Sean,

We should be more than used to different prices being used by different people for the same aeroplanes by now – even different branches of Government.

We should be used to prices that seem to be the same thing (‘unit flyaway’) incorporating different elements. Typhoon’s £64.8 m T1/T2 UPC quoted by the NAO including fixed production costs and even advance Production Investment costs from Tranche 3, for example. From preliminary investigation, it seems as though the Typhoon £40.5 m cost includes elements of what would be a unit weapons system cost in the USA.

These prices are hard to nail down, and hard to compare.

There may be all sorts of reasons why a budget line referencing the addition of four F-22s might appear low – does it include radar and engines? Does it take account of long lead items ordered years ago? Was it a ‘one off deal’ like Boeing’s recent C-17 discount?

Fortunately we do know that the USAF has said that the flyaway costs of the 24 jets ordered using FY2006 funding totalled $3.77 Bn – that’s $157 m each. You can do the ‘math’ yourself.

And even if the FY2006 price was lower, so what? We know that FY batches vary in cost (largely because of variation in numbers from the plan, that leads to different consumption of long lead, etc.) and that the important figure for F-22 in this context is what the US would have to charge for an export aircraft.

The figures we’re bandying about are simple UPCs, not even UWSCs, and as such they don’t include any contribution to development test and evaluation, nothing for production investment, and nothing for R&D. They may even exclude some long lead items….. They certainly don’t include the costs for developing an export version, with the £1Bn for the required tamper-proof technology, the foreign weapon/systems integration, etc.

And even if the cost of F-22 in FY2006 was a lower figure than $157 m, we know that the export price will be based on the last price paid by the USAF, or the average, and not on the price from a random year. The last batch in FY2010 will cost $166.035 m, and the average price over the whole run is $156.356 m (flyaway), or $185.372 m (unit weapons system cost).

Whatever the answer is, it isn’t $127 m!

And the most important problem with your figures was your bull$hit claim for Typhoon, which was inflated by about 50% or $40 m.

SOC,

Your figures are demonstrably wrong for F-22 (the FY 2006 jets cost $157 m each, not $127 m), they are wrong for F-35 (the $112 m is an LRIP average, the stable APUC for production air force F-35As will be below $90 m), and for the Typhoon (the jet costs $80 m, not $118.6 or $124 m).

Apart from that, we’re good….. except on Rafale.

Now you might believe the Rafale cost of a $62 m flyaway, but it ws said at the time that they did not beat Typhoon on price in Singapore (inferring an export flyaway price higher than $80 m), and not many people believe that Dassault have managed to achieve zero cost growth since 1997, which they would have to have done if your price were still valid.

In eDefence Online, JM Guhl quoted “a list price given at some $66.5 million for the basic “naked” aircraft and almost $145 million with its complete set of sensors and weapons.” Other sources have suggested that the oft-quoted unit system cost (not unit programme cost) of FF 600 m (€88-€91 m or $113.46-$117.33 depending on exchange rates) is actually accurate as a unit production price or flyaway. That sounds high, to me, and I suspect that the jet was offered for about $80 m in Singapore, and will now be offered for somewhere around $75 m).

But we don’t actually have a good, attributable alternative to the official French figure, however improbable!

It’s perhaps worth putting the Typhoon price lie to rest.

So let’s not compare anything with “their $118.6 million unit price for the EF-2000 as paid by the RAF.”

Because the RAF hasn’t paid $118.6 for the EF-2000. Nowhere near. Nor has it paid the $124 m sometimes quoted.

The equivalent flyaway for Typhoon is in the region of $80 m. Sit comfortably, and I’ll explain.

I know exactly where you got that figure, as it’s a simple conversion of the £64.8 m figure in the last NAO Major Projects Report. Unfortunately, however, that NAO figure is not a Flyaway cost, nor even a proper unit production cost.

The MoD have acknowledged that it includes ‘fixed production costs’ (which the F-35, F-22 and other unit costs don’t) and it includes those costs from all three tranches, while averaging them over only two Tranches, making it simply wrong!

