Saturday, February 23, 2008

Weekend Wings #8 - Revisiting Military Aircraft Cost-Effectiveness


On February 11 I posted "Weekend Wings #6: Military Aircraft And Cost-Effectiveness". It was cross-posted on the Winds Of Change blog as well. It attracted a fair amount of reader response, here, there and by e-mail. Some were favorable, but many were opposed to my thesis that the USAF is spending far too much money on "gee-whiz" technology without enough emphasis on "bang-for-the-buck".

The two weeks since I posted that article have been a fascinating vindication of most of the points I raised. If you haven't read the original article, please do so now before reading further here. I won't be able to include all the background material, and there are lots of updates. In that post I examined four aircraft programs. I'll use the same headings here and re-examine the issues in the light of the latest developments.


1. A NEW PRESIDENTIAL HELICOPTER.

This article is positively vitriolic in its analysis of the mind-boggling budgetary boondoggle that is the VH-71 Kestrel. I wouldn't put my case quite as strongly as its author, who appears to have political as well as economic motivations, but nevertheless it's worth reading. A sample to whet your appetite:

Let us stipulate that the shooting down of a U.S. president would be a bad thing. One might ask whether a distinctively appearing, distinctively marked leviathan flying about would create more risk than a standard, common helicopter that could be mistaken for any other rotorcraft in the military or civilian inventory. The UH-60 Blackhawk is as common a sight above metropolitan Washington as a Lexus on the Capitol Beltway: it is inconspicuous. The UH-60 is also in the current presidential fleet.

But the UH-60, or any other helicopter, would inevitably have an Achilles heel if presidential security were the paramount criterion. Unfortunately for the taxpayer, presidential vanity has long since trumped the need for pure physical survival at least cost. Hence presidential chariots must be gaudily decorated in the imperial livery of Marine One, making them unnecessarily conspicuous. Hence the perceived need to equip the new presidential fleet with every conceivable spoofer, jammer, and communications link that sole source IT contractors can push on the VH-71 program manager.

The army and navy have announced their intention to buy a large quantity of Blackhawks over the next 5 years. The price would come to around $14 million each. Fourteen million as opposed to half a billion. Wouldn’t a UH-60 — as we have said, a rotorcraft already in the current presidential fleet — be far more cost effective than a VH-71, as well as safer, particularly if it were painted in inconspicuous colors mimicking a standard military paint scheme? One could put every conceivable bell and whistle on a Special Operations UH-60, as well as an Aga Khan-level interior, and there is no way it could remotely approach the unit cost of the VH-71 boondoggle.


Nicely put, sir.


CASE TWO: A MARINE BATTLE TRANSPORT.

Concerning the V-22 Osprey, one respondent claimed that "The value of Osprey is as R&D for other programs". Nice try . . . but the only other US military program of which I'm aware that uses V-22 technology is the Bell "Eagle Eye" unmanned aerial vehicle, or UAV, being developed for the US Coast Guard as part of the profoundly troubled Deepwater program.








Guess what? The Coast Guard has announced that after committing $100 million to its development, it has discovered that it'll take several hundred million dollars more to get it to production status. They don't have the budget for that expenditure, so they've "suspended" (read: canceled) the program.

Think about it. If you worked for a commercial corporation, and you told the Board Of Directors that you'd just blown $100 million of the company's money on a program that had proved too expensive to pursue, just how long would you expect to continue working there?

I want to know two things. First, what will happen to the careers of the cretins who approved this expenditure without thinking it through? I can only hope that someone is making sure that they will never have the chance to perpetrate a repeat performance of this fiduciary catastrophe. Second, what criminal charges will they face for their misuse of US taxpayers' money? (Of course, this applies to all those involved in the can of worms that is the Coast Guard's "Deepwater Project". To add insult to injury, some of those involved are now trying to get the US Navy to buy Deepwater's deeply flawed design of the National Security Cutter! One hopes they'll not succeed.)

