F-35 versus Spinney’s ‘death spiral’

We’ve been down this road before. The Pentagon signs a contract to develop an advanced new weapon. As cost estimates rise and budgets struggle to keep up, production units are slashed. But the cut itself raises the cost per unit even higher, leading to more production cuts and (paging Chuck “death spiral” Spinney!) even higher unit costs.

In the last few months, the F-35 has seemed precariously close to starting down this road. In October, Inside the Air Force reports the second Joint Estimating Team (JET) study determined F-35 costs exceeded the $15 billion overrun in the first study. Meanwhile, Senators Carl Levin and John McCain call a closed-door hearing on F-35 costs in December, saying afterward they are “deeply concerned” about growing costs and “apparent delays”. Finally, Bloomberg reports last week that the Pentagon is factoring the JET’s estimates into next year’s budget request, slashing 10 of the 47 F-35s from the production plan. Perhaps not least, a US Navy study surfaces on this blog yesterday backing up the the JET study, and raising alarms about the F-35′s affordability.

In some places, the F-35 death spiral watch has already begun.

As might be expected, Lockheed Martin does not share the opinion.

I interviewed Dan Crowley, F-35 executive vice president, yesterday. He responds to talk about an F-35 death spiral scenario by making two points: 1. Lockheed and the program office do not agree with either of the JET studies. 2. The company has a plan to avoid the death spiral even if the Pentagon’s budgeters follow the guidance in the JET report.

On the first point, Crowley claims the cost of the F-35 have actually declined by half over the first four lots of low-rate production. Lockheed has also delivered aircraft on a year-over-year basis based on the cost profile adopted under the 2007 selected acquisition report, he says. “Why would you suddenly adopt a more conservative [cost estimating] position when we outperform than plan,” Crowley says.

Crowley acknowledges that the Pentagon has, however, taken a more conservative budgeting position, although he notes the new philosophy is not exclusively applied to the F-35. In fact, Lockheed “supports” and “understands” why the government is going conservative, he says.

That leads to the second point. If the Fiscal 2011 budget request slashes F-35 production orders in the fifth year of low-rate production, Crowley says, the program still has options to avoid Spinney’s proverbial death spiral, including one option that seees to mark a radical departure from industry practice. It’s important to note that Lockheed doesn’t expect the Pentagon to slash the production budget, but perhaps the number of orders. If that happens, Lockheed might seek to deliver more aircraft than the Pentagon orders at no extra price, Crowley says.


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39 Responses to F-35 versus Spinney’s ‘death spiral’

  1. EG 14 January, 2010 at 3:51 pm #

    “Why would you suddenly adopt a more conservative [cost estimating] position when we outperform than plan,”

    Funny you should bring up Spinney. Wasn’t he a member of the fighter mafia?

    I wonder hat machinations are taking place amongst the various non F-35 military aircraft program managers in the pentagon?

  2. Chris 14 January, 2010 at 4:05 pm #

    “As might be expected, Lockheed Martin does not share the opinion.”

    Of course they don’t. =P

    I’m beginning to wonder if the entire development and procurement process is broken beyond repair. 20+ years to develop a new aircraft with a production run of like, 5.

    There’s gotta be a better way. What ever happened to the K.I.S.S. principle?

  3. Dave 14 January, 2010 at 5:27 pm #

    I had an idea after speaking to a Captain at NAVSEA a couple of days ago. For ship building purposes, the Navy develops and buys subsystems such as radars, reactors, catapults and arresting gear via separate program offices for multiple ships and classes. The program manager for a ship simply integrated those sub-systems on to his vessel, perhaps the same approach might not be a bad idea for aircraft…

    You have avionics suites and engines under development as separate programs, and thus a new aircraft design integrates what is available from what is being developed. The avionics and engines simply need to have standard hookups to the aircraft so a multitude of platforms can use the same hardware. The hard part is done and airframe can be tailored for that specific service/mission with out reinventing the wheel/avionics each time… If a newer radar or whatever is developed, with the common interface, it would be easy to switch out…

    I know, it’s asking a lot to build all the components as interchangeable modules. But given the way every program manages to get into the death spiral, it might come in handy i.e. when the F-35 crashes and burns, that way we wouldn’t have to start from scratch. One way or the other we need planes.

