Types of costs for military aircraft
There are a variety of types of costs related to military aircraft programs, with each form of accounting used for different purposes and insights. The two types most commonly reported are the unit "flyaway cost" (FAC) and "unit procurement cost" (UPC), the latter also being referred to by some as "unit program(me) cost". A "unit" cost is simply the indicated type of cost divided by the number of aircraft being paid for (i.e., the "per airplane" cost). The FAC is what most people think of as an airplane's cost. Unfortunately, there are two different costs that get referred to "flyaway cost". The UPC is most often reported as the total announced price of an acquisition program divided by the number of aircraft, but this is just an approximation because programs can and do vary widely in what "other stuff" is included.
For the purposes of Wikipedia, our order of preference for cost types we provide should be 1) basic FAC, 2) "Total FAC" and 3) UPC. However, for those who want to better understand how these costs are defined and build upon one another, the following paragraphs discuss each type.
Recurring flyaway cost: Usually reported as the "unit recurring flyaway" (URF) cost, this covers only the airframe, engines, avionics, and other such equipment that come "standard" with every airplane (and thus are "recurring"). The URF is one of the two fundamental cost elements of the basic FAC. Until the F-35 program began using it, the URF was rarely ever reported in the general press. The F-35 program uses it to capture those costs of the basic airplane that are common to all of the partners. The partners are individually responsible for those "nonrecurring" elements they may desire to better "tailor" the airplane to their specific requirements. The F-35's URF is often mis-reported as the airplane's FAC, but this understates the true FAC.
Nonrecurring flyaway cost: Almost never separately reported, the nonrecurring costs include basic "startup" costs which are apportioned over the whole fleet of aircraft planned to be built for the purchaser(s), as well as allowances for user-required changes. The nonrecurring cost is typically a fraction of the recurring cost.
Flyaway cost: The basic flyaway cost (FAC) is the sum of the recurring and nonrecurring costs and is always reported as a "unit flyaway cost" (usually abbreviated "FAC" or, rarely, "UFAC"). It is the most commonly reported cost and is normally what most people think of when they think about what an airplane "costs." However, just to keep things from being simple, there is something called "total flyaway cost".
Total flyaway cost: This is always reported as a "unit" cost, and is often also referred to as the "weapon system cost" or simply as the "flyaway cost" — however, it comprises not only the "basic" flyaway cost, but also the delivery costs and the peculiar support equipment, technical data packages, training equipment, and a variety of contractor services required to provide initial support for the airplanes; all of this is usually amortized over the size of the customer's purchase. Unfortunately, with the total flyaway cost often being called "flyaway cost" and the term "weapon system cost" being used generically (even sometimes for the total lifecycle cost), it can often require an expert to figure out which is which. For the purposes of Wikipedia, editors should treat the "total" FAC and "basic" FAC as roughly the same "in round numbers." For follow-on purchases of a given aircraft by the same customer, this difference is often quite small.
Procurement cost: This can be reported as either a "program cost" or a "unit procurement (or program) cost"; the unit procurement cost (UPC) adds the cost of initial spares — amortized over the quantity being purchased — to the flyaway cost. This is the other most commonly reported type of cost, and is usually derived from the reported procurement program cost divided by the quantity of aircraft being bought. While this is not a fully accurate estimation method, it is usually just about all one has to go with. (It should be noted also that there is no such thing as a "standard initial spares" package for costing purposes.)
Program acquisition cost: Rarely ever seen — and normally only in the US — the PAC adds the costs of research and development, testing and evaluation, and related military construction (e.g., new hangars, test facilities, etc.) to the procurement cost. It can be found in the US DoD's "Selected Acquisition Reports". Detractors of a program often use this to "estimate" an exceptionally high unit cost for an airplane; while it is a "legitimate" form of cost, it is often used as a political tool by comparing it to the FAC or UPC — which are very different types of costs — thereby implying that it is the "real" cost (generally perceived to be the FAC or UPC) of the airplane as opposed to the government's "official" — and by implication, deceptive — cost (the actual FAC or UPC).
Life-cycle cost: The (total) life-cycle cost (LCC) takes the program acquisition cost and adds to it all of the projected lifetime logistic and operational costs: munitions and missiles, AVPOL (fuel, oil, and lubricants), spares (other than initial spares), replenishment, depot maintenance, system support and modifications, as well as the costs of hiring, training, supporting, and paying the personnel associated with the operating unit(s). In recent years, the term "life-cycle costs" has increasingly been used to refer to just the logistic and operational costs, while the term "total life-cycle costs" includes the PAC. While certain things may indeed be done to reduce LCC, any LCC projection should be taken with more than a few grains of salt; I've yet to see a verified and validated methodology for producing a realistic valuation.
The TFC or the Total Flyaway cost is what is the closest estimate is but even then LCC (Life-cycle cost), PAC (Program acquisition cost) and the PC (Procurement cost) must be added. That is why a 22.5 million fly away cost translates into a 50-60 million end cost.
The real big killer component in modern fighters is the cost of avionics. In a book written by Ben Rich (former head of Lockheed's skunk works) in 1994, he estimated that the avionics cost approximately $7,000 per pound of fighter weight! R&D work also takes a large chunk of the costs. And this was a 1994 estimate so its your guess how much they cost now lol