As for the V-22 itself, I repeat my acknowledgment and acceptance of the fact that it's a superb aircraft in its current form: but at four to five times the unit cost of a helicopter to do the same job, albeit more slowly in the latter, I still maintain that it's overpriced and doesn't deliver value for money. To demonstrate this, let's examine in some detail just
one alternative (out of several currently available).

The basic commercial list price for the Sikorsky S-92 helicopter, with a similar effective cargo capacity to the V-22 (albeit over a slightly shorter range and at lower speed), was stated in 2003 to be $15.5 million. There would be no development costs to be paid by the US government, as the aircraft has already been fully developed at the expense of its manufacturers. The only additional expense would be the cost of developing, purchasing and installing any specialized equipment to be put aboard. In a worst-case scenario I can't imagine such equipment costing more than $10-$15 million per aircraft, which would take the unit price to about $30 million at the most (probably rather less than that). In contrast, the total contractual expenditure on the V-22 program, including all development costs as well as production, was estimated in 2007 to be approximately $55 billion. Averaging this over a planned total production of 458 aircraft for the US Marine Corps, USAF and US Navy, the unit cost of each comes out at about $120 million.

You do the math.
At least four S-92's, probably more, could be bought for the total cost of one V-22. The former would be slower and shorter-ranged than the latter, but in terms of cost-effectiveness (defined in this case as the expense and time taken to move X amount of cargo and/or passengers from point Y to point Z), I respectfully submit there's no contest at all. Even if a S-92 fleet had to make two trips to move the load compared to the number of V-22 flights required, it would still cost less than half as much overall to do the work, even including increased operating costs. I accept that the V-22's greater speed and slightly better range might be tactically desirable, but they come at a heck of a price premium. Given that consideration, might not tactics be adjusted to accommodate the less-capable (but still perfectly usable) helicopter platform?

Another consideration. In wartime aircraft get shot down, or damaged, or worn out - the latter very quickly under the stresses of combat. With only 360 Ospreys, what's the USMC going to do when they've had forty or fifty of them rendered inoperative? They won't be able to produce more in a hurry, and couldn't afford them even if they wanted them. On the other hand, they could buy two or three times as many helicopters and
still save billions and billions of dollars. The extra birds could be stored for future use, or used to form more squadrons to increase overall airlift capability, or a combination of these approaches. Either way the USMC could afford to lose a hundred helicopters or more, replace them from its reserve fleet and be able to continue its operations almost unaffected. As I said in my earlier article, fleet size is very important. (The USAF has just been reminded of this with the crash, yesterday, of a B-2 bomber on Guam. There were only 21 of these billion-dollar-plus bombers in the Air Force - so that one crash has just wiped out almost 5% of the fleet!)

Let's look at it from yet another perspective. The US Marine Corps (the primary user of the V-22) expects to spend about $10 billion on a new Expeditionary Fighting Vehicle. It will be the primary amphibious assault transport for the Corps. Already the costs of the program have sky-rocketed: unit price for each EFV has risen from an earlier estimate of $12.3 million to - wait for it -
$22.3 million as of March 2007! The only way the USMC can afford them is to slash the number to be purchased from an initially-planned 1,013 to a current total of 573. That's about half as many vehicles as the USMC initially predicted it would need. (As far as I'm aware its need for the original number of vehicles has not changed: only now it can't afford them - so its projected needs will no longer be met by this program.) The "cost bloat", delays and manifold problems of the EFV program deserve an article to themselves.

Looking at the V-22 and EFV programs together, if the USMC had bought the same quantity of helicopters instead of V-22's it would have saved at least $90 million per aircraft. Multiplying that by a planned purchase of 360 V-22's for the USMC (excluding Navy and Air Force purchases), the total savings would have been a staggering $32.4 billion: enough to pay for the entire EFV program more than three times over - or to spend twice as much on it, buy all the EFV's the USMC initially said it would need, buy double the number of helicopters, and
still save about $10 billion!

