William T. Qualler sat in a mock F-22 cockpit aboard a Boeing 757 high over the Maryland coast.
The flying laboratory was testing the radar system for the new F-22 Raptor fighter jet, and Acting Secretary of the Air Force F. Whitten Peters was watching intently over Qualler's shoulder.
But there was nothing to see.
"OK, I just lost 'em," Qualler said, searching in vain for two blips on the F-22 radar screen. "The radar went down. Doggone it. We're not giving you guys a very good show here."
Qualler and other Boeing Co. technicians finally got the radar working that April morning, and Peters assured them he was not troubled by the slip. In fact, the secretary said, the glitch showed the wisdom of testing electronics on the flying laboratory before putting them on an actual F-22.
Left unsaid was that the Pentagon decided in December to buy the F-22 even though no one knows whether the radar or the plane's other complex electronics will work as planned.
It amounts to a leap of faith with $62.7 billion in taxpayer money, the total projected cost of the program -- faith that the plane will work, faith that Lockheed Martin Corp. can keep costs in check, faith that the nation needs it enough to spend that much.
Unfortunately, the cost record on the F-22 offers nothing to justify such faith. Despite Air Force insistence that the F-22 is a model program that is setting a standard for efficiency, the overall public investment of $184 million per plane is twice the amount originally promised. And Air Force leaders recently acknowledged a potential overrun of nearly $1 billion.
No one has accused Lockheed Martin of mismanaging the F-22. The cost problem is more complex than that and reaches back to the roots of the program:
* The Pentagon tried to have it both ways by promising Ferrari technology at a Hyundai price. That simply cannot be done, so the bills have been higher than predicted.
* The Air Force has continued to make unrealistic claims and downplay problems over the years because backpedaling would put the program at political risk.
* The end of the Cold War eliminated the threat that the F-22 was designed to fight and shrank the amount of money available for defense, increasing the pressure to make the program look affordable and necessary at a time when it might be neither.
Now the program has put the Pentagon in a predicament. Even if the Air Force can overcome the past and keep the F-22 program perfect from here on out, affording it is going to be a major challenge for a military swamped with other needs -- including two other types of fighters, a new generation of ships and costly missile defense systems.
"Looking at current defense budgets, the money will not be there around 2006 or 2008 when you have the cost," said Rep. Saxby Chambliss, a Georgia Republican who won an award last year from the aerospace industry for advocating the F-22 and other warplanes in Congress.
The looming defense budget problem is a "train wreck" waiting to happen, Chambliss said. "There's no answer yet. One answer is to put more money in it. ... I don't know where it's going to come from, but we've simply got to put more money into defense."
Even President Clinton's plan to add $112 billion to defense spending over the next six years would not crack the problem of affording all the weapons the Pentagon has on order. And despite the promised "peace dividend" of the post-Cold War era, the nation already spends as much each year on the military as it did throughout the Cold War -- adjusted for inflation -- except for the peaks of Vietnam and the Reagan buildup.
New plan to trim waste
One reason the F-22 is expensive is that it is complicated to build. Defense companies vying to win the fighter contract in the early 1980s used to paint idealized pictures of futuristic robot assembly lines, but the reality is far more mundane.
At one end of Lockheed Martin's mile-long fighter factory in Fort Worth, Texas, the midsection of an F-22 test plane hangs vertically in a blue metal frame. Snaking down either side of the section are the plane's intake ducts, openings that guide air into the jet's two engines.
To apply radar-resistant skins to the twisting ducts, a worker has to climb down into the openings and insert hundreds of fasteners while hanging from a sling, turning at tight angles.
Then workers use a tool to measure precisely how deep each fastener is sunk into the skin. If a single locking bolt is more than 0.009 inch deep, enemy radar could snag on the hole and expose the plane to a deadly missile.
Such work is just a small part of the overall assembly process. It takes about 60,000 hours of hands-on labor to build a midsection in Fort Worth -- more than the 45,000 hours it takes to build an entire F-16 fighter.
