Different offices within the Pentagon disagree on the cost of several nascent aircraft including the F-35 Joint Strike Fighter, according to a new report.
For the six aircraft programs, the Office of the Secretary of Defense’s Cost Assessment and Program Evaluation office (CAPE) derived a larger cost estimate than is stated in the so-called Service Cost Position (SCP).
A new 30-year aviation program the Pentagon submitted to Congress this week says each of the six programs has differing SCPs and CAPE Independent Cost Estimate (ICEs) that in both cases are up-to-date. Thus, the programs have two seemingly current, yet-different, price tags derived within the Pentagon, with the CAPE determining higher costs in all of the instances. Their differing cost estimates–the dollar figures for which are not actually cited in the report–are explained in a special appendix of the 36-page document.
Lawmakers have lamented when Pentagon offices have derived clashing cost estimates for programs.
The six aircraft highlighted are either in development or low-rate initial production. They are Lockheed Martin’s [LMT] F-35, Boeing’s [BA] KC-46 aerial-refueling tanker, Northrop Grumman’s [NOC] E-2D Advanced Hawkeye aircraft, Boeing’ P-8A Poseidon plane, and Boeing’s AH-64 Apache Block 3A and Block 3B helicopters.
The largest delta between the CAPE and SCP estimates is for the E-2D, with the cost-assessment office deriving a 7 percent higher price. The CAPE’s larger figures, in comparison to the SCP’s, for the other programs were: 5 percent for the F-35; 4 percent for the Block 3B AH-64 Apache; 2 percent for the KC-46; 2 percent for the P-8A; and 1 percent for the Block 3A Apache.
“These are the only cases where the difference between the ICE and the SCP is relevant to the funding data presented in this report,” the 30-year aviation plan states. “For all other aircraft types, the funding data used in this report is based on historical procurement/sustainment costs, an SCP that is much newer than the ICE, an SCP that has not yet been followed by an ICE, or analogies with other programs.”
The reports says the difference between the CAPE and SCP cost estimates for the F-35 is primarily found in the areas of procurement (2 percent difference), military construction (MILCOM) (86 percent), and operations and sustainment (O&S) (6 percent).
“The largest difference between CAPE and SCP estimates of procurement costs is attributable to the assumed future levels of commonality between F-35 variants. The CAPE estimate reflects less commonality among the three F-35 variants than the SCP estimate and, as a result, the CAPE estimates of variant unit costs are higher because of the inherent procurement inefficiencies associated with reduced commonality,” the aviation report says.
Regarding the differing MILCON estimates, the report says the SCP estimate uses “previously-generated, narrowly defined service estimates that did not include all MILCON efforts required to support the entire F-35 fleet.” The CAPE estimate, it says, is “based on the facilities and infrastructure required for the joint training center planned for Elgin Air Force Base, and service-specific requirements for the Air Force, the Marine Corps, and the Navy.”
The report explains the differing F-35 O&S costs by noting the SCP reflects a manning structure outlined in a Manpower Estimate Report. The CAPE estimate, though, “adjusts mission personnel to better reflect the actual staffing of the F-16 and F-22, which are on average more senior in grade than those in the MER,” it says. The report cites additional reasons for the differing O&S estimates.
For the E-2D Advanced Hawkeye, the aviation report says the difference between the CAPE and SCP cost estimates for the is primarily attributed to the areas of procurement (4 percent) and O&S (11 percent).
The report cites several reasons for the differing E-2D estimates, including that the “CAPE employed actuals, adjusted for content and fee assumptions, based on historical learning and rate curves to estimate radar production costs;” this is while the “SCP, in contrast, derived the estimate from a combination of System Development and Demonstration (SDD) and pilot production actuals, with a step-down factor based on a recent RAND study.”
The aviation report attributes the delta between the CAPE and SCP estimates for the other aircraft to different calculations for: procurement for the KC-46; procurement and O&S for the P-8A; procurement for the Block 3B AH-64 Apache; and procurement along with research and development for the Block 3A version.