More Than Acquisition Cost – F-35

Aircraft are “sustainment-dominated” systems.  These are systems for which the lifetime footprint significantly exceeds the footprint associated with making it [1].  In the case of aircraft, the footprint we are talking about includes cost.   Lockheed Martin’s official response to President-elect Trump’s recent tweet about out-of-control costs for the F-35 included the following statement [2]:

“The cost doesn't just include the acquisition price. Lockheed Martin and its industry partners are also investing in reducing the sustainment costs of the aircraft recognizing that much of the cost of owning and operating an aircraft is after it's delivered. We're investing hundreds of millions of dollars to reduce the cost of sustaining the airplane over its 30-40 year lifespan. We understand the importance of affordability and that's what the F-35 has been about.”

It is not uncommon for 70% of more of the life-cycle cost of a sustainment-dominated system (e.g., commercial and military aircraft, ships, power plants, and other high-cost, long-life items), to be incurred after the design, development, and procurement of the system.  These life-cycle costs can include: operation, maintenance, upgrade, spare parts, testing, training, documentation, unplanned life extensions, obsolescence management, and many more things that contribute to the logistics footprint of a complex system.  As an example, consider obsolescence management [3].  The majority of the electronic systems in the aircraft are not constructed from “custom” parts, but rather from the same parts that are in consumer products (phones, computers, etc.).  Most of these parts have a procurement life of a few years at best, but an airplane has to be supported for 30+ years.  Sourcing these parts after they are discontinued (obsoleted) by their original manufacturer can be expensive and risky.  The problem is that aircraft are safety-critical systems that are highly qualified and certified, replacing obsolete parts with newer versions of parts may be a very expensive proposition (may require re-qualification of critical subsystems or even the entire aircraft); alternatively using aftermarket suppliers exposes systems to the risk of counterfeit parts [4]. Obsolescence is only one example of how high procurement cost systems can become even more (much more) expensive to sustain.

[1] Sandborn, P. and Myers, J. (2008). Designing engineering systems for sustainability, in Handbook of Performability Engineering, K.B. Misra, Editor, pp. 81-103 (Springer, London).
[2] http://www.zerohedge.com/news/2016-12-12/lockheed-responds-trump-tweet
[3] Sandborn, P. (2008). Trapped on technology’s trailing edge. IEEE Spectrum, 45(1), pp. 42-45.
[4] Pecht, M. and Tiku, S. (2006). Electronic manufacturing and consumers confront a rising tide of counterfeit electronics. IEEE Spectrum 43(5), pp. 37-46.