  4. EG 14 January, 2010 at 5:36 pm #

    I wonder how much cost is driven by:
    1. Parts going obsolete during the planning/protoype stage
    2. Goldplating
    3. Mission Creep
    4 Redesign caused by 1 – 3
    5, Inflation

  5. SMSgt Mac 14 January, 2010 at 5:50 pm #

    Spinney. Yeah, he beclowned himself years ago. As to his ‘death spiral’, it is more accurately described as a political technique: a spiral to slow roll programs into oblivion when it can’t be justified for national defense reasons. It’s what opponents of weapon system acquisition create when the mission need is real, but they want the money for other reasons. I created a “SMSgt Mac’s Acquisition 101″ slide to illustrate how the spiral works. I submit that it is cheaper in the long run to proceed with a costly program as long as the technical goals are met and the requirement remains valid. A good case study would be TSSAM vis a vis JASSM.

    K.I.S.S….glad someone brought it up
    The origin has been attributed to Kelly Johnson but its common use oversimplifies the original meaning: ‘Keep It Simple and Stupid’. Of course, we know from Mr Johnson’s legendary aircraft designs, that this does not mean ‘Simple and Stupid for Simple and Stupid’s Sake’. It means as simple and stupid as needed to do the job. The P-80 and U-2 were technically complex by the standards of the day. The SR-71 can still be considered advanced and complex. ‘Simple’ is only something that has been done already and thus ‘known’.

  6. Chris 14 January, 2010 at 5:59 pm #

    “I wonder how much cost is driven by: Goldplating”

    I’d reckon a lot. Pratt & Whittney was pushing hard for a new engine for the F-35, and it’s not even operational yet.

    I realize they’re trying to make a buck, but trying to push up your bottom line by getting more of your crap tacked onto the plane helps no one in the end.

    I wonder if the trend in defense to “spread the work” to as many subcontracts as possible in order to make a program “too large to kill” has backfired. There are so many layers and competing interests and any and all efficiency has gone down the tubes.


    I understand exactly what you’re saying. I wonder if we’re making the planes too complicated…sure, they’re great, but you can only benefit from quality so much if you have a whole 10 of them.

    I wonder if we could even build something like the early F-16 anymore.

  7. ELP 14 January, 2010 at 8:52 pm #

    The problem with LM’s comments in the article above is that they don’t know what they are building because flight-test (and corrective measures learned from that flight testing is so far behind. Also a large portion of the flight testing has been done on a non-production representative aircraft.

    If all he can come up with is that x craft is cheaper than y on the production run, he isn’t saying much. CF-1 was rolled out when? When will it fly? Roll-outs on this project becoming a joke and all that. Consider it was almost a year between roll out of AF-1 and first flight.

    The simple fact is that this program is behind and it will take a while. Good luck on getting more than 400-500 delivered to the services.

    As for Spinney’s comments on things like….oh I’ll just pick something like…. lets say…. close air support. They are wrong and have already been proven as such.

  8. Dfens 14 January, 2010 at 9:20 pm #

    “Death spiral” my ass. Ever since the DoD started paying more profit on development than they pay on delivered weapons (in the mid ’90s) the contractors have opted to spend more time designing weapons than building them. Anyone can make a profit designing an airplane. Rent a building. Stuff it with leased computers, cubicles, and office furniture. Stick a lit sign on the front entrance, and watch the money roll in.

    The more incompetently you design the weapon, the longer it takes and the more money is converted from buying weapons to funding their design. After all, neither the contractor nor the DoD watch dog wants to be out of a job.

    The great thing is that you stupid taxpayers keep paying for this scam. Even though it happens right in front of your face, you go hysterically blind when it comes to figuring out the scam. When you decided it was a good idea to pay us more profit to design weapons than build them, what were you thinking would happen?

  9. EG 14 January, 2010 at 10:13 pm #

    Congratulations on the most cynical post I have ever read here. Perhaps the company that is allowing you to suck on the taxpayers will eventually go broke like several other contractors that foisted off their crap. It also appears that you care not for the folks that will have to use your gear.
    Many people here work in defense and are skeptical of defense programs, but I have never read anybody so blatantly describe their own work as “incompetent”.
    Thanks for the laugh! You should consider running for office you have what it takes for a bright political future!

