Thursday, February 8, 2001

Air Force declares 'war on costs'
in bid to keep F-22 program on track

By Lisa Burgess
Washington bureau

WASHINGTON — Backed against the wall and ordered to cut $2 billion from the cost of the F-22 program by Congress, the Air Force has unveiled a new program to keep the fighter on track.

Darleen Druyun, principal deputy assistant secretary of the Air Force for acquisition and management, said this week that the Air Force has declared a "war on costs," and one of its chief battle tactics includes a plan to allow contractors who could provide parts at less than the contracted price to keep some of the difference.

"It’s important to step out and reward [F-22 contractors] for good work and allow them to retain part of the savings," Druyun said.

Officially dubbed the Raptor, the fighter will replace the Air Force’s F-15C Eagle, which will be 30 years old when the first 339 F-22s officially take off in 2005.

"The contractors are looking to us to make upfront investments [in their capabilities]," Druyun said. "So we’re going to pay for product improvements."

In 1998, Lockheed invested $107 million on a similar incentive program for its subcontractors, said Robert Reardon, vice president and general manager at Lockheed Aeronautics Co. and head of the F-22 program at the company. "For each dollar we’ve invested, we’ll make $18," Reardon said. "The opportunity is significant here."

About half of the $475 million set aside by the Air Force to offer as incentives on this program was built into the fighter’s budget, Druyun said. Program managers found another $215 million by planning to reduce the initial production rate of the aircraft.

"It’s an issue of ‘pay me now, or pay me later,’ " Druyun said.

The Air Force plans to spend $107 million of the $475 million pot in fiscal 2002, which begins in October. The money won’t be spent until then because program managers need time to choose which F-22 contractors should receive the funds, Druyun said.

The Air Force says final cost of each of the 339 planes will be $187 million. But foes of the fighter say the real cost will be much higher — perhaps even more than $200 million per aircraft, especially if research and development costs are taken into account.

Regardless of whose fly-away figure is correct, one thing is certain: The F-22 program is currently too expensive for Congress, which has capped the procurement part of the program at $38.4 billion. Right now, the Air Force estimates that buying the 339 fighters will cost $2 billion more than the Congressional cap.

Thus, the Air Force must bring the F-22 program back into line, Druyun said.

There is another issue involved with the F-22, however: namely, the fate of the program as a whole.

The F-22 program is due to run out of authorized funds on March 31. But before the program can move forward and more funds released, the Pentagon’s Defense Acquisition Board must hold a review of the aircraft’s progress and certify that it has met certain development milestones.

But that crucial meeting has not been scheduled yet, and even the F-22’s Air Force program manager, Brig. Gen. Jay Jabour, said he has no idea when the review will happen. "I just know I’ll be there," Jabour said.