The f-35

A MUST-HAVE WE CAN AFFORD

The F-35 Joint Strike Fighter program has been criticized for cost overruns and project delays. It is the Pentagons largest single acquisition program, but to what extent does it actually drive the overall budget? Answer: Not that much.

Next-generation competitors and customers

The F-35 is the sole next-generation aircraft now under construction to serve the U.S. Air Force, Marine Corps and Navy. It is the cutting-edge vehicle keeping American military technology ahead of international competitors like China and Russia, and is a key deliverable for US sales to allies, including Israel, The United Kingdom, Canada, and Australia, among others.

PARTNER COUNTRIES

FUTURE CUSTOMERS

POSSIBLE COMPETITORS

SOUTH KOREA

U.A.E.

TAIWAN

SINGAPORE

Affordable investment

Critics complain that F-35 production, which has suffered project delays and cost overruns since its inception in 2003, takes up too much of the Defense Departments procurement budget. Yet, while the F-35 is by far the largest acquisition program underway, it only comprises 1.6 percent of the Defense Departments overall budget request to Congress for 2013.

( CONSTANT 2003 $ ) 500,000 400,000 300,000 200,000 100,000

F-35 = 1.6%
$ revolving management funds $ family housing $ military construction $ RDT&E $ PROCUREMENT $ operations & maintenance $ military personnel

2003 ALLOCATED

2013 REQUESTED

1.6 percent, relatively speaking

5.0% 3.5% 1.6%

SHARE OF FAMILY BUDGET FOR ENTERTAINMENT

SHARE OF FAMILY BUDGET FOR CLOTHING

By comparison, according to a 2011 Bureau of Labor Statistics survey, 1.6 percent is about half of the average familys budget share dedicated to clothing, and less than a third of what the average family allocates from its annual budget to entertainment.
SOURCE: Bureau of Labor Statistics

SHARE OF Defense department's BUDGET FOR F-35

Sharing the pie

Looked at another way, the share of funding dedicated to the F-35 has increased from 14 to 27 percent of the overall aircraft procurement budget. Yet the share of the budget allocated to both aircraft and overall procurement remained constant between 2003 and 2013. Thus, neither the F-35 nor the overall procurement budget is driving increases in defense spending.

2003 DEFENSE ALLOCATIONS

2003 PROCUREMENT BUDGET ALLOCATION

40%

operations & maintenance aircraft procurement ammunition & missiles

military personnel

18%

33%

11%

25%

naval vessels 12% other ground vehicles

rdt&E

CBRNE

OTHER

14%

NAV

27%

C41

c41

6%

AM

GV

1%

revolving and management funds

1%

family housing

military construction

cbrne

1%

3%

2013 DEFENSE REQUEST

2013 PROCUREMENT BUDGET REQUEST

ammunition & missiles

8%

44%

operations & maintenance

aircraft

4%

33%

naval vessels military personnel procurement

24%

18%

14%

ground vehicles other c41

3%

rdt&E

11%

34%

10% 2%

revolving and management funds military construction family housing 1%

14%

cbrne

0%

2%

Pentagon priorities
At the same time that the procurement percentage of the pie remained constant, the cost of operations and management has increased by 10 percent relative to other expenses. A big driver of that increase is going to administrative costs as well as the cost of operating forces, both of which increased in absolute and relative terms while air operations decreased.

administration services 2003 2013 13% 23%

operations & Management spending

air operations 2003 2013 27% 34%

operating forces 2003 2013

44% 58%

AIR POWER

To criticize the increased spending on the F-35$9 billion overall in the 2013 fiscal year requestis to ignore that the aircraft are actually now being delivered and maintained. Though the number F-35s procured are dwarfed by the procurement numbers of other aircraft, its capabilities will make it the keystone of American air power for decades to come.

f-35: 29

V-22 Osprey: 21 p-8 poseidon : 13

Transport Aircraft: 7

F-18A/E: 26

HELICOPTERS: 252

UAVs : 283

Market dynamics
$ IN
MILLIONS 350

300

leveling out and dropping off in 2027 when the Navy stops acquiring the aircraft. If the US stops or slows production of the F-35, not only does it lose its customer base among its allies, but their departure from the market raises the price per plane for the US. And without the next-generation technology, the US will not be in a position in the future to repel emerging threats.

Spending on procurement is set to peak in 2017 before

250

200

overall program cost per unit

150

100

50 0

2012

2034

THOMAS DONNELLY AND PHILLIP LOHAUS