Give or take a billion

The Parliamentary Budget Officer estimates a total price tag of $29.3-billion for new fighter jets.

The PBO has estimated the total program cost—including acquisition and ongoing sustainment—to be US$ 29.3 billion. Divided over 65 aircraft, this results in a cost of approximately US$ 450 million per aircraft in FY 2009 dollars.

There is continuing speculation as to the final average acquisition cost per aircraft. It would appear that Lockheed Martin remains confident that the average cost will come down. However, it is not immediately obvious, given the available evidence, how the cost can be reduced to estimates predicted by Lockheed Martin over 10 years ago. Not only do such figures not resemble the PBO’s costs estimates, but they are considerably lower than the forecasts issued by the DOD organizations, such as the CAPE and the GAO. The Selected Acquisition Report (SAR) published by the DOD shows an average unit production cost of US$ 91 million per aircraft. Being of the view that the program was in even worse shape, NAVAIR’s analysts under Vice Admiral David Venlet predict an average unit cost of US$ 128 million. Unless there is compelling evidence to the contrary, it is difficult to see prices reducing to their original estimated level.

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