November 26, 2011:
The U.S. Air Force is upgrading its F-22 fighters, at a cost of $39 million each. This is just the latest of several upgrades for the F-22, which entered service six years ago. Upgrading combat aircraft is common, and necessary. But the F-22 upgrades have been more expensive than previous aircraft. The F-22 is also more expensive to maintain. That costs $44,000 per flight hour, compared to $30,000 per hour for the older F-15 that the F-22 is replacing. The F-22 per-hour cost is nearly twice what it is for the F-16. While it requires 19 man hours of maintenance for each F-16 flight hour, the F-22 requires 34 hours. The manufacturer originally said it would be less than ten hours. Most of this additional F-22 expense (and man hours) is for special materials and labor needed to keep the aircraft invisible to radar.
The main problem is the radar absorbent material used on the aircraft. The B-2 had a similar problem, which was eventually brought under control. But even then, the B-2 cost more than twice as much to operate than the half century old B-52. The B-2 and F-22 use different types of radar absorbent materials, so many of the B-2 solutions will not work for the F-22. Some of the F-22 electronics were not as reliable as the air force expected.
The F-35 uses a different approach to defeating radar signals, and the manufacturer insists that F-35 maintenance costs will be closer to that for the F-15. But Lockheed Martin has been saying, for years, that its F-22 would be cheaper to maintain than existing aircraft. The air force never challenged this, at least not in public. Instead, the air force tried to keep the high operating costs a secret.
In addition, the F-22 costs more than three times as much as the aircraft it was replacing. The air force wants to build more than 187, and has allies in Congress who want the jobs (and votes) continued production would generate. But the Department of Defense was reluctant to spend that kind of money, especially when there so many other programs seeking funds (like electronic warfare aircraft, UAVs and upgrades for F-15s and F-16s). Thus, two years ago, the Department of Defense decided to terminate F-22 production at 187 aircraft. This resulted in each aircraft costing (including development and production spending), $332 million. Just the production costs of the last F-22s built was $153.2 million. Added to the cost of the last few aircraft was a $147 million fee the Department of Defense agreed to pay if the production line was shut down. This goes to pay for shutting down facilities and terminating contracts with hundreds of suppliers.
The F-22 is a superb aircraft, probably the most capable fighter in the world. But the development and manufacturing costs kept rising until it became too expensive for the media, voters and politicians. The air force was able to build it, but they couldn't sell it to the people who paid the bills.
Back in the 1900s, the F-22 was a $62 billion program, of which development accounted for $18.9 billion (this was a spending cap imposed by Congress). A decade before that, the air force was planning to buy 750 F-22s. Costs kept going up for two decades, and Congress refused to provide more money. So, for $62 billion, the air force ended up getting fewer aircraft.
The air force ran into a similar problem with the B-2 bomber, which became so expensive they were only allowed to build 21, and these cost $2.1 billion each. About half of that was development expense. Actual construction costs for each of those aircraft was about $933 million. Still pretty high, mainly because a lot of special machinery and factories had to be built to manufacture the many custom components.
The air force likes to point out that if the original (1986) plan had been followed, each of 132 B-2s would have cost $438 million each. But then the entire program would have cost $58.2 billion, versus $44.3 billion for the 21 plane program (which included $10 billion more R&D expense).
New technology gives a weapon, especially an aircraft, an edge in combat. But since World War II, most military technology has been developed in peacetime conditions. This means it is more than twice as expensive, as there is no wartime urgency to overcome bureaucratic inertia (and emphasis on covering your ass, which is very time consuming and expensive) and hesitation (because you don't have a war going on to settle disputes over what will work best). Developing this new technology takes longer in peacetime, which also raises the cost, and fewer units of a new weapon are produced (driving up the amount of development cost each weapon will have to carry.) If several hundred B-2s were produced under wartime conditions, each aircraft would have probably cost $200 million, or less. In other words, a tenth of what it actually cost. Same deal with the mythical $35 million F-22, or any other high tech weapon.
Other nations have adapted more effectively to peacetime development conditions. But the United States has the largest amount of peacetime military research and development, and this has created a unique military/industry/media/political atmosphere that drives costs up to the point where voters, politicians and the media will no longer support them.