  10. Obamanite 14 January, 2010 at 11:36 pm #


    Agree 110% with you. Of course, Congress doesn’t think that way seeing as how their jobs largely depend on feeding that criminal military-industrial complex. Poor Ike. He must feel terribly tired from all the spinning he’s doing in his grave…

  11. Obamanite 15 January, 2010 at 12:21 am #

    It is remarkable that there are some significant doubts creeping in and being expressed in Congress about the rationale behind fielding the F-35C and, by extension, the B as well. If the C model goes, then to what extend will the Navy continue to step up for the B? If increasing its shipbuilding budget is contingent on keeping its aviation budget down, and, more importantly, keeping its carrier fleet at 10 or 11 decks, then I’ve no doubt the Navy would sacrifice not only the C but the B model F-35 as well. I think the Navy may be looking at the V-22 debacle and saying, we’re not about to make the same gold-plated mistake again for the sake of satisfying the same inane, illogical ideological fixation with vertical lift. And, if the B and C models go the way of the F-111B, will the A model even survive? And if it survives, will the USAF get only 180 of them at some $400 million a piece? Will the F-35 become the most expensive stealth aircraft since the B-2? Will the F-22, as a result, be brought back from the dead? And does the Navy now look awfully smart for hedging their bets not only with the F/A-18E/F, but with N-UCAS as well? Things are beginning to look extremely dire for the F-35 indeed…

  12. XBradTC 15 January, 2010 at 6:03 am #

    Actually, for smaller items, there is a lot of that going on. MILSPEC? Ever heard of it?

    There was an excellent book a few years ago called “Engineering the F-4 Phantom” that delved pretty deeply into the tension between using an existing MILSPEC component and developing a new component, and the tradeoffs involved in using each.

    As to why engines aren’t developed separately, well, it would probably be a money losing proposition.

  13. SMSgt Mac 15 January, 2010 at 8:42 am #

    “Poor Ike. He must feel terribly tired from all the spinning he’s doing in his grave..”

    Why? Answer…. carefully

  14. EG 15 January, 2010 at 1:46 pm #

    “criminal military-industrial complex”
    Obamanite, go back and carefully read the post you agree with.

  15. Dfens 15 January, 2010 at 2:32 pm #

    You pay us more to drag out development and jack costs through the roof, and then complain when we do it. Which do you want, an airplane that does what it is supposed to do delivered when we said we’d deliver it, or an incompetently designed piece of crap delivered 2 decades later than it should have been? When you pay us more for the latter than you do for the former, then I’ve got no patience for your incessant whining.

    Here’s an idea. Why don’t you try paying us more when we don’t screw you and see what happens? Offering monetary incentives for what you want is called capitalism. Obviously you taxpaying idiots want to be screwed, otherwise you wouldn’t pay us more to do that. So shut the hell up.

  16. Obamanite 15 January, 2010 at 3:19 pm #

    I’ve reread Dfens’ post I agreed with and continue to find nothing in it with which I find fault. It strikes me as exactly right, as I’ve previously thought precisely the same thing. The big bucks in defense contracts no longer come from production but from R&D. Look at the F-22. Look at the B-2. Look now at the F-35. We spend a trillion dollars on development and by the time the article in question is “ready” for production, we’ve no money left to actually buy enough to justify the huge development costs. Who is getting rich with this deal? Who is getting shafted? Dfens is exactly right. Oh, and that doesn’t even touch where another bundle of cash lies, namely, in support costs, which for aircraft like the B-2 and F-22, are astronomical, and which is how defense companies ensure they have us by the balls for decades after they deliver their totally unreliable products. Just notice how the USMC is attempting to keep the V-22′s reliability rate at a relatively respectable level: “aggressive sparing”. What, pray tell, do you think that entails?

    As for Eisenhower rolling in his grave, he took pains, as a military man, to warn us against the military-industrial complex and we’ve done nothing to heed his warnings. A bit like a priest preaching about the necessity of maintaining the separation between Church and State (thankfully, there are many who do so). Lockheed Martin is Eisenhower’s worst nightmare come true.

  17. Anonymous 15 January, 2010 at 3:31 pm #

    “Here’s an idea. Why don’t you try paying us more when we don’t screw you and see what happens? Offering monetary incentives for what you want is called capitalism. Obviously you taxpaying idiots want to be screwed, otherwise you wouldn’t pay us more to do that. So shut the hell up.”

    Someone’s butthurt. =P

  18. EG 15 January, 2010 at 3:40 pm #

    “Here’s an idea. Why don’t you try paying us more when we don’t screw you and see what happens?”
    - If you’re not being paid enough, May I suggest you find another outlet for your creativity? May I suggest packaging derivatives?

    So shut the hell up.
    - Thank you for your kind words.