As if that were not enough, EF GmbH have challenged the figures, with the Programme Director saying: “This leads me to question whether the NAO price is really a Unit Production Cost” and pointing out that “Typically in Germany recovery of production investment and two years of support and operating costs have been included in what effectively becomes a unit system cost. My suspicion is that the UK MoD has moved towards a system cost while still calling it a Unit Production Cost. This £64.8 million figure is much higher than any unit cost, flyaway cost or purchase price that I would recognise. It’s something quite different.”

So how much does Typhoon cost?

The one ‘export’ flyaway cost that we know for Eurofighter is the Typhoon cost to Austria. It was leaked, along with the Gripen price and we know that it was €62 m. That’s $79.85 m at today’s exchange rate. Or £41.86 m.

We know that EF GmbH are legally obliged to charge more to export customers than to the partner nations, whose basic flyaway price HAS TO BE LOWER. There is a legally defined minimum profit margin and a specific export levy on all export sales.

There are other indications that this Austrian price is fairly accurate. Previous UK NAO prices have been closer to a genuine Unit Production Cost than the 2005 MPR figure, though because they have included “those costs that are not part of the collaborative programme, such as the Austere A-G contract and the R1 and R2 retrofit, and other national contracts,” they are not directly comparable to the export price.

With that proviso, however, it is known that the UK paid £45.45 ($86.7 m) for each Tranche 1 jet, and that the ‘global’ unit flyaway for Tranche 2 averaged £40.5-million ($77.25 m).

So no more with the bull$hit $118.6 m or $124 m, please!

And how much does Raptor cost?

When it comes to F-22, it’s absolutely clear, in black and white, that it costs way more than $130 m.

Even Lockheed’s single F-22 for development cost more than $130 m, and that did not include many items that Lockheed procured separately from the vendors, or already had in place. This may have included the radar and the engine nozzles.

Flyaway costs on the 24 jets ordered using FY2006 funding totalled $3.77 Bn – that’s $157 m each. And that doesn’t include any development test and evaluation money, nothing for production investment, and nothing for R&D. It’s a simple flyaway cost, and it may exclude some long lead items…..

Any export customer would also have to add the cost of the required tamper-proof technology on top of the $157 m. The export price is going to be more like $160 m – more than double the Typhoon price, and almost twice the cost of a JSF. Even if the JSF price hits $100 m, the F-22 still costs half as much again, and will give higher operating and support costs.”

Tranches are actually defined by funding, not capability, though in the case of T2, the chance was taken to introduce a step change in hardware.

Tranche 3 is widely assumed to be the point at which advanced capabilitys (TVC, AESA, etc.) will be introduced.

Capability improvements are introduced in Blocks.

Good courteous reply, Ron. Thank you.

In essence, my problem is that you (and Lockmart) say that the current production forecast averages $50 m. I still suspect that that figure is given in 2002 dollars and so actually represents somewhere around $60 m in ‘real money’.

But the latest DoD Selected Acquisition Report says that the average production cost is £94.8 m, and the JPO says the eventual stable F-35A flyaway price will be between $89-92 m, while the GAO, the UK MoD and a whole slew of other folk all give average flyaway estimates lurking around the magic figure of $90 m.

And some of these bodies, frankly, have more credibility as accurate and impartial sources than Lockheed does.

The reason why I have so much trouble understanding the difference between the price you quote and all of the other costs we read is thus partly that the others seem to enjoy such credibility. When the DoD’s own Selected Acquisition Report gives an APUC of $94.8m, and when the JPO have used figures in the same broad ballpark ($70 m, $89 m), $50 m just doesn’t sound remotely credible.

And nor can I believe that inflation has had almost no effect. Lockmart simply do not operate outside the real world, and in fact, inflation has tended to be worse the more high tech you are, and the JSF is undeniably high tech. Even the materials that JSF will rely on have gone up in price more steeply than background inflation. I do not believe that better ‘Price estimates for components’ and better production methodology will have wiped out five years of inflation – to say nothing of the ‘more than 30% UPC growth’ that triggered the “Nunn-McCurdy” warning, and which is entirely real, and reported in the latest SAR, whether you were aware of it having been invoked or not. It just isn’t credible that there has been such little cost growth in five years.