I'm sorry, but despite its phenomenal performance and technological prowess, I can't support the V-22 program as being in any way cost-effective and an appropriate use of our all-too-hard-pressed military budget. I accept that it's far too late to stop the program altogether: but I still hope that someone in the Pentagon or the Department of Defense will come to his senses and impose drastic cuts. If we bought one-third to half as many V-22's for the Marines, that would still furnish 120 to 180 of them to provide "bleeding-edge" support to amphibious forces: and even though this would drive up the unit cost of those we buy, the money saved would still be more than enough to buy another 360 medium-lift helicopters such as the Sikorsky S-92. At no extra cost this would give the USMC 50% more lift capability in this class of aircraft and a larger fleet to absorb the inevitable losses that military operations will incur.


CASE THREE: A PROLIFERATION OF FIGHTERS.

The past couple of weeks have seen some astonishing developments concerning USAF fighter procurement. A USAF Major-General came out flat-footed and stated that the Air Force still wants 380 F-22's and is determined to get them, despite the Office of the Secretary of Defense (OSD) "capping" procurement at 183. Of course, this immediately led to a very negative reaction from the Secretary of Defense. It appears that some of those supporting the continued procurement of F-22's are carefully "leaking" allegations to the news media that a Deputy Secretary of Defense is biased against the F-22. The USAF has also requested discretionary funding in the next budget to continue F-22 production beyond the DoD limit. Furthermore, it's continuing with projects to expand the capabilities of the F-22 in areas like synthetic aperture radar mapping.

I happen to support the idea of a larger fleet of F-22's to take care of the air superiority mission. However, it's unlikely that they can be afforded as long as the F-35 Joint Strike Fighter continues its development. There are serious questions still unanswered about how effective the latter will be. For example, the Center for Defense Information stated in 2006:

. . . the current DOD plan . . . is already costing 84 percent more in the development phase than originally planned; program acquisition costs per aircraft are up 28 percent, and it is all taking five years longer than first thought. Moreover, the DOD plan has already reduced the number of aircraft to be produced by 535 aircraft. The report also notes that there appears to be little promise that the current acquisition plan will not experience even more cost overruns, schedule delays, and production reductions.

Nor is there any promise that F-35 performance will be what was originally promised . . . By 2013 when initial operational testing is finally complete, 424 aircraft will have been produced. As so often happens with such “concurrent” acquisition programs, when the inevitable technical problems are discovered, there will be additional delays and costs to address them.

The GAO recommends that DOD delay most production until after sufficient testing has shown the design can perform at just a basic level, but the Pentagon has rejected that modest, even tentative, recommendation. The unfortunate result would seem almost inevitable.

This is bad enough: but what about the costs? CDI again, in late 2007, as reported by David Axe:

Compared to early cost estimates of $35 million per copy, DOD currently predicts the development and production of 2,458 F-35 aircraft for $299 billion. Each F-35 would cost $122 million. For this reason, the F-35 can already be said to have failed to achieve its primary objective: low cost. Furthermore, the current cost estimate assumes no further cost overruns from the current immature state of the aircraft. We can expect even more cost growth, which is already about three times the original promise. We can also expect more shrinkage in the total number DOD plans to buy; which is, after all, a typical way DOD manages cost growth.

I can't emphasize that last point too strongly. History reminds us that almost every aircraft program the USAF has undertaken in the past few decades has seen its quantities cut as a way to save costs when the budget proved inadequate. The F-22 is a classic example: of over 700 originally planned, the actual purchase has been cut to below 200 (unless the USAF can finagle funds for more, as mentioned above). Of course, the unit cost for the smaller number of aircraft sky-rocketed (due to having to amortize the development costs over a much smaller number of airframes). If you believe that the same thing won't happen to the F-35 program, there's a bridge in Brooklyn, NYC that I'd like to sell you. Cash only, please, and in small bills.