  19. Obamanite 15 January, 2010 at 3:41 pm #

    Christ, can I “fan” Dfense somehow? He talks as much sense as former insurance industry executives who point out that they make more money the less care they offer, and that it is bad business for them to actually perform the business for which they are contracted, namely, to offer affordable care.

    I am tempted to just quote his last post in its entirety. It is an instant classic, and there is nothing I, nor anyone, need add to it. I could read it again and again, like a mantra, like a prayer, it is so ridiculously sublime. But I will just quote this one line, which is the ne plus ultra of “you’re so stupid I actually need to say this” logic: “Here’s an idea. Why don’t you try paying us more when we don’t screw you and see what happens?”

  20. EG 15 January, 2010 at 3:44 pm #

    - “Which do you want, an airplane that does what it is supposed to do delivered when we said we’d deliver it, or an incompetently designed piece of crap delivered 2 decades later than it should have been?”

    Dfens, I owe you an apology. For some reason I factored ethics into this conversation. I apologize for my egregious lapse of judgment

  21. SMSgt Mac 15 January, 2010 at 6:45 pm #

    Obamanite (delightful handle BTW) should have answered carefully……..

    Eisenhower’s statement needs context.
    Here it is in context of the speech that was given:
    This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence — economic, political, even spiritual — is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.
    In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.
    We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.
    Akin to, and largely responsible for the sweeping changes in our industrial-military posture, has been the technological revolution during recent decades.
    In this revolution, research has become central; it also becomes more formalized, complex, and costly. A steadily increasing share is conducted for, by, or at the direction of, the Federal government.
    Today, the solitary inventor, tinkering in his shop, has been overshadowed by task forces of scientists in laboratories and testing fields. In the same fashion, the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. For every old blackboard there are now hundreds of new electronic computers.
    The prospect of domination of the nation’s scholars by Federal employment, project allocations, and the power of money is ever present and is gravely to be regarded.
    Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific technological elite.
    It is the task of statesmanship to mold, to balance, and to integrate these and other forces, new and old, within the principles of our democratic system — ever aiming toward the supreme goals of our free society.
    And in the context of the times the caution against a military-industrial complex out of control, defense spending was a relatively large portion of the GDP, with the US only just coming off the industrial war footing began in WWII, and extended by the Korean and Cold War escalation. US consumer spending as a % of GDP had only just begun increasing, and it was a concern that the private sector might not continue to grow if suppressed by Federal spending.
    Eisenhower was cautioning against too much federal spending, PERIOD (read the speech), it just so happens that at the time, defense WAS the most dominant factor in the equation. Since that time, defense spending as a % GDP has declined, while other government (federal down to local) has increased even more. We now have a Government-Entitlement complex, and THAT complex is now threatening the American Culture.
    Finally, note that Eisenhower was cautioning against too much INFLUENCE of a ‘complex’ vs the existence of a complex itself. I went looking for the M-I complex once, and it is so small it is almost impossible to find: http://elementsofpower.blogspot.com/2008/04/what-military-industrial-complex.html

  22. EG 15 January, 2010 at 7:27 pm #

    “We now have a Government-Entitlement complex, and THAT complex is now threatening the American Culture.”

    Me thinks one of those constituents be posting here.

  23. Dfens 21 January, 2010 at 6:47 pm #

    These idiots with their phoney “ethics for others” make me sick. Capitalism is not about ethics. Capitalism is about making money. Either you believe in capitalism, or you get run over by it, but either way it continues to work. If you want it to work such that the defense industry F’s you up the ass, then keep the rules just like they are, and stop your damn whining. You clearly must be enjoying it or you wouldn’t pay us more for it.

    If, on the other hand, you want to turn the rules back to what they once were when we developed weapons in a manner unimaginable now, the way we did things when we built the century series fighter jets up through the teen series of fighters, the SR-71, the XB-70, then let’s do that. Let the defense contractors risk their own money on research and development and only buy functioning aircraft, not pie-in-the-sky promises that are never delivered on.

    Instead we pay for ignorant, tedious process and get plenty of it. I hope all that process you’ve bought will keep you safe from the Chinese from coming over the hill. You stupid bastards will get what you deserve then.

  24. TomL 25 January, 2010 at 1:34 am #

    Former Lockheed Martin CEO, Norman R Augustine, once summarized the ever-escalating DoD tactical fighter aircraft procurement trends:

    In the year 2054, the entire defense budget will purchase just one aircraft. This aircraft will have to be shared by the Air Force and Navy 3-½ days each per week except for leap year, when it will be made available to the Marines for the extra day.

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