The Ft. Fumble Death Spiral

It's how a program dies.

This is how it works:

Say you're the program officer. Your project is to build a new airplane. The production cost is anticipated at $100 million a copy. The program development cost is $10 billion. What the bugeteers do is amortize that program cost across the expected buy, so it works out that the development cost is $10 million per airplane, or $110,000,000.

Now, of course, in reality, it doesn't work that way. The program costs get paid well before the last airplane rolls out of the factory, but budgetese isn't based on reality.

There are, of course, issues developing with your proposed airplane. Different offices in Ft. Fumble want your new shiny airplane to do more missions. So program costs go up and up. Soon, with all of the change orders and the re-engineering and the fixing of conflict issues, the development costs reach $25 billion. Congress says "holy shit, we can't afford all that" and orders you to cut the buy in half.

With all of the changes, your estimated production cost has creeped up to $120 million. Each airplane's share of the program cost is now $50 million, so the bugeteers say that each airplane costs $170 million.

You're now 54% over budget. But the services keep hitting you with change orders. Those changes cause problems. The airplane is heavier, which means that the structure has to be beefed up to take the stress of launching and traps on Navy carriers. The Air Force is squawking about the additional structural weight, because they see it as lost payload. So now the production line gets sort of split. And maybe by now you've got the first few airplanes out for testing, and the tests show more problems.

Add another $10 billion for program costs and the costs of having to rework the test airplanes, the ones now on the production line, and to rework a hell of a lot of parts that have already been made for the series. The flyaway cost, or the incremental cost, for the last airplane in the production series is now $130 million. The press latches onto your program as just another example of government spending that's out of control, the heat is on, and Congress slashes your buy in half, yet again.

Congratulations, your program is now in the Death Spiral. $35 billion in development costs for 250 airplanes is $140 million per. Your airplane that was projected to cost $110 million will now cost $270 million. With all of the changes that have been foisted upon it, the airplane tests out as maybe meeting 80% of the original designed mission parameters. Your bosses react to that by ordering you to revise the mission parameters to meet the airplane's capabilities. Of course, Congress gets wind of that and you spend a few weeks before sixteen different Congressional committees, as senators and congressmen who wouldn't know the difference between an aileron and an aerostat verbally beat the shit out of you in hearings that are aired by C-SPAN and excerpted by the networks.

Your program limps along, only because the prime contractor has sourced out production of sub-assemblies to companies in forty states, sot hat all of those companies (and their unions) are bending the ears of their congresscritters and explaining how many jobs will be lost if your program is axed. The inefficiency of so many sub-contractors and sub-sub-contractors is part of why the production costs went up. But that doesn't stop the abuse that's being rained down on your head.

If you haven't been fired from being the program officer and if you haven't developed a drinking problem, you're one strong mother. But the chances are that, even though you did as good a job as anyone could have, you're never going to get promoted.

So you retire. (Good news, Boeing/LockMart/General Dynamics is hiring program managers.)