Beyond Procurement Costs

It’s often easy to focus only on acquisition costs when discussing military procurement programs, but the GAO’s most recent report on the F-35 program provided an interesting reminder of the importance of long-term operations and maintenance costs:

In addition to the costs for acquiring aircraft, significant concerns and questions persist regarding the costs to operate and sustain JSF fleets over the coming decades…The sustainment affordability target for the Air Force’s CTOL ($35,200 per flight hour) is much higher than the current cost for the F-16 it will replace ($22,500 per flight hour, both expressed in fiscal year 2012 dollars)… The program has undertaken efforts to address this life-cycle affordability concern. However, until DOD can demonstrate that the program can perform against its cost projections, it will continue to be difficult for the United States and international partners to accurately set priorities, establish affordable procurement rates, retire aged aircraft, and establish supporting infrastructure.

The steadily upward trend of aircraft procurement costs is no doubt a serious challenge for defense budgets, but it’s ultimately only one piece of puzzle. And while acquisition costs stop once a buy is complete, sustainment costs continue to play an important role in service budgets for decades.