Subject: The Rising Cost of Low Readiness Date: Sat, 11 Apr 1998 14:59:20 -0400 From: Chuck Spinney <email@example.com> [Personal opinion, not representing institutional affiliation] The current policy of reducing operating costs by cutting infrastructure in order to fund increases in the modernizarion budget will not succeed unless we attack the root causes of this phenomenon. For years, the R&D cartel has justified its purchases of ever more complex and costly weapons by saying that modern technology is more capable and will reduce operating costs over the long term. Therefore, total costs over the lifespan of a new weapon (R&D plus procurement plus operating costs) will be cheaper than the weapon it replaces. This is a sophisticated version of the free lunch argument. Like most sophistries, this one is dangerously wrong, but the fact that this rosy scenario persists year after year, despite mounds of evidence to the contrary, is evidence of deep roots fertilized more by the compost of domestic politics than by external threats. The evolution of operating costs from the F-4 to the F-15 to the F-22 is a good way to illustrate why the high cost to repair the small holes in the B-2 is a harbinger of worse things to come. On April Fools Day, 1974, the magazine "Aviation Week" carried an article entitled "Simplicity is Stressed in F-15 Operations and Maintenance." At that time, the F-15 was beginning to replace the F-4E, which cost about half as much to buy as the F-15. Despite its higher cost, developers predicted the F-15 would cost much less to operate than the F-4. This prediction was based on the F-15's "remove and replace," black box, maintenance technologies. The article said the F-15 would (1) require less than half as many maintenance manhours per flying hour (or sortie) as the F-4E, (2) would have a mean time between failure (a measure of reliability) 4 times better than the F-4E, (3) would require no new maintenance skills than those already found on fighter bases, and (4) would require 15 percent fewer people to maintain than the F-4. Not bad for a plane that cost twice as much to buy as the F-4E. However, in 1974, these data were hopes and dreams--the F-15 had not yet entered the operational inventory. Five years later, in 1979, the real numbers began to roll in, and the story was very different. Instead of half as many, the F-15 required only 11% less maintenance manhours per sortie than the F-4E. Instead of being 4 times better that of the F-4, the mean time between failure was only 25% better. Instead of being 15% lower, manpower requirements were virtually identical. Instead of equal skills, the F-15 required a far higher skilled (expensive to train and retain) workforce to maintain its complex avionics and engines, particularly at the intermediate maintenance level, which was highly computerized. Now when one considers the greater functional complexity of the F-15, these numbers are very impressive, but they apply only to base level maintenance-- the Aviation Week article did not discuss how the remove and replace black box maintenance concept would affect costs at the depot--and that is where the rising cost of low readiness is killing us. The black box concept increases the costs of spare parts and transfers some maintenance from the base to the depot--particularly the repair of electronic circuit cards. This concept also increases indirect costs, because a greater variety and a larger quantity of high-value spare parts must be tracked by serial number as they move through a world-wide network of bases, depots, and suppliers. Taken together, in 1979, Air Force budget data indicate that replenishment spares and depot maintenance costs of the F-15 were four times greater than those of the F-4E, and when these costs were combined with the base-level costs, the F-15 cost twice as much to operate as the F-4E--which is what a reasonable person would expect for a plane that cost twice as much to buy. While the F-15 is a far better fighter than the F-4 (but, then, so is the lower cost F-16), predictions of lower life cycle costs never materialized. By the time we found that the F-15 actually cost twice as much to operate as the plane it replaced, it was too late to do anything about it. While the numbers are different, the same pattern held true for the M-1 tank, the Apache helicopter, the Aegis missile cruiser, and the many other complex systems which were developed in the 70s and entered the force in the 80s. The cost of maintaining a combat ready force ratcheted steadily upward, which left less money for modernization, unless one increased the total defense budget, shrunk the force, or cut back readiness. To make matters worse, the liklihood of budget increases over the long term evaporated in the late 1980s when the Soviet threat began to implode--but then, so did the need for cold war weapons, like the F-22, which were being developed to to counter that threat. For those of you who think the comparison of F-4s to F-15s is ancient history, consider the following: We are once again comparing predicted performance of the next generation fighter (F-22) to the known perfomance of the current generation fighter (F-15). Only today, a comparison of the F-22 to the F-15 embodies uncertainties that are greater and disparities that are wider. No one knows what the F-22 will cost to buy, but it will cost at least twice and perhap four times as much as the F-15, which cost about $50 million a copy, when expressed in today's dollars. The uncertainties in maintenance are even greater--as I indicated in my last message, many people believe the the avionics are the most risky part of the entire program (software, for example, has three times as many instructions as in B-1), yet the avionics will not be delivered or tested until well AFTER the production decision. The F-22 also will also incorporate stealth technologies, which will be delivered AFTER the production decision. Moreover, as the attached AP report reflects, stealth technologies are notoriously expensive to maintain and repair. The F-15, of course, has far less complex avionics and no comparable stealth technologies. Despite these differences and uncertainties, the AF claimed last year that the F-22 WILL COST 40% LESS TO OPERATE THAN THE F-15C!!!!! (AF letter dated March 27, 1997, based on data submitted to Congress in the 1996 Selected Acquisition Report.) Of course, no one knows what the F-22 will cost to operate until significant numbers of these aircraft enter the operational fleet in about 10 years. But a rerun of the F-15 experience will increase the operating budget at the same time we are trying to increase the modernization budget to buy Joint Strike Fighters. Nor is the case of the F-22 an isolated example. The same squeeze will occur when the true operating costs of the Comanche helicopter, the SC-21, the seaborn ABM system, the V-22, etc. materialize after they enter the inventory in the distant future. Each new generation of equipment will cost more that the equipment it is replacing and each is being sold the same way--the higher procurement costs in the near term will be "affordable" because they will decrease (or at least hold down) operating costs over the long term. Why does this hogwash about life cycle costs persist despite pervasive evidence to the contrary? The scam serves a political purpose: It helps the military-industrial-congressional complex protect the cold war status quo. By downplaying the future consequences of current decisions, it enables the defense industry, and its allies in congress and the Pentagon, to continue front loading the defense budget with the ever more complex and costly weapons. These weapons, which are technology leftovers from the cold war, naturally require a greater number of subcontracts. This increases the opportunity to spread money to a larger number of congressional districts. The spreading operation, known in the Pentagon as Political Engineering, builds a political protection network. The web of patronage reduces the political risk of a program's cancellation, but it does so at a high cost to our nation. It puts decision makers into a fiscal death spiral wherin they shrink our forces and reduce readiness to feed the procurement program that can not buy enough new hardware to modernize the shrinking inventories. That is why a cold war budget can not support a post-cold war force structure--and why a policy that pretends it can pay for the status-quo modernization program by closing bases is really a reflection of the death spiral rather than a solution to it. When reading the attached story about the high cost of repairing small holes, do not think of it as an isolated horror story--ask yourself a question: Was spending $44 billion for 21 B-2s the best way to maximize military capability or was it merely part of a larger political mosaic?