Exhibit VF-16. Retyped and note added

Note - This memo delivered to Air 5061 for typing and distribution on 7/16/75. Illness and then vacation delayed a follow up until 8/19 when I learned draft of memo had been given to Adm. Foxgrover, who held it until I picked it up from him on 8/21. He said Adm. Lee had seen it. My lack of support for the Navy Position was criticized, especially since I am a NAVAIR consultant. I offered to quit. -- Copy of Draft to Air-05 and Air-501 on 8/21. -- Strange game
GS 9/2/75

Drafted 7/16/75

MEMORANDUM FOR THE RECORD 

SUBJ:F-18 High Cost/Low Capability

Encl:
(A) Unit Procurement Prices
(B) Cumulative Prices
(C) Program Price - F-18 Total vs. F-14 Add On

1. Until quite recently, the NACF program appeared to have minimal support within the Navy except as the best solution to a problem initiated by the OSD and adopted by the Congress, viz., that only half the required number of F-14s would be authorized because of a belief that their cost was excessive. Working under this constraint, a lightweight complementary fighter was examined (1973) but found to be more costly than simply buying more F-14s. A theoretical solution of a "VFAX", also convertible to a VTOL, was proposed by Fighter Study IV, albeit without technical justification, and included as a budget item after support by the Navy and OSD in the 1974 hearings. A congressional mandate of "commonality" with the selected Air Force ACF was then imposed by the Congress, reducing any real hope that there could be a rational solution. After one of the more formal and protracted source selections run by NAVAIR, the MCAIR version of the Northrop F-17 was picked as the winner, designated the F-18, and congressional authorization sought. Opposition to the program has now surfaced in OMB and in parts of the Congress, while LTV filed the first formal protest on a Navy source selection in modern history. The opposition from without apparently has tended to consolidate internal Navy support so that Navy spokesmen are now in favor of the program not only as the best choice under the OSD direction as to what makes a satisfactory carrier complement, but actually as a preferred solution. Within the last week, the CNO has endorsed the program to the major congressional committees without qualification. The situation parallels and is even less understandable than was the endorsement of the F-111B by Admiral MacDonald after he replaced Admiral Anderson as CNO in the early 60s.

 

2. From my knowledge of the evaluation results, there is no question as to the fact that the F-18 was a clear winner of the competition and that the LTV protest is without merit. At the same time, the Navy should not defend the method used in this case to select a contractor for a major program. Restricting the competition to the Air Force technology prototype contractors was contrary to the Navy's practice of allowing all qualified bidders to bid on a new program, and is contrary to my understanding of the ASPR. In the Senate hearings before the Government Operations Committee (Senator Chiles), no Navy condemnation of the total procedure was apparent, despite the fact that the subcommittee claimed to be interested primarily in the method of obtaining competition. Those protesting should really be Boeing, Lockheed, Grumman, and Rockwell who were excluded from bidding on either the ACF or NACF.

 

3. Supporters of the F-18 program have attempted to justify it on the basis of some combination of the following:

 

1. Lower investment costs
2. Lower operating costs
3. Higher reliability, maintainability, and availability
4. Better "fighter" performance
5. Better "attack" performance
6. Less vulnerable in combat area as VA
7. Reduction of types on a carrier
8. Adequately meets the stated "requirement"

In fact, of course, the program cannot be justified using the measures used successfully in the past to select new combat types. Any cost advantage for the design as a fighter is grossly overshadowed by its very low overall effectiveness relative to the F-14, while any advantage in combat performance as a VA is grossly overshadowed by its higher cost and inadequate payload/radius capability relative to the A-7. The program offers no reduction in the number of types on a carrier when compared to an F-14/A-7 mix, but only to a never planned F-14/F-4/A-7 complement. Endorsement of the program as a free choice of the Navy in effect repudiates the efforts of those involved in naval aircraft development over the last 20 years, and is the first intentional major step backward in capability taken by naval aviation.



