The Pentagon is putting its new weapons cost-cutting strategy to its first big test as it negotiates with Lockheed Martin over the price of the next batch of F-35 Joint Strike Fighters (JSF).
Contract negotiations for the production of 32 JSFs began earlier this year. This will be the first opportunity for Pentagon officials to see how well their “should-cost” approach to setting weapons prices works.
Under this approach, Defense Department experts review the program’s technical requirements, production and testing processes, and staffing to determine what they think the price should be. That figure is based on reductions that could be made in those areas and efficiencies that should come over time with the program, such as improved supply chain management.
An independent office in the Pentagon — the Cost Assessment and Program Evaluation, and before that, the Cost Analysis Improvement Group — already assesses the cost of weapon systems for budgeting purposes using sophisticated models that consider past weapon costs. Historically, the budget figure is the floor from which costs rise, not the ceiling under which costs are contained, defense officials have said/.../
Acquisition experts are anxious to see how well the effort performs, but some are skeptical it will succeed at containing costs on large programs.
“It’s an interesting way to try to impose discipline on what has become an undisciplined process. But I don’t think it gets at the core problem here,” said Todd Harrison, senior fellow at the Center for Strategic and Budgetary Assessments.
The major cost driver on weapon programs is requirements that are added over time with little regard for costs, Harrison said.
“Until they get that process under control — and [until] they develop a rational way to understand the cost they’re imposing on the system with every additional requirement they put on it — I don’t think they’re going to be successful,” he said/.../