There is an alternative to the F-35, and a very good one, as mentioned in my previous article. The latest-generation F-16 has systems fully as capable as those on the F-35, and is available today for a fly-away cost of approximately $50-$55 million. (Development costs no longer apply, as the USAF completed its purchases of older-model F-16's and ended the program years ago.) They offer the very latest radars, missiles and weapons, and they're available hot off the production line where we're building them for our allies. Further improvements such as the F-16XL's larger wing (providing double the weapons capacity and much longer range, as well as supercruise capability even with an engine of lower power than that in current-production F-16's) and thrust-vectoring have already been flight-tested and proven, and could be incorporated on the latest model F-16's with minimal difficulty and expense. An aircraft so equipped would be at least a match for, and probably superior to, the very latest overseas designs. Furthermore, the enormous cost of upgrading and maintaining the USAF's aging F-15 and F-16 fleet (which is over and above F-35 procurement costs) could instead be applied to the purchase of new aircraft needing much less upgrading and maintenance. Overall, I expect the USAF could significantly improve its operational capability and save an enormous amount of money by canceling the F-35, ordering a large number of new F-16XL's and coupling these with a fleet of up to 400 F-22's.

(Another alternative would be to order the US Navy's very capable F/A-18E/F, but that aircraft carries a lot of extra weight to beef up its structure for the demands of carrier flight. I suspect that the cost of removing this might raise the F/A-18's unit cost to more than an F-16's, and the new aircraft would also mean a whole new support infrastructure for the USAF: so it might not be as suitable and economical a choice as upgraded F-16's.)

There are those who argue that stealth characteristics are vital, indeed indispensable, and that this factor alone is sufficient reason to justify the F-35 program. I respectfully beg to differ. Stealth is important for certain missions, to be sure, but not for every purpose. There are many measures that can be taken to improve the radar cross-section (RCS) of existing aircraft through surface applications, redesign of minor features, etc. The F/A-18E/F is an excellent example of this: despite being 50% larger than its predecessor F/A-18A/B/C/D models, its RCS is an order of magnitude smaller. Radar-absorbent materials can be applied. Furthermore, stealth isn't the be-all and end-all of military aircraft effectiveness. For air-to-air combat and defense suppression it's important, sure: but the F-22 takes care of the first requirement, and stealthy cruise missiles and other weapons can be launched (even by non-stealthy platforms) from far outside the range of enemy defenses to deal with them. When it comes to close air support in the current operational environment in Iraq and Afghanistan, stealth technology has
no relevance whatsoever and is completely unnecessary.

Some advocates of a large fleet of stealthy aircraft point out that potential enemies such as Russia and China are developing their own fifth-generation aircraft with this capability, and we want to have aircraft that can face them in combat and win. They're right - but let's re-examine the numbers. I remind you, as I said in my first article, that
the USA spends more on defense than the rest of the world put together. Even if these nations develop an aircraft of similar capability to the F-22, how many will they be able to afford? China is a growing economic superpower, but even so its Air Force is considerably smaller and less capable than the USA's - at least for now. It'll have the same budgetary problems fielding a large fifth-generation fighter force that the USA is now experiencing. Russia's in an even worse economic situation. I doubt that the numbers of fifth-generation aircraft opposing the USA will be all that great. If that changes, we'll have plenty of warning - and by then the successor to the F-22 and F-35 programs will be on the drawing board. Remember that the F-22 is essentially 1980's and 1990's technology - and no-one else has matched it yet.

The importance of unmanned aerial vehicles (UAV's) in this regard is overwhelming - they can go into dangerous situations without risking the lives of pilots. Israel already operates a sophisticated fleet of UAV's that may be more advanced than the USA's, and other countries are racing to catch up. Such aircraft are significantly smaller and less expensive than manned strike aircraft - and they completely remove the danger to human pilots. That being the case, the arguments in favor of the F-35 become even more tenuous. I doubt whether the successor to this aircraft or the F-22 will have a pilot inside.