4. Recently, OMB presented an analysis of alternative programs which showed a mix of F-14s and A-7s to be cheaper than a mix of F-14s and F-18s. A Navy check of OMB data showed somewhat less of an advantage, but still indicated that any monetary savings could accrue only in operating costs and then not for many years. Based on the Navy estimates, for example, it appears that we can buy about 500 F-14s after the approved 390 aircraft program before procurement costs become equal. Under the schedule proposed, the break even point would be reached sometime during FY'85 deliveries, about 12 years from now. It is difficult to imagine that these programs would remain stable for this length of time making it hazardous to count on such long range projections. For assurance that the pricing was being done on a fairly comparable basis, the unit procurement prices for production aircraft are plotted on Enclosure (1). Note that the F-18 curve has an apparent anomaly in the FY'84 price (support caused), but generally is a smooth curve with about an 82% "learning" slope from 300 airplanes to 600. The F-14 figures are quite inconsistent. The unit prices for future buys in the basic 390 aircraft program are all higher than for the 75 budget. The production rate is very low, of course, but in any case, it is difficult to consider the figures optimistic relative to those used for the F-18. (The Iranian buy of 80 aircraft are not included in the F-14 price data). The Navy estimates for an "add on" case in which the F-14 is produced using about the same expenditures as the F-18 is also noted, and shown in comparison to a total program made up the Navy basic case plus the OMB "add on". This slope can be seen to approximate that used for the F-18, while the Navy "basic and add on" contains so many anomalies it is hard to compare directly, though obviously there is some 1-3 M more conservatism in the unit prices for the F-14.

 

5. Enclosure (2) shows a comparison of the total procurement prices for the F-14 and F-18 in a plot of total price vs. number of production aircraft. For the F-14, "real" dollars are used for the program through FY'75 followed by 75 dollars for the remainder, and for all of the F-18 programs. Strangely, this plot shows that the pricing used for the F-14 show that there is no significant reduction in total cost for 390 aircraft when the production rate is increased, though this result could be anticipated from the unit price data. Using this plot blindly allows F-18 proponents to claim a $4B saving for procuring 800 aircraft. The real comparison is shown on Enclosure (3), however, when the incremental costs of procuring F-14s beyond th current 390 is plotted versus the total F-18 program. Using the Navy estimates for the increased production F-14 program it is seen that about 500 more F-14s can be purchased for the same price as the F-18. If the more optimistic OMB "add on" figures are used, the equal price number increases to over 650. It is believed that these figures are probably on the conservative side for the F-14. The F-18 has many more opportunities to increase in a relative sense. The R&D funding profile is known to be inadequate, and the probability of changes to increase capability is very high.

 

6. The price of 300 F-18s after 500 fighters have been procured would average about 5.8M, while current estimates for the A-7 range from about 5M at low rates of production to less than 4M at higher rates. A unit cost penalty of about 50% will be carried by the F-18 relative to the A-7. Little data are now available on the relative payload/radius capabilities of the F-18/A-7, but those promising essentially equal capability are probably grossly overstating the case. If the F-18 uses its afterburner to gain its claimed performance advantage in the combat arena, its actual operational radius will be substantially inferior to the F-14, A-6 and A-7. Under such circumstances, it has little potential for reconnaissance use, one of the many uses being proposed for it.

 

7. As the F-18 advocates attempt to reduce costs by eliminating attack capability from fighter versions, and fighter capability from attack versions, the overall carrier complement capability drops even more. One advantage of a "VFAX" was the capability to field either 3 squadrons of VF or 3 of VA. When specialized versions are produced, we lose that possibility and then have only the VF contribution of the single complementary squadron. Operational analysts for at least 10 years have rated single seat F-18 type aircraft inferior, overall, to the two seat F-4J. The same analysts would also probably rate F-18s inferior to A-7s because of the reduced payload/radius capability. Justification for the program seems to rest entirely on feelings that our currently deployed aircraft are so complex and so unreliable that they will not be usable in wartime. This conclusion is hardly credible to those who remember the days when the F-4, A-6, and A-7 were all considered "too complex".

 

8. The F-18 is much too little, much too late, and costs far too much to be considered as a part of naval aviation for the next two decades.

G.A. Spangenberg

Copy to:
AIR-506
AIR-501
AIR-503
AIR-05
AIR-00
PMA-265
OP-05
OP-05A