Government Ability to Predict Costs is Unpredictable

I ran across this story last week.  At the time, I didn’t pay much attention…just another blah blah same stuff, different day type of story.  But after the healthcare debacle on Sunday, I’m afraid it’s an example of what’s to come.  You could write the same story about air traffic control, border fences, etc.  If the gov’t does it, you can be assured it will always cost more and take longer.

Have you ever seen a story with this headline “Gov’t Reports Overhaul Ahead of Schedule and Under Budget” – you don’t need to answer that.

WASHINGTON (Reuters) – The estimated total cost of Lockheed Martin Corp's F-35 fighter jets being bought by the Pentagon may be nearly twice as high as originally forecast, the Defense Department said Friday.

The bill for 2,443 F-35s is currently estimated at $278 billion to $329 billion, up from the $197 billion projected when the development program began in October 2001, taking into account inflation, a one-page Pentagon F-35 "unit cost" report said.

The percentage hike per aircraft is even higher than for the fleet overall because the Pentagon now plans to buy 409 fewer F-35s than the 2,852 it originally planned.

The single-seat, single-engine F-35 is built to evade detection by radar. Also known as the Joint Strike Fighter, it is the Pentagon's costliest arms procurement program.

Three highly common models are being built for the U.S. Air Force, Marine Corps and Navy as well as eight international partners and other prospective foreign buyers.

The eight U.S. co-development partners are Britain, Italy, the Netherlands, Turkey, Canada, Australia, Denmark and Norway.

Defense Secretary Robert Gates fired the Pentagon's F-35 program manager in February. He also added 13 months and $2.8 billion to the development phase plus four more test aircraft.

The Government Accountability Office, in a report to Congress Friday, said the latest Pentagon steps should "improve outcomes and provide more realistic cost and schedule estimates."

But further cost growth and schedule extensions are likely, the Congress's non-partisan audit and investigative arm said.

Lockheed Martin, the Pentagon's No. 1 supplier by sales, said it had no insight into how the Pentagon established its estimate averaging up to $112 million per F-35. That figure was up from a baseline projection of $59 million in real, inflation-adjusted terms.

"We expect the average unit cost of the F-35 to be far below that number," Christian Geisel, a company spokesman said, replying in an email.