighter," Hawley said. "But we definitely need to keep those programs on track."

Rising Costs

The F-22 Raptor, the Air Force's next-generation air superiority fighter, is only the tip of a wave of new tactical aircraft programs that also includes the Navy F/A-18E/F attack fighter and the multi-service Joint Strike Fighter (JSF).

Many analysts believe the new aircraft are too expensive as replacements for the services' aging aircraft fleets. According to the Congressional Budget Office, the Pentagon now plans to purchase more than 3,700 new tactical fighters over the next 27 years at a combined cost of almost $340 billion.

"The Defense Department's planned purchases of F-22s, F/A-18E/Fs and JSFs will replace most of the military's older fighter aircraft as they retire from service, but the services will still need to keep planes in the fleet for unusually long periods to prevent large shortfalls from developing over the next decade," said Christopher Jehn, assistant director of the CBO's National Security Division, in recent congressional testimony. The average age of an Air Force aircraft is 12 years today, he noted, and will climb to a peak of almost 20 years by 2011. "The large number of older aircraft will drive the average age of DoD's fleets to unprecedented levels, which could increase modification costs or decrease readiness."

A main reason for the aging aircraft fleet is the exponential cost growth in new aircraft programs. Even factoring out research and development costs, for instance, each F-22 will cost roughly $120 million in fiscal 1998 dollars, according to the independent Center for Strategic and Budgetary Assessments. That's well over double the $47 million cost of the latest model F-15 that it replaces.

"The fact that major weapons programs continue to grow in cost far in excess of inflation is puzzling," says Bert Cooper, a military aircraft analyst with the Congressional Research Service. "Partly I think it's due to the fact no one wants to cut corners on a military program because it's supposed to be the very best, and with a single government customer you don't get the cost benefits of true competition and the sheer production numbers that you see in the commercial sector."

Indeed, since the inception of the F-22 program in mid-1980s the planned production run for the aircraft has fallen from 750 (or more than 1,000 if a once-contemplated naval version is included) to just 339 fighters. "The problem is that eventually you reach a point of diminishing returns: The costs keep rising, Congress' first impulse is to cut the program numbers, and that causes the unit price to rise further," Cooper says. "So you cut the numbers further."

F-22: A Critical Milestone

Last December, when Defense Secretary William Cohen announced contracts worth nearly $800 million for two F-22 aircraft, and parts for six more, he essentially launched a $60 billion program to produce 339 aircraft over the next 16 years, making it the Pentagon's most expensive weapons purchase ever.

The story of the F-22 serves as a cautionary tale for Pentagon managers trying to modernize the services' tactical aircraft fleet in the face of a post-Cold War downsizing that has seen procurement spending drop by 67 percent since 1986. Despite embodying a host of 1980s-era acquisition reforms, the F-22 so far has failed to break a cycle of ever-escalating costs that has long bedeviled major weapons programs.

Due in part to budget pressures, the program has been restructured three times. As planned purchases have dropped from 750 to 339, cost per aircraft has soared, because development costs are spread over fewer units.

In 1997, a team of representatives from the Air Force, the Pentagon and private industry estimated that the F-22 development program would exceed Air Force cost projections by $1.86 billion and production costs would rise by as much as $13 billion. Reacting to that estimate in 1998, Congress approved the purchase of 339 aircraft but imposed cost limits of $18.6 billion for development and $43.4 billion for production.

The F-22 cleared a major hurdle last year by completing a compressed flight-test schedule and a number of congressionally mandated performance goals, thus earning Cohen's production decision. In February, however, the Pentagon told Congress it still could be facing a $667 million cost overrun on the F-22 program. Defense Week reported that engine and structural problems with the test aircraft have thwarted cost-cutting efforts.

For fiscal 2000, the Pentagon has requested $1.85 billion for procuring the next six F-22s, plus $1.22 billion for continued development. Lockheed Martin is expected to reach a full production rate of 36 aircraft per year in 2004.

An additional problem for the Air Force is that with only 339 F-22s now planned, the service will not be able to completely replace its fleet of more than 500 F-15s as quickly as it would like. "We're clearly not going to be able to replace the F-15 with F-22s on a one-to-one basis, which means we'll have to assume some more risks and probably keep the F-15 around for longer than we planned," says Col. Frederick Richardson, chief of F-22 requirements at the Air Combat Command.

Air Force officials are studying the idea of using the F-22 to also replace the ground-attack F-15E and F-117 stealth aircraft. That would allow the service to procure the four wings of F-22s previously planned rather than the three wings anticipated today.

"I think going from four to three wings was a bad compromise, because the F-15 is the most stressed fighter in Air Combat Command's inventory right now in terms of its use in engagements and the operational tempo of the air crews. I don't see how we can go from four to three wings when we are at this level of engagement on a day-to-day basis," Hawley told defense reporters.

Some critics point to the Balkans war as proof that the F-15 remains more than a match for any likely opponent, and that a much more capable F-22 designed during the Cold War is a luxury the nation can no longer afford. "Even as American fighter planes are once again putting their unchallenged superiority on display for all to see, the Pentagon and its friends in Congress are moving ahead with plans to build three new types of fighter aircraft," Ivan Eland, director of defense policy studies at the libertarian Cato Institute, recently wrote. "The United States no longer needs the expensive F-22 stealth fighter." In July, the House Defense Appropriations Subcommitee seemed to agree, redirecting $1.8 billion in F-22 funds out of the program.

Hawley counters that a new generation of surface-to-air missiles (SAMs) and advanced fighters now entering service around the world are rapidly closing the technological gap that separates the F-15 from other modern fighters.