Lockheed Martin -- along with its one-third partner, Boeing, and engine-maker Pratt & Whitney Corp. -- is struggling to offset the cost of so much raw labor. Innovative computer design techniques, new tools that perform several tasks at once and production lines using the latest theories of efficient flow make the plane "one great deal for the taxpayer," said James A. "Micky" Blackwell, Lockheed Martin's aeronautics president.
But despite promises that the F-22 would break the mold of Pentagon excess, the bottom line is climbing at a rate higher than historical trends.
Since at least 1950, each new generation of fighter or attack jet has cost more than the previous generation. The Congressional Budget Office plotted those increasing prices to predict what the F-22 should cost -- and found that not only has the jet failed to break the cycle of increasing cost, it is actually 28 percent higher than the historical trend predicted.
Using best-case Pentagon cost projections, the CBO said, the F-22 is likely to wind up overshooting the historical trend by almost 60 percent.
Some in Congress have begun to believe that those best-case projections are fantasy and that the cost might climb even more steeply. The House Appropriations Committee gave vent to its fears Friday by passing a defense spending bill that would cut $1.8 billion from the $3 billion the Pentagon had requested for next year for the F-22.
That money was intended for buying the next six planes, but Callifornia Republican Rep. Jerry Lewis, who heads the defense appropriations subcommittee, said he thinks the cost has become a burden on the rest of the military.
Despite the usual outward bravado about faith in the program, even Pentagon officials worry whether F-22 expenses are under control. Their concern dates at least to 1996, when the Department of Defense appointed an independent review board -- called a Joint Estimating Team -- to look at the health of the program.
Earlier that year, the Pentagon had assured Congress in a report that "the F-22 program from its inception has led the way in implementing [efficiency] initiatives. ... The goal is to reduce costs, reduce delivery timelines and improve quality in all areas."
So it caught Congress off guard when the estimating team, led by retired Lt. Gen. Richard M. Scofield, projected a huge increase in overall F-22 costs. Based on today's figures, the increase would amount to $13 billion on top of the $62.7 billion already being spent.
Then the team made another surprising announcement: It said it had worked out a plan with the contractors to eliminate the price increases simply by trimming waste and making the program -- already supposed to be exemplary -- even more efficient.
At the time, Lockheed Martin scoffed at the team's predictions that assembling the plane would require far more manual labor than planned. Today, the company has set the team's labor levels as a goal that it hopes not to exceed.
Scofield, the team's leader, said recently that he had not followed up on the report to assess how the company is doing. But he is now a part of the equation: Within days of the report's release, Scofield went to work for Aerojet, a major F-22 subcontractor.
Links to C-130 cargo plane
Congress acted on the Joint Estimating Team report by imposing cost limits that would hold the program to its promises of greater efficiency.
The ceilings stand at slightly more than $18.88 billion for the development and testing phase of the program and $39.76 billion for producing the planes. Another $3.8 billion was spent on an earlier phase of development, when contractors also invested about $1.4 billion.
The Pentagon fought the ceilings, warning that restrictions on spending would "increase program risk" or even "cause the termination of the program prior to completion." Since then, trying to live within the limits "hasn't been easy. It's been a change in culture, quite honestly," said John Sommerlot, a top F-22 executive at Lockheed Martin's plant in Marietta, Ga.
But the ceilings are not absolute. If cost problems arise, the Air Force could ask Congress for more money, buy fewer planes or include less technology for the same total amount. Already, $350 million has been transferred to development from production to cover components that have become obsolete.
While the spending limits have made life more complicated for program officials, the limits also allow them to be vague when questioned about cost.
Last summer, sources close to the F-22 program said the $18.88 billion development effort was headed for $1 billion in additional expenses. Lockheed Martin denied it.
Several executives and Air Force officials then brushed aside the cost issue by pointing to the congressional spending limits.
"All our data is showing we're making it," Blackwell said.
Noted Charla Wise, who until a recent promotion managed the F-22 for Lockheed Martin's Texas plant, "We will perform within those caps."
Sommerlot, the Lockheed executive in Georgia, said, "We're managing to the ... cost cap."
