FLYAWAY COSTS

Question. For the record provide the flyaway costs of each Air Force aircraft weapon system in each fiscal years 1980 to 1987. In addition, provide the same data in common base year constant dollars. Also, explain in detail the cost trends.

Answer. Following are unit recurring flyaway costs of current SAR Air Force aircraft weapon procurements for fiscal years 1980 through 1987. Costs are in then-year and in FY 86 constant base year dollars.

General, downward unit cost trends are due to the learning curve effect; i.e., successive units become less expensive since the units are produced more efficiently. Upward trends are largely due to program stretchouts and quantity reductions which allocated a larger share of fixed costs and greater amounts of inflation to each aircraft. Other cost trends affecting weapon systems are discussed following the weapon system costs below.

1 Includes airframe, propulsion, avionics/armament and engineering change order (ECO).

F-15: In constant dollars, the F-15 unit cost increased between FY 80 and FY 85, decreased significantly in FY 86 and increased again in FY 87. The FY 87 cost is lower than the FY 84 and FY 85 costs, and estimates remain below this level throughout the next five years, despite the increased combat capability of the F-15E aircraft. The cost increase between FY 80 and FY 85 is a result of two major changes. First, the production rate fell from 95 aircraft in the FY 80 procurement (60 USAF and 35 foreign military sales) to 42 aircraft in the FY 85. Second, major improvements were incorporated under a Multi-Staged Improvement Program (MSIP) to meet the increasingly more capable threat systems. MSIP improved the avionics, radar and electronic systems designed in the early 1970s to enable the F-15 to maintain its air superiority capability against current and projected threats.

F-16: The primary causes of the changes in the unit cost in constant year dollars are: (1) technical improvement to the mission capability of the aircraft with the addition of ASPJ, LANTIRN, AMRAAM, higher thrust engines (AFE) and an improved radar; (2) the impact of reduced procurement quantities in the FY 82

59-248 0-86--20

through FY 85 time period; and (3) savings associated with the Multi-year procurements. The decrease in unit cost from FY 85 through FY 87 results from additional procurement quantities and the benefits of experience (learning curve). The then-year cost trends are affected by the cumulative impact of inflation.

KC-10A: This program has been relatively stable. The final 44 aircraft have been procured with a multi-year procurement contract. Changes have been the result of changes in program peculiar inflation indices, and estimate methodology revisions.

C-5B: This program has also had a stable history, reflecting Air Force and Congressional concern to retain the pricing advantages of a contract signed under intense competition. Changes reflect the impact of lower than expected engineering change orders and economic price adjustments.

B-1B: Until enactment of the FY 86 PB, the B-1B had been stable. The program enjoyed configuration stability due to the significant development effort in the B-1A program and strong configuration control discipline. Approval of a multi-year contracting approach has been a key factor. The resulting stability has contributed to excellent unit cost improvement performance. Also, downward pressure on unit costs has been a result of revised lower economic escalation indices and transfer of ALCM and CSRL integration costs from production into RDT&E.

E-3A: The downward unit cost trend is due primarily to learning curve effects. The FY 80-FY 83 US buys were made in conjunction with NATO E-3 production; US standard configuration was produced. Block 20/25 and subsequent enhancements had no effect on these unit production costs..

FIGHTER UNIT COSTS

Question. For the record, provide a track of fighter unit costs in the same format as last year. (See HAC hearings, part 2, page 505) Answer. The attached tables depict the Air Force unit cost data requested.

Nonrecurring decrease (F-15E configuration for all aircraft)..

Fiscal year 1987 flyaway unit cost......

+1.3

- 1.0

+0.9

31.5

Nonrecurring decrease (competition engine front loaded in fiscal year

$12.2

+0.5

+1.2

+0.2

$14.1

+0.6

-0.3

-0.3

-0.4

+0.2

0.1 +0.1

14.1

+0.8

+0.2

-0.4

-0.7

-0.3

+0.1

+0.1

13.9

F-15 AND F-16 MSIP COSTS

Question. For the record, provide a track of F-15 and F-16 MSIP costs in the same format as last year. (See HAC hearings, part 2, page 507)

Answer. F-15 RDT&E costs for FY 83 and FY 84 remain the same. All other F-15 MSIP costs are considered competion sensitive at this time, since FY 83/FY 84 over-target baselines and FY 85/FY 86 fiscal year buy contracts are being or will be negotiated. Release may compromise these negotiations. Therefore, this data will be provided after negotiations are complete.

The F-16 MSIP program consists of two types of change: improvements to contractor furnished equipment (CFE) already on the aircraft and improvements to existing government furnished equipment (GFE) or additional GFE to provide new capability to the aircraft. Costs for many individual CFE changes are not available since these items are proposed and negotiated as part of the aircraft and not broken out separately. Cost of F-16 MSIP items which can be broken out follow:

F-15 AND F-16 UNOBLIGATED BALANCES

Question. For the record, provide a track of F-15 and F-16 unobligated balances in the same format as last year. (See HAC hearings, part 2, page 509)

Answer. F-15 and F-16 unobligated funds and the major items to be funded with them are shown on the attached tables. These funds are required to fully fund these aircraft and the associated training equipment, support equipment and data, as directed by