[Mar Verde]

Updated US Military Aircraft Prices (Dec. 2006): JSF Leads Cost Inflation
   
(Source: defense-aerospace.com; published Apr. 11, 2006)


PARIS --- The cost of US combat aircraft has grown at a substantial rate during the past six months, according to the Pentagon’s latest Selected Acquisition Report, released on April 9 and covering the six months to Dec. 31, 2006.  
 
The largest increase was posted by the Joint Strike Fighter (JSF) program, whose total cost jumped by $23.3 billion (or +8.5 percent) in six months, equivalent to an annualized growth rate of 17%. This is much higher than any previous forecast for the program, and bodes ill for the program’s future affordability.  
 
According to the Pentagon, the increase in JSF costs (from $276.4 billion to $299.8 billion) is “due primarily to a decrease in the annual procurement quantities and a stretch-out of the production buy schedule from fiscal year 2027 to fiscal year 2034.”  
 
Other factors are “commodity market price increases (+$5,472.8 million), revised assumptions based on contractor LRIP I proposals and methodology (+$8,307.1 million), and support increase due to aircraft configuration update, revised procurement profile, and methodology changes (+$6,423.2 million),” the Pentagon said. These increases were partially offset by lower estimates of JSF prime and subcontractor labor rates (-$3,576.3 million) and for subcontractor costs (-$5,201.4 million).  
 
If JSF wins the prize for fastest price inflation, other military combat aircraft programs also experienced significant increases: +4.3 percent for the F-22, +8.2 percent for the V-22 Osprey, +5.4 percent for the F/A-18E/F Super Hornet.  
 
Much higher cost growth was experienced by the C-130 avionics modernization program (AMP), with an increase of +21.2 percent even though the number of aircraft being retrofitted was cut by 166.  
 
In the field of helicopters, the cost of the US Army’s ARH (Armed Reconnaissance Helicopter) program increased by $1.78 billion, or +49.6 percent, but this was mostly due to the fact that production numbers jumped by 144 units to 512. Unit costs increased only marginally.  
 
 
US Military Aircraft Prices  
 
For the second time, we publish below the unit program costs of US selected military aircraft, based on the April 9 Selected Acquisition Report, in which the Pentagon estimates the total cost of each major program by computing actual costs to date, when available, or by estimating future anticipated costs, when not. All estimates include anticipated inflation allowances.  
 
Our Program Cost per Unit (PCU) figures are computed by dividing the total cost of each program, as stated in the SAR, by the number of units to be produced.  
 
Each PCU includes research and development costs, and some support costs. It is thus not an indication of actual acquisition prices.  
 
It is, however, the simplest, clearest and most accessible measure of weapon costs publicly available.  
 
It also offers two major advantages: it is practically immune to manipulation, and is a credible basis for direct comparisons between programs.  





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