F-35: Stick a fork in me, I'm done

It’s sticker shock in Shinjuku time.

238 million US dollars. That’s how much each Japanese F-35 Joint Strike Fighter is going to cost, including maintenance and training expenses. From the U.S. Department of Defense announcement (h/t Mike Yeo):

All aircraft will be configured with the Pratt and Whitney F-135 engines, and 5 spare Pratt and Whitney F-135 engines. Other Aircraft Equipment includes: Electronic Warfare Systems, Command, Control, Communication, Computers and Intelligence/Communication, Navigational and Identifications (C4I/CNI), Autonomic Logistics Global Support System (ALGS), Autonomic Logistics Information System (ALIS), Flight Mission Trainer, Weapons Employment Capability, and other Subsystems, Features, and Capabilities, F-35 unique infrared flares, reprogramming center, and F-35 Performance Based Logistics. Also included: software development/integration, flight test instrumentation, aircraft ferry and tanker support, spare and repair parts, support equipment, tools and test equipment, technical data and publications, personnel training and training equipment, U.S. Government and contractor engineering, technical, and logistics support services, and other related elements of logistics support. The estimated cost is $10 billion.

According to the Mainichi, this is way above what Japan thought it was going to pay. Way, way above.

Last December, the government selected the F-35, jointly developed by nine countries including the United States and Britain, as the nation’s next-generation fighter to replace the aging fleet of F-4 fighters. It plans to deploy 42 F-35 fighters and set aside outlays for the first four units in the fiscal 2012 budget.

Under the budget, Japan earmarked about 8.9 billion yen per F-35 aircraft body. By contrast, the U.S. estimate means a unit price of 238 million dollars, or about 19.1 billion yen at current exchange rates, more than double the Japanese calculation, though the U.S. figure also includes ancillary equipment and training expenses. (Link)

The funny thing is that when this was still the F-X competition to replace the F-4EJ Phantom, the estimated cost per aircraft was being quoted at a rather reasonable sum. Here’s Greg Waldron at Flightglobal:

Lockheed has said the conventional take-off and landing (CTOL) F-35A variant can be delivered for an average unit cost of about $75 million, although that number assumes the USA and eight partner countries order more than 3,100 jets during the next 25 years. (Link)

Granted, Japan was not an the original F-35 program partner. It should pay more. But that “more” was apparently supposed to be $75 million. Or maybe it’s $161 million. From Reuters earlier this year:

The new baseline forecasts the average cost of the F-35 fighter, including research and development (R&D) and inflation, at $135 million per plane, plus an additional $26 million for the F135 engine built by Pratt & Whitney, a unit of United Technologies Corp.

In 2012 dollars, the average cost of each single-seat, single-engine plane, including R&D, would be $112.5 million, plus $22 million for the engine.

This is the first year that the government has separated out the cost of the plane and the engine, and comparison figures were not immediately available. Lockheed Martin has said the average cost of the plane will be around $65 million to $70 million, based on 2010 dollars.

Lockheed Martin declined comment on the new estimate, saying it had not yet received the Pentagon’s latest report.

There are two possible scenarios. One, that the cost of the plane has doubled in a year, from $75 million to $161 million. In that scenario, a mere $77 million for support costs (more than the original cost of the plane) proportionally does not seem unreasonable (Never mind the doubling of cost.) The other scenario is that the plane still costs $75 million and the support cost is $163 million per plane. In other words, the service contract costs more than twice as much as the product.

A reasonable person can look at Japan’s procurement of the F-35 and conclude that a “bait and switch“, as we say in America, has occurred. The Mainichi article makes it clear that even the buyer thought that the price was going to be far, far less than the final estimate.

And this isn’t likely the end of the costs. Remember that Japan was promised the privilege of being able to do final assembly and checkout of the F-35 — the lamest and least beneficial to Japan’s aerospace industry of the three production proposals by Lockheed Martin, Boeing, and BAE. Notice there’s no mention of the construction of that facility in Japan. Who is going to pay for that?

The F-35: taking over defense budgets one country at a time.

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A contributor and editor at the blog War Is Boring, Kyle Mizokami started Japan Security Watch in 2010 to further understand Japan's defenses and security policy.
Kyle Mizokami has 596 post(s) on Japan Security Watch