Subject: The Rising Cost of Low Readiness
Date: Sat, 11 Apr 1998 14:59:20 -0400
From: Chuck Spinney <cspinney@erols.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?