And Maj. Gen. Claude M. Bolton Jr., head of fighter acquisitions for the Air Force, said, "My job is to stay within that cost cap."
Finally, Lockheed Martin executive Tom Burbage conceded that engineers had indeed found extra expenses because of kinks in two new manufacturing processes, but he put the total far below the rumored amount, at $240 million.
Early in March, after advance reports of a critical study by the General Accounting Office, company and Air Force officials at last acknowledged a much higher potential cost-growth figure: nearly $1 billion.
That amount, Virginia Democrat Norman Sisisky pointed out during a House of Representatives defense hearing, is almost equal to the Army's entire annual aviation budget.
Once again, F-22 officials maintain that they can make most of the overrun disappear by finding more "efficiencies" within the program. The GAO and the Congressional Budget Office disbelieve those claims and predict that the program will not be able to stay within the cost limits.
The CBO estimates that building combat-ready planes will cost $8 billion more than the current $39.76 billion ceiling for production.
In its March report, the GAO offered a glimpse of how Lockheed Martin's cost problem has been worsening. Through January 1998, the report said, the company's F-22 costs exceeded budgets by $14.4 million. Five months later, that figure had swelled to $93.3 million in excess costs. Program delays were also worsening.
What's more, the vaunted effort to make cost growth disappear by being more efficient is smaller than some of the rhetoric suggested. Cost-reduction plans will address only $80 million of the potential overruns, the GAO reported, and Lockheed Martin had validated only a quarter of that figure by the end of last year.
The company's plan for offsetting the rest of the cost growth is simple: cut back on testing.
Lockheed Martin itself has demonstrated how fragile the cost situation is. Late last year, the company warned that slow international sales could all but halt production of the only product besides the F-22 that it builds in Georgia -- the C-130J military transport plane.
If the Air Force does not hurry and place orders for the C-130J, the company said, all the overhead of running the 3-million-square-foot Georgia plant would descend on the F-22, breaking its cost ceilings.
"So [the two programs] are linked. The Air Force didn't like us talking about that for a number of years ... but from the business aspect of it, that's the reality. It's not strong arm, it's not leverage. It's economics," said Bob Lange, vice president of business development at Loockheed Martin's Georgia plant.
The Air Force has said it is not ready to buy the transport planes. But Lockheed Martin's threat is not taken lightly. One military official told Congress in March that if the F-22 program has "reasonable" overhead problems, the Air Force is willing to pay.
The key now is how much more money it will take to make the F-22 perform as the generals envision. Testing is under way at Edwards Air Force Base, Calif., to help answer that question.
Shrinking tests in the air
The first F-22 test plane -- a stripped-down model that is not fit for combat -- flew for the first time in September 1997. An identical test plane took flight early last year.
The planes are intended only to test the F-22's ability to take off, land and execute flying maneuvers. They do not have the radar-evading stealth qualities planned for the final version, and they have none of the electronics.
In fact, the plane's system of sensors, computers and software -- which represents at least a quarter of its cost -- has not even been fully assembled in the flying laboratory operated by Boeing. That won't take place until next year, along with the first flight tests of the gear on the F-22.
All told, the Air Force has planned more flight testing for F-22 electronics than it conducted on the electronics of the F-15 Eagle and F-16 Fighting Falcon combined, but none of it begins until next year.
Nonetheless, Pentagon purchasing chief Jacques S. Gansler approved Dec. 17 of buying the first two production-model F-22s based on less than 200 hours of general flight testing -- about 4 percent of the planned hours.
Turning the corner from development to production funding is a major step for a weapons program, akin to a professor getting tenure. The military seldom pulls back from such a commitment.
"Once you cross that, the program gets a life all its own. Whether it works or not is almost irrelevant. You're going to build it," said Louis J. Rodrigues, director of defense acquisition issues for the federal General Accounting Office.
It was not supposed to work out this way. As recently as 1994, plans called for F-22 test planes to log 1,400 hours of flying time before the Department of Defense decided whether to begin production. A study in 1993 by the Defense Science Board praised the program for planning so much testing before purchase.
