The Sixth Estate

In my last post, I estimated that under Defence Minister Peter MacKay’s controversial new plan, the total cost of the F-35 Lightning fighter comes out to around $127,000 per hour. We’re kind of back in medieval territory here, where several lowly peons must labour for an entire year just to get the plane into the air for a single flight. Something’s been bugging me ever since I wrote that: how the hell could things have got so screwy?

F-35 per-hour costs were never low. I’ve also inflated them somewhat: various American estimates say the actual operating costs per hour are around $30,000 to $50,000. That’s for the pilot, the fuel, the maintenance, etc. Then you tack on all the other costs and average them out over the life of the plane to get my number. But here’s the problem. The flight cost per hour is far higher than it used to be. It looks way higher than it should be — in fact, it’s an extra $330 million a year, by my math. What gives?

Part of the problem, as I stated, is that the new “30 year/42 year” life cycle plan is horseshit. It’s no more accurate to estimate costs for the F-35 over 30 years when the military isn’t planning to use it for that length of time than it is to estimate those costs for 20 years, which the military also isn’t planning to use it for. That’s what the media and the Auditor-General noticed. What I still haven’t seen an actual reporter taking note of, although I’m still willing to give a gold star to an exceptional journalist, is that DND says they’ve also saved costs by slashing the F-35′s per-month flight budget. So we’re using the planes for less time than they originally planned, and we’re going to fly them less often during that shortened timespan here, too.

So why aren’t we just buying less planes? That’s a good question, and DND’s new report has a hidden answer to that one, too. More on that next time, maybe. But back to today’s problem.

My estimate said that the F-35 would cost $127,000 per hour to operate at 15 hours per month over 30 years, given the new report from DND. I initially assumed that the per-hour costs had gotten so high because the acquisition costs of the planes was being averaged out over a much shorter number of flight-hours. Because DND slashed the number of hours per month the planes will fly, in other words, you have to build into each remaining hour a higher proportion of the initial acquisition costs. In other words, it’s an issue of averaging.

But that can’t explain the total difference. There’s another issue, one I honestly can’t explain. In the initial 2010 estimate, DND said that they would fly the F-35 fighter for 15,800 hours per year for 20 years, and that during that span the operating costs alone (before you add in the acquisition and sustainment costs) would be $9.6 billion and $480 million per year. That averages out to around $30,300 per hour.

Now we have a new estimate, in which DND says they will fly the F-35 for 11,700 hours per year for 30 years, and during that timespan the operating costs will be $19.96 billion and $665 million per year. That comes out to just short of $56,900 per hour.

This isn’t the end of the questions, though. The sustainment costs — parts, base maintenance, “contractor support,” upgrades, etc. — have been altered too. In the original estimate, the sustainment costs were $328 million per year. Now, they’ve increased to $508 million per year. Put the sustainment and operating cost estimates together, and DND is saying that even at reduced usage rates, the F-35 is going to cost an extra $340 million per year over and above their earlier estimates.

I have no explanation for this huge difference. Somewhere between this spring and this fall, DND has apparently discovered that the operating costs of the F-35 jet fighter are twice as high as they thought they were. There is no explanation for this discrepancy in the report that I can find. It’s big enough that I had to wonder several times whether my math was right. There are plenty of political bloggers in Canada and at least some of them read this website. Anyone and everyone is willing to check my math.

It’s not necessarily that DND lied during the last estimate. It’s possible that the new numbers are based on an expectation that the F-35 will age very badly, and that after 15-20 years, keeping it in the air will become exorbitantly expensive. But remember from last time that under the new, reduced flight budget, the F-35 will only actually be two-thirds of the way through its 8000 anticipated lifetime at the 30-year mark. So that wouldn’t seem to be the expectation.

What’s the extra costs for? Are we going to be using premium fuel or something?

At least one more post to come, and then it will be on to the next procurement debacle. I’m taking requests.