CASE FOUR: TRANSPORTS IN TURMOIL.

A few days after my first article came out the USAF announced that it has canceled the re-engining of older-model C-5A's. It will upgrade only the later C-5B models. This will save almost $10 billion, which will presumably be applied to the purchase of new transports, probably Boeing C-17's.

I support this move, and also hope that the USAF will look into buying commercial freighters such as the Boeing B-777F. Such aircraft are cheaper than specialist military transports and are more economical to operate. They could easily handle routine airport-to-airport shipments of freight, leaving the job of battlefield transportation to the C-17 and C-130 fleet. The latter are too small to handle many modern fighting vehicles, and it's to be hoped that a larger replacement in the class of the Airbus A400M or the Antonov An-70 will be considered in due course.

In a related development, the USAF seems reluctant to add the new Joint Cargo Aircraft, the C-27, to its fleet - for apparently good reasons. However, there's no reason why it should operate this aircraft at all. I'd be quite happy to let the US Army operate the C-27 on its own. After all, it's the Army that wants it and will most use it! Trouble is, the USAF wants to minimize the number of aircraft operated by other services, for fear that this would encroach on its "turf". (It tried to achieve this with UAV's, but failed dismally.) Such a dog-in-the-manger attitude is nothing new, but it's counter-productive and completely unacceptable in the light of modern budgetary and operational realities.


In conclusion, let me say this. Right now the USAF wants to buy more F-22's; buy well over a thousand F-35's; re-engine some of it's C-5's; buy hundreds of new tanker aircraft to replace its venerable KC-135 fleet; buy more helicopters; design a new bomber; buy more transports; and so on
ad nauseam. All these purchases are probably desirable - but they'll cost hundreds and hundreds of billions of dollars. As a result the USAF's auxiliary budget request to Congress for the next year is two-and-a-half times the amount requested by the US Navy and Army combined! It's mounting a fierce budgetary battle against the other Armed Services. It claims its current fleet is "geriatric" and wants an extra $100 billion over the next ten years to fund all the replacements it says it needs. For the coming year alone its budgetary request totals $143.9 billion, plus an additional extra-budgetary "wish list" totalling $18.75 billion.

Folks, this is insane. Let me repeat that word:
INSANE! The USAF doesn't have a hope of getting all it wants compared to the needs of the other armed services and the state of the budget as a whole.

All over the world defense budgets are under pressure. The UK is currently seeking to slash about $9 billion from its (much smaller) military budget over the next few years. Only 6 out of 26 NATO nations are meeting defense spending targets, and NATO'S defense spending per head and the size of its member nations' armed forces are wildly out of balance across the alliance.

The US military budget is facing precisely the same pressures. According to the Internal Revenue Service, in fiscal year 2006 the U.S. government took in $2.407 Trillion and spent $2.655 trillion. Expenditure was as follows:

  • $955 billion to Medicare, Social Security, and Social Security Disability;
  • $504 Billion to social/welfare programs (including public health);
  • $319 Billion to physical, human, and community development;
  • $212 billion to pay interest on the national debt;
  • The remaining $675 billion of the budget to pay for national defense, veteran's benefits, law enforcement, and general government.

Take a look at those numbers.
Fully $1,778 trillion (67%) of expenditure went on social programs (many of them better known as "wealth redistribution programs"). The demands of those programs are rising steadily. The defense budget has to compete with them - and buying military hardware doesn't bring in votes for the politicians who have to set our budgets. Social programs do.

The budget is a symptom of a much wider problem. No less an authority than the Comptroller General of the United States, Mr. David Walker, has stated baldly that the USA is living far beyond its means and that many of the Government programs mentioned above are unaffordable.





At present the so-called War On Terror and operations in Iraq and Afghanistan have boosted military spending. As soon as the US involvement in the latter countries winds down (and note that depending on the results of this year's elections, that might happen sooner rather than later) we can confidently expect military spending to diminish, perhaps substantially. There's no way on earth that the current levels of spending can be sustained in the absence of a meaningful military threat.