But as funding cuts and technical problems delayed the F-22 program, the date for making the production decision actually was made earlier -- partly to reward Lockheed Martin for trying to be more efficient.
By 1997, the plan was down to 601 hours of testing before production, and last year it sank to 183 hours before Congress stepped in and froze that amount.
As it was, the program had to race to achieve even that last year. When a test plane passed the 183rd hour just after 2 p.m. Nov. 23, it celebrated by sounding a sonic boom over Edwards AFB.
"This is a great day for the F-22 program ... and the nation!" Brig. Gen. Michael C. Mushala e-mailed his superiors in the Pentagon that afternoon. "I think one senior Air Force officer said it best with the following: 'Just incredible. Brings tears to the eyes to see a group of Americans so focused on a goal.' "
Since then, the planes have been virtually grounded as contractors catch up on routine modification work. Bad weather and a problem with the planes' brakes have left the flight test program about two weeks behind schedule, but test pilots rave about the F-22's performance.
"I did things ... that I never would have dreamed of doing with any previous fighter," said Air Force Lt. Col. C. D. Moore, who runs the F-22 test team at Edwards.
Only a week after that interview in April, though, a Pentagon memo surfaced that said flight testing has been restricted because Boeing had discovered a design flaw in the rear section of the plane.
Engineers are still determining whether they have to redesign the section or whether they can use stiffeners to keep two panels from collapsing under the stresses of flight. "This design flaw has the potential to throw the already tight flight test schedule further behind," the memo said.
The Air Force and contractors have tried to allay fears about the adequacy of testing by claiming that with advances in computer simulation, such flights are less important. Instead of flying a plane to see what it will do, engineers can run everything through simulation; airborne tests then just show that the plane can perform as predicted.
But that claim -- along with recent plans to save money by canceling tests -- contradicts the Air Force's philosophy.
"As weapon system acquisition continues towards extended development schedules with fewer production units, the importance and length of testing increases," the service reported to Congress in 1994.
The F-22 would seem to be exactly the type of program the Air Force had in mind with that statement: Not only has the original plan to buy 750 planes shrunk to 339, but development is extending almost 10 years beyond what was originally envisioned.
In fact, it is only when funding is at stake that supporters downplay the number of flying hours. Otherwise, contractors boast in briefing materials that the F-22's total 4,337 hours of testing will be more than was conducted for the F-15, which had about 2,700 hours, or the F-16, which had about 2,500 hours.
The Air Force also claims that the F-22 will offset its high cost by being from 30 percent to 60 percent cheaper to maintain than the F-15. But by the time real-world experience shows whether those projections come true, it will be too late to turn back.
Historically, more complex equipment has always cost more to maintain, and the F-22 -- with its radar-absorbent coatings and unproved electronics -- is billed as the most complex fighter ever built.
'A huge double standard'
The complexity adds another large unknown to the program: how much it will really cost to build 339 jets on assembly lines.
Weapons programs have a terrible track record when it comes to following production cost estimates. The Pentagon's three most recent fighter planes are prime examples.
The Navy's F/A-18 Hornet wound up costing nearly twice as much to build as preproduction estimates promised. The Air Force F-15 and F-16 also cost more once assembly lines started running, though by smaller percentages.
Lockheed Martin says it is so confident it can stick to cost goals on the F-22 that it has agreed to produce the first two production batches on a fixed-price contract. That is an unusual step; most such contracts are "cost-plus" arrangements in which the government pays expenses plus incentive fees to the contractors. Going fixed-price means that if cost problems appear, the company absorbs them.
In addition, the company has agreed to shoot for a target price on the next four batches of production planes. All together, that means the company will have a fixed price or a targeted price on the first 94 planes, which are the most expensive because Lockheed Martin will still be ironing out kinks in the assembly process.
There is no price commitment on the remaining 245 planes, but for future budgets to work they have to be dramatically cheaper than the first batches. With no guarantees, Lockheed Martin concedes that this is another leap of faith for the taxpayer.
The situation is akin to a homeowner taking out an adjustable-rate mortgage with a ceiling on only the first few years -- without the option to refinance. If those uncapped years turn out to have higher rates, the red ink starts to flow.
