V-22 Osprey

Cost

In 1986 the cost of a single V-22 was estimated at $24 million, with 923 aircraft to be built. In 1989 the Bush administration cancelled the project, at which time the unit cost was estimated at $35 million, with 602 aircraft. The V-22 question caused friction between Secretary of Defense Richard B. Cheney and Congress throughout his tenure. DoD spent some of the money Congress appropriated to develop the aircraft, but congressional sources accused Cheney, who continued to oppose the Osprey, of violating the law by not moving ahead as Congress had directed. Cheney argued that building and testing the prototype Osprey would cost more than the amount appropriated.

In the spring of 1992 several congressional supporters of the V-22 threatened to take Cheney to court over the issue. A little later, in the face of suggestions from congressional Republicans that Cheney's opposition to the Osprey was hurting President Bush's reelection campaign, especially in Texas and Pennsylvania where the aircraft would be built, Cheney relented and suggested spending $1.5 billion in fiscal years 1992 and 1993 to develop it. He made clear that he personally still opposed the Osprey and favored a less costly alternative.

The program was revived by the incoming Clinton administration, and current plans call for building 458 Ospreys for $37.3 billion, or more than $80 million apiece, with the Marines receiving 360 Ospreys, the Navy 48 and the Air Force 50. The first prototype flew in 1989. As of early 2000 three test aircraft had crashed: no one was killed in the 1991 crash, an accident in 1992 killed seven men, and the third in April 2000 killed 19 Marines.

By 2005 program unit cost had resen from $37.724,000 as of 1998 to $101,078,000 as of December 2003. MV-22 Block A technologies are mature and the design is considered stable. Problems identified during recent tests are expected to be resolved prior to the next operational test, according to program officials. Some redesign efforts have been identified as candidates for preplanned product improvements.

The V-22’s original program cost estimates changed significantly. From 1986 through 2007, the program’s Research, Development, Test, and Evaluation cost increased over 200 percent—from $4.2 to 12.7 billion — while the cost of procurement increased 24 percent from $34.4 to $42.6 billion. This increase coincided with significant reductions in the number of aircraft being procured—from nearly 1,000 to less than 500 — resulting in a 148 percent increase in cost for each V-22. Operations and support costs were expected to rise. An indication is the cost per flying hour, which was over $11,000 in 2007 — more than double the target estimate for the MV-22. After more than 20 years in development, the MV-22 experience in Iraq demonstrated that the Osprey can complete missions assigned in low-threat environments. The program faced a future of high operations and support cost funding needs, estimated at $75.4 billion for the life cycle of the program.

As of September 2008 program unit cost was $122,579,000. Although the aircraft was approved for full-rate production in 2005, the program continues to identify and correct deficiencies. Although the program office considers V-22 critical technologies to be mature and its design stable, the program continues to correct deficiencies and make improvements to the aircraft. The MV-22's shipboard pre-deployment training revealed challenges related to required aircraft maintenance and operations. Due to the aircraft's design, many components of the aircraft are inaccessible until the aircraft is towed from its parking spot. Shipboard operations were adjusted to provide 24 hour aircraft movement capability.

By 2010 the V-22 was in the third year of a 5-year contract for 167 aircraft. According to the program office, the production rate would be 35 aircraft per year for fiscal years 2010 through 2012. The program was planning and budgeting for cost savings that would result from a second multiyear procurement contract that would begin in fiscal year 2013.

By 2012 the plane’s operating cost was declining from rates as high as $12,000 per flight hour to an all-time low of $8,300. This was attributed the decline to a variety of factors, including more reliable parts and different flying protocols that cut down on maintenance needs.