And even with the economies of scale offered by an overall 2,500 aircraft programme, and even though the F-35C has only one engine, I simply do not believe that anyone will EVER be able to build an advanced F-35C, with all the titanium, RAM, Stealth technology and advanced avionics for just $7 m more than Boeing are currently charging for a Super Hornet. And they’re only building 430 F-35Cs, so the economies of scale are not going to be that significant …..

Of course we understand that LRIP jets are going to be expensive at first, and that these will distort any average – just as the more expensive F-35B and F-35C raise the average. But while you could, at a stretch, describe AA-1 as “hand built from hand made components” this will be an increasingly inaccurate description with each successive LRIP batch, and will be actively misleading within 40 or 50 aircraft.

Though LRIP represents a huge number of aircraft (424, do I recall?) this is still less than 10% of the total, is still smaller than the total number for the US Navy, and so the LRIP average (which we know is $116 m, giving an LRIP total of $47 Bn) cannot distort the overall average that much.

In fact, you can work out that the average APUC without LRIP would still be $91 m ($185.1 Bn for 2,034 aircraft). And if the average price for all non-LRIP aircraft is $91 m, we can assume that the F-35A will come in at about $4 m less than that, and the F-35B and F-35C at about $9 m more.

And if the USAF paying $87 m for each of its F-35As, on average, I don’t believe that the price will ever reduce by another $40 m, and it’s not credible that Congress would be happy for export customers to be paying $40 m less than Uncle Sam, per jet.

Moreover, an organisation like LM will have driven the vast bulk of excess cost out of the production programme long before the end of LRIP – and indeed has already done so to an unparallelled extent by adopting lean practises from the start and by rigidly sticking to a ‘best value’ approach when selecting suppliers. That’s not to say that the average cost of batches won’t go down – Eurofighter has shown what we can expect by slashing average UPC from £45 m in Tranche 1 to just over £40 m in Tranche 2. But if the average is close to $90 m excluding LRIP, I simply don’t see it getting as low as $50 m.

With so many aircraft, mathematically you’d exect that the low price would be close to the average. And if the high price is $150 m, and the average price is $94.8 m, then I don’t believe that even the last off the line will cost as little as $50 m, and the USAF JPO’s estimate of an eventual stable F-35A flyaway price of $89-92 m sounds eminently realistic.

And all of the above pre-supposes that the GAO and the appropriators are wrong about the risk inherent in the programme, and that despite pushing for production steps before the appropriate R&D and flight test milestones have been achieved, there won’t be any serious problems, and there will be no extra cost resulting from this.

Finally, if the $50 m average was so obviously correct, then surely the GAO, the SAR, the Air Force Times, the JPO, the Air Force and the UK NAO and MoD would have caught on, and would be as relaxed about the price as you are. And they are not remotely relaxed.

Err, it’s not, actually. When Lockheed had to buy one for development use, with no support, no costs, and without some key GSE (cos they already had it) they paid far more than that.

Flyaway on the 24 jets ordered under FY2006 totalled $3.77 Bn – that’s $157 m each. And that doesn’t include any development test and evaluation money, nothing for production investment, and nowt for R&D. It’s a simple flyaway cost, and it may exclude some long lead items…..

So JSF still looks cheap, even at $90 m.

The Super Bug, by contrast, really is bargain basement, especially now that Boeing have driven so much cost out of production with the new pulsed line.

“Just a thought. How would a Typhoon laden with 6 x 1,000lb / 454Kg bombs fare in close combat against a clean Tornad F.3???”

Dunno.

But helmet sight and ASRAAM would give Typhoon an edge regardless of loadout.

“Standard loads are great for standard missions but what happens when you have to go that little bit further and your air-to-air refuelling capability is limited?”

Of course it’s a compromise. Everything is. Typhoon isn’t Rafale. Rafale isn’t Typhoon. And in fairness, it has to be realised that Tranche 1 Typhoon and Tranche 2 Typhoon will not be long range strike/attack aircraft. If you can’t get enough tankers, and if two 1000 litre jugs aren’t enough then clear the 1500 litre tanks (ok, they’re subsonic – so is a Paveway II/III), or carry two less PWs to save weight and drag, or send the spiker in with no bombs at all, or send a GR4.

Or make sure that Tranche 3 have Conformals!