Cost Estimates of the B-1 Aircraft Program

Two independent cost analyses of the B-1 aircraft program prepared by the Air Force resulted in estimates that showed an appreciable difference from the Systems Program Office (SPO) estimate of $22.8 billion for 244 aircraft.

One of the analyses used current and projected cost data from the F-15, F-16, and A-10 programs, while the second was based on historical data from about 20 different aircraft programs. In both cases, the actual B-1 cost data available as of June 30, 1976, were included. The estimate based on historical data was 4% higher than the SPO estimate, while the estimate based on current data was 20% higher. The major reasons for the differences between the independent estimates and the SPO estimate were: (1) different learning curves (improvements in production costs) that are anticipated to be achieved during the production of 240 aircraft; (2) the amount of production experience that can be retained from the four research and development aircraft; and (3) a difference of two percentage points in the amount of fee that contractors are expected to earn. A cost review team from the Office of the Secretary of Defense was of the opinion that the independent Air Force estimate based on current data was the most reasonable, and even that estimate appeared somewhat low.

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