Report: Cost-Per-Effect Is Best Way to Compare Weapons’ Value

The Air Force should replace traditional metrics like cost per flying hour and unit price when calculating the cost of weapon systems with metrics that instead account for weapons’ efficiency and effectiveness. By focusing instead on cost-per-effect, a new study argues, the Air Force can better compare options for how best to invest in the future.

AFA’s Mitchell Institute for Aerospace Studies unveiled the paper—“Resolving America’s Defense Strategy-Resource Mismatch: The Case for Cost-Per-Effect Analysis”—at an online event July 8 that featured Brig. Gen. David A. Harris, head of the Air Force Warfighting Integration Capability, and William A. LaPlante, Mitre Corporation vice president and former Air Force acquisition executive.

Video: Mitchell Institute on YouTube

The paper’s authors argue that while stealthy, sensor-laden aircraft such as the F-35 and B-21 cost more than legacy aircraft, they are also more precise, able to perform more actions per mission, and more likely to survive to fight again. The combination makes them a better bargain than aircraft that are cheaper to buy and operate, but which cannot operate alone and are more likely to be shot down.

Retired Lt. Gen. David A. Deptula, dean of the Mitchell Institute and a co-author of the report, shared charts during the presentation dating back to the 1991 Gulf War that illustrated the concept. One showed that 20 F-117 stealth fighters could strike 12 times more targets than a strike package comprised of 41 aircraft, which required electronic jamming escorts, defense suppression planes, and fighter escorts. Another showed that two B-2 bombers were “19 times more effective” than traditional strike packages, so that a single B-2 supplanted 75 other airplanes, Deptula said.

Yet the Pentagon and Congress continue to use metrics that put “a premium on cheapness” rather than mission effectiveness, Deptula lamented. With budgets going down, he said, the Air Force needs to make every dollar count. It is already too small to carry out its National Defense Strategy obligations, Deptula said.

Deptula’s co-author, Mitchell Executive Director Douglas A. Birkey, said USAF has “no elasticity to surge for war.” Its National Guard wings are already all-in on the every day missions the Air Force must sustain.

Citing the Air Force’s justification for buying the fourth-generation F-15EX, Deptula noted its unit cost is slightly higher than the fifth-generation F-35, yet the F-35 is pilloried for its higher cost per flying hour—$35,000 vs. a projected $27,000. The F-35, however, can collect more information, share it more readily and be more effective inside enemy air defenses—and survive, he said. Plus, he predicted, flying hour costs “are coming down.”

“We need to stop using industrial-age measures when we’re pursuing information-age capabilities,” Deptula said. The Korean War-era F-86 is not equivalent to the fifth-generation F-22. “Assessment tools have to keep pace as we move into the future,” he added. “We’ve taken ‘effectiveness’ out of the ‘cost effectiveness’ equation.”

When fewer airplanes can accomplish the same effect as a larger package, the actual cost per effect is lower, even if the individual airplane’s cost and effect is higher because “a finite number of assets [yields] a disproportionately high number of effects,” Birkey said. A B-1 bomber carries the same munitions load as a package of fourth-gen fighters, which together combine for a cost per flying hour that’s 371 percent higher and can’t match the B-1’s range.

On Capitol Hill, though, bombers suffer in comparison to fighters because the planes are stacked up against each other using cost per flying hour and unit cost without that context.

Expanding the concept beyond the Air Force, Birkey offered that cost-per-effect should “be expanded across all DOD mission areas.” This would help avoid scenarios like what happened during sequestration, when the Air Force was expected to retire A-10s from its inventory while the Army was buying brand-new AH-64A Apaches, even though the helicopters are less lethal and less survivable when providing close air support.

“That comparison wasn’t even being made,” Birkey said. Likewise, in the long-range strike realm, the Army and Navy are pursuing very long-range fires that, from a cost-per-effect perspective, compare poorly with USAF assets. The Army is pursuing “mile-long cannons … while bombers are seeing cuts,” he said. “This is nuts. Has anyone measured what it would cost to deploy, sustain, and defend these mega-artillery batteries?”

The Mitchell study recommends four actions, Birkey said:

  • Recognize the problem.
  • Add cost-per-effect as part of the Joint Capabilities Integration and Development System (JCIDS) for new procurement decisions.
  • Apply cost-per-effect analysis across all modernization and force management decisions.
  • Plan like regional joint commanders, to whom “it doesn’t matter what service owns the capability,” Birkey said, and focus