From National Defense, November 2008 issue

 

Customers Blamed for Military Aircraft Sticker Shock

By Sandra I. Erwin

 

The justification most often heard for the spiraling costs of military aircraft is that the Pentagon is ordering fewer of them, so they become more expensive to build.

But that theory doesn’t hold water, says a recent government-funded study.

 

The Rand Corp. examined cost trends for every military aircraft — patrol, cargo, trainer, bomber, attack, fighter and electronic warfare — for the past quarter century. It found that labor costs have grown only slightly faster than inflation, but the proportion of labor cost in overall aircraft price tags has steadily decreased as more manufacturing is outsourced. With two exceptions — specialty metals and avionics systems — materials and equipment prices have risen roughly at the same rate as inflation.

 

Rand concluded that the biggest contributors to cost escalation are the sophisticated features and unique specs that the government requests. “We found that complexity of the aircraft — performance characteristics and airframe material — contributed to aircraft cost escalation, often at rates far exceeding those of inflation.”

 

Aircraft manufacturers told Rand that the increased demand for stealth and reduced aircraft weight contributed to cost jumps. They also cited government regulations, such as those designed to protect U.S. industry from foreign competition and environmental restrictions as culprits for soaring prices.

 

[CV32: Curiously, no mention of the cost of government funded studies. ]

From National Defense, November 2008 issue

 

Customers Blamed for Military Aircraft Sticker Shock

By Sandra I. Erwin

 

The justification most often heard for the spiraling costs of military aircraft is that the Pentagon is ordering fewer of them, so they become more expensive to build.

But that theory doesn’t hold water, says a recent government-funded study.

 

The Rand Corp. examined cost trends for every military aircraft — patrol, cargo, trainer, bomber, attack, fighter and electronic warfare — for the past quarter century. It found that labor costs have grown only slightly faster than inflation, but the proportion of labor cost in overall aircraft price tags has steadily decreased as more manufacturing is outsourced. With two exceptions — specialty metals and avionics systems — materials and equipment prices have risen roughly at the same rate as inflation.

 

Rand concluded that the biggest contributors to cost escalation are the sophisticated features and unique specs that the government requests. “We found that complexity of the aircraft — performance characteristics and airframe material — contributed to aircraft cost escalation, often at rates far exceeding those of inflation.”

 

Aircraft manufacturers told Rand that the increased demand for stealth and reduced aircraft weight contributed to cost jumps. They also cited government regulations, such as those designed to protect U.S. industry from foreign competition and environmental restrictions as culprits for soaring prices.

 

[CV32: Curiously, no mention of the cost of government funded studies. ]

 

Maybe the government should fund a study on the cost of all these studies.

 

Buddha