All of our armed forces must face the challenge of doing more with less money, and in the process they're going to have to give up a lot of the "gee-whiz" programs they love so much and settle for more "bang-for-the-buck" economics in their purchasing and planning. There have been far too many ruinously expensive programs that haven't delivered. As the so-called "fighter mafia" have pointed out:

Today, we have the smallest defense inventory since 1946. For example, with a spending level considerably higher than in 1985 when the Cold War raged and after Ronald Reagan increased the Defense Department's budget, we have now 10 active Army divisions, not the 17 we had in 1985; less than 300 naval combatants - compared to 542 in 1985, and we have just over 12 active Air Force tactical air wings, not 25.

A major reason is incompetence.

According to the "scorecard" of the Office of Management and Budget on how well U.S. agencies are run, the Pentagon has ranked among the worst since the ratings began. By bad management, don't think of just "waste, fraud, and abuse" and incompetent book-keeping - the measures OMB uses. Add to those the incessant decisions in the Pentagon and Congress that favor bureaucratic and selfish interests, rather than the needs of war. Those latter factors provide most of the explanation for why the Pentagon budget delivers less for more.

I'll conclude with this thought. There is one way in which all the USAF's needs could be met without seriously affecting the other armed services and without increasing its budget beyond what's already envisaged or authorized. That way is to
cancel the F-35 program. Sufficient advanced F-16's could be bought to replace the aging conventional fleet, and enough F-22's could be purchased to take care of the air superiority mission. The funds saved would also be sufficient to accommodate all, repeat, all of the rest of the USAF's "wish list" and probably still leave some change.

I'm not alone in advocating this, but the entrenched forces of bureaucracy and military inertia don't want to hear it. The question is: will the USAF and the politicians have the intellectual honesty and moral courage to admit it and do what's necessary? Personally, I doubt it - and so do others.

Peter

2 comments:

Dano said...

It does make one wonder how much they'd cost if things were done by someone who didn't intentionally milk the federal cash cow. Any business run the way the feds are would crash and burn.

Anonymous said...

Peter,
I'm actually beginning to think that you're too kind to the VH-71. That turkey needs to be canceled and rethunk. Instead, this administration will likely spend the money given it BY CONGRESS for some more of the Increment 1 aircraft, which don't come close to meeting the operational requirements as stated. They are basically EH-101s. Still very costly though.

We disagree on the V-22. Now that it's been developed and re-devloped, it's the most-tested aircraft ever. Engineering test called DT, Operational Test culminating in an eight-aircraft deployment aboard an amphib, and a seven-year, 550-shot live-fire T&E program with attendant design improvements make it far less vulnerable to getting hit than any helicopter, and far more survivable if it does get hit. Factor in the speed and altitude it's capable of, and survivability of the V-22 is demonstrably better than any helicopter. Ever.

And the target cost of a V-22 in the first multi-year procurement contract will be $58 million each. Not cheap, but not too bad for the first of a new type of aircraft. The first jets were pretty expensive compared to what they were replacing too.

The EFV is a disaster resulting from an inescapable need and some promising technology. In an effort to save money, the Marine Corps never fully funded the systems engineering required during the design. As a result, instead of seeing 43 hours mean time between operational mission failures, we saw about one-tenth that during the first OT&E. The vehicle requires a complete redesign, ongoing now. That actually makes sense if your problem is getting 24 Marines from ships 25 miles at sea to an objective 100 klicks beyond the beach. 6-knot amphibious tractors won't do that. The EFV as designed will. It just has to be made reliable (and, one hopes, affordable; but don't get your hopes up).

Overall, I share your despair over the incredible cost of modern "nth generation" weapon systems. The high costs drive a force to low numbers or unsustainable budgets. At what point do we cry "Enough!"?

TC