"If I thought that the only defenses we were ever going to face were the small force of MiG-29 and MiG-21 aircraft and the SA-3 and SA-6 SAM systems we've confronted in Yugoslavia, I wouldn't even consider buying the F-22 or the Joint Strike Fighter," said Hawley. "But the projected lifetime of the F-22 is from 2005 to 2030, and everything I know tells me that they will face a proliferation of advanced SA-10s and SA-12 SAM batteries, advanced air-to-air missiles, and advanced fighters like the French Rafael and EuroFighter 2000. These are advanced systems already being fielded, and I assume we are going to see them in places where our national interests are at stake. So we have to equip the Air Force to deal with those threats, and that means buying the F-22."

Joint Strike Fighter

A joint Air Force and Navy effort, the Joint Strike Fighter program is designed to ultimately provide a family of aircraft to replace Air Force F-16 Falcons, older Navy F-18 Hornets and Marine Corps AV-8B Harriers. The aircraft is also supposed to give the Navy a stealthy strike fighter to complement its new F/A-18E/F Super Hornets. In November 1996, Lockheed Martin and Boeing were selected to build prototypes of the JSF, with the winner of a proposed "fly-off" selected to produce the aircraft.

However, this "all things to all people" approach to the JSF, while dictated by cost constraints, has added significant complexity and stress to the program. The Air Force, for instance, needs a low-cost replacement for its F-16, the low end of the Air Force's mix of fighter aircraft. The Navy, on the other hand, needs a high-end strike fighter that will give the service its first stealth capability for carrier airwings. The Marine Corps, meanwhile, needs a replacement for its vertical take-off and landing Harriers, a type of specialized aircraft requiring vastly different attributes.

Some experts believe the complexity involved in trying to satisfy the requirements of all three services in a single airframe is likely to drive up costs.

"The basic reason new aircraft programs take so long and are so expensive is that the services are addicted to complexity. It's like a religion to them. Because each generation of aircraft is so much more complex and expensive than the previous one, the services are then able to buy fewer and fewer of them," says Franklin Spinney, a long-time analyst in the Tactical Air Forces Division of the Pentagon's Office of Program Analysis and Evaluation.

In an early sign of trouble, DoD officials called in rivals Boeing and Lockheed Martin recently to reveal that they planned to restructure the JSF program in an attempt to head off rising costs. Both companies had apparently run into problems, with Lockheed Martin reportedly suffering from cost overruns and Boeing forced to redesign its entry due to weight problems.

The restructuring under way is designed to keep the program on schedule and within its $750 million cost cap for the concept definition and demonstration phase. The Pentagon still plans to begin engineering and manufacturing development in fiscal 2001, however, with production projected to begin around fiscal 2005. The proposed fiscal 2000 budget, meanwhile, requests $477 million for the JSF (including $242 million in Air Force funding and $235 million in Navy funding). In July 1998, the Congressional Budget Office estimated that the total cost of the revised program for 2,852 aircraft would eventually reach an estimated $212 billion in fiscal 1998 dollars.

The Super Hornet

For the Navy, perhaps the highest acquisition priority in the fiscal 2000 budget now before Congress is continued acquisition of the Boeing F/A-18E/F Super Hornet strike fighter. The Super Hornet is a significantly upgraded version of the current F/A-18C/D multi-role fighter, with a longer fuselage, wingspan and strike range. It is intended to replace earlier models of the F/A-18 as well as A-6E strike aircraft and F-14 fighters aboard U.S. aircraft carriers.

The first 12 Super Hornets were purchased in fiscal 1997, and the Clinton administration has requested $3.06 billion in fiscal 2000 for the Super Hornet, including $2.85 billion to procure the next 36 aircraft, $143 million for continued development, and $70 million for spare parts. With the flight test program for the Super Hornet almost complete, the Pentagon released funds in February for the third and final low-rate initial production run of 30 Super Hornets. The next major milestone in the program is operational evaluation, which will start next month and consist of more than 800 flights over the next six months.

The Super Hornet program has faced its share of difficulties. Although the Navy says it has fixed a significant "wing drop" problem, the modifications have reportedly left the aircraft with residual shaking in high-speed flight. A report released by the Pentagon's director of operational test and evaluation earlier this year also confirmed that the Russian MiG-29 and Su-27 can accelerate faster and out-turn the Super Hornet in most scenarios. The report also said the Super Hornet's performance in air combat and fighter escort was only "slightly" better than the less costly and smaller Hornet.

"The F/A-18E/F should be canceled. It's not even as capable as the carrier aircraft it's supposed to replace," wrote Eland of the Cato Institute. "It has less range and fewer air-to-air capabilities than the F-14, and it has less range and fewer bombs than the A-6 ground attack aircraft. By purchasing the Super Hornet, the Navy is giving up range when it should be increasing it."

Pentagon officials counter that the Navy no longer can afford to keep myriad types of aircraft on its flight decks, each maximized to a specific mission and with its own costly logistics tail, and that any multi-role fighter-attack aircraft is bound to give up some performance in various combat scenarios. What the F/A-18E/F delivers that the service badly needs, they say, is increased range and bomb load over the F/A-18C/D, and competent air combat capabilities.

Despite early problems, Pentagon acquisition czar Jacques Gansler reportedly is leaning toward recommending a multi-year buy for the aircraft later this year. Navy officials contend that purchasing 222 aircraft for $8.8 billion between 2000 and 2004 would save the service $700 million.

Recently, the Senate endorsed the Super Hornet by voting 87 to 11 to table an amendment that would have required the Navy to stay within an $8.8 billion cost cap on the program. Some legislators feared the proposal would have prevented future insertion of new technologies into the fighter.

James Kitfield is a National Journal staff
correspondent.

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