"We do have history of how those [price] curves should look," said Blackwell. "If you can get the first five [batches] to head down that curve, then history shows the rest of the curve is going to pretty well fall in place."
If the F-22 does veer into the red, the Air Force can prune technologies or capabilities to keep the overall cost from rising. Then the function that was cut can be developed later and added to the plane.
Such nibbling away is common and has occurred often on the F-22 program. In March, the Air Force said it would consider saving money by not preparing the F-22 for attaching extra fuel and weapons bays under the wings. That capability is essential, so the cut simply will postpone the inevitable for the sake of appearing to stay under the cost ceiling.
Other features stripped away over the years include two developmental planes; all four planned "preproduction verification" planes; 85 two-seat models that were intended for training pilots, which will be single-seaters instead; thrust reversers to let the plane land on short runways; infrared tracking devices; an enhanced ejection seat that would let the pilot escape while making harsh combat maneuvers; bulletproof lining for the cockpit; and a fly-off test against the F-15. Even the warranty was canceled to save money.
A number of live-fire tests -- in which components are blown up on a test range -- were scrapped to cut costs. That included testing to see how well the pilot would be protected in the cockpit and to determine the effect of missiles catching fire in the weapons bay.
The Pentagon will shoot at one of the test F-22s on the live-fire range but not before production of combat planes is well under way. That means any flaws disclosed by the testing would be included on combat-ready F-22s.
In addition, no full-system live-fire testing of the F-22's Pratt & Whitney jet engines will take place. The same engines are destined for the forthcoming Joint Strike Fighter, so testing their vulnerability would have been doubly important.
"That's a pretty serious mistake, and for that I probably should have been fired," said Roy Hempley, who retired last year from the Pentagon's testing office and negotiated the live-fire testing program for the F-22.
Company officials dislike having to tiptoe around the F-22's cost pressures -- which, they point out, have been routine on other programs and could have been much worse if not for the efforts to streamline and innovate.
"In fact, we were told by a high official in the Air Force -- and I won't use his name -- he said, 'In ordinary times, you would get gold stars for this. But these are not ordinary times, and we cannot afford a dollar increase.' That's been the real problem: The Air Force doesn't have any more money," said Blackwell, the Lockheed Martin aeronautics president.
He and the Air Force are quick to blame Congress for some of the cost increases. They say that efforts to trim spending on the program have caused the F-22 to cost more -- a whopping $3 more for every $1 cut.
Congress has trimmed F-22 funding on three occasions, which program officials say forced the contractors to reorganize and renegotiate subcontracts each time. After Congress shaved a total of $263 million from the program in 1994 and 1995, the Air Force said it cost nearly $1 billion to absorb the cuts because of delays and having to renegotiate deals with subcontractors.
As costs have risen, the number of warplanes to be purchased has fallen -- causing the cost of each plane to rise still more.
Why, then, does Congress cut? The GAO found in a 1992 study of a variety of weapons systems that such cutting is actually a method of keeping big job-producing programs alive, because it allows Congress to claim short-term savings but avoid politically dangerous cancellations.
Former Navy Secretary John F. Lehman Jr. said the Air Force thrives in that environment because it is "more politically savvy" than other branches of the military.
The Ronald Reagan appointee held office during the Navy's ill-fated A-12 attack plane program, which began at about the same time as the F-22 but was canceled in 1991 in the face of a cost overrun.
"So here we have the F-22 spending over $20 billion for development, and the Navy's got canceled because it was going to reach $4.5 billion. There's a huge double standard there," Lehman said.
A bogus target price
Now that the F-22 program has reached this point, Congress and the military have to find a way to continue paying for it.
With the end of the Cold War, military size and spending have shrunk. The Pentagon has gone on what is called a "procurement holiday," buying no new weapons to replace old ones. Maintenance costs for the aging equipment has skyrocketed.
So all the branches of the military find themselves desperate to modernize their forces. The Navy needs new ships and submarines, the Army needs new helicopters. The Air Force needs not only a new air-to-air fighter such as the F-22, it also needs a Joint Strike Fighter to replace vast numbers of aging F-16s as the versatile backbone of the fleet.
The defense spending bill the House Appropriations Committee approved Friday gives a stark sense of the scale of the resources being concentrated on the F-22. Instead of spending $1.8 billion on six more F-22s, the committee voted to use the same amount of money to buy eight F-15s, five F-16s, eight KC-130J tanker planes and one Joint STARS surveillance plane, and to put the remaining $500 million into bonuses and training for Air Force pilots.
Plans to buy both the F-22 and the Joint Strike Fighter would cost almost twice as much each year as the Air Force has historically spent on fighters, according to the Congressional Budget Office and the Center for Strategic and Budgetary Assessments, a nonpartisan think tank in Washington.
From 1983 to 1992, for instance, the Air Force spent more on fighters than in any other decade of the Cold War, buying 1,800 of them for $52 billion, in today's dollars.
From 2003 to 2012, by contrast, the Air Force plans to spend slightly less -- about $45 billion -- for just 627 planes.
The extra $112 billion Clinton has proposed spending on defense over the next six years would boost military budgets to a level not seen since the late 1980s but would not address the even bigger bills on the horizon.
Early in March, the CBO estimated that the president's plan falls short by $28 billion a year just to preserve the current size of the military.
To make matters worse, even if all the new programs have no cost growth and the Pentagon finds a way to afford them, the remaining Air Force fleet would reach an unprecedented age because the small number of new planes will leave so many old ones in service. The average age of a fighter will reach 20 years even after the F-22 comes on line, meaning some F-15s will retire after serving 40 or more years.
The new fighters are so expensive that the Air Force cannot afford to address other needs at the same time. Generals recently told Congress that they will be unable to buy new bombers for the next 40 years. Some B-52s will reach the eye-popping age of 80 years or more.
That implies continually climbing maintenance costs. But the Joint Chiefs of Staff complained to Congress in September that the military is already drowning in maintenance costs and needs an extra $25 billion a year.
The testimony angered some Republicans, who for years had been led to believe that they were helping the Pentagon achieve an affordable plan for modernization.
"Every year we quiz the services about future needs," said Chambliss, the Georgia Republican. "They've always contended they had enough money to maintain readiness and buy new equipment. Now all of a sudden the Joint Chiefs have come forward and said, 'Well, that's not quite right.' "
Whether the F-22 program can stick to its ambitious goals is a big part of affording a strong military into the future. But to some degree, the program has already carved its path. It started with a promise of unprecedented technology for a bargain price that the Air Force knew it could not reach -- $35 million per plane -- and has become so politically entrenched and absorbed so much money that its survival in some form seems certain.
The real pressure is shifting to the Joint Strike Fighter program, which is at an earlier stage and remains a bigger unknown. The plane itself will be less powerful than the F-22, but it will be the real workhorse of three branches of the military. The Air Force, Navy and Marines plan to buy nearly 3,000 Joint Strike Fighters beginning in the next 12 years.
To afford that many planes, the Joint Strike Fighter has to do what the F-22 has not done: stick to unprecedented cost restrictions.
To help ensure that, the Pentagon has put a price target, much as it did on the F-22. Hundreds of billions of dollars are riding on whether the basic Strike Fighter can be delivered at close to $28 million a copy.
No one ever intended to meet the target on the F-22. "The fact is, they never, ever planned to buy a $35 million airplane," said Lockheed Martin's Blackwell, who is leading his company in competition with Boeing to build the Joint Strike Fighter.
"That was the goal. We were given a target," he said. "It's not too much different from the $28 million goal that's been given for the Joint Strike Fighter."
ABOUT THIS SERIES
Sunday: Begun with the false promise of a bargain sticker price, the F-22 fighter plane has failed to live up to its status as a "model program" for reforming Pentagon excess.
Yesterday: The world's most ambitious fighter plane lacks one crucial component: a foreign military threat, which disappeared with the breakup of the Soviet Union.
Today: Despite promises of unprecedented cost controls, the F-22 has already doubled in price -- and costs are going up.
Pub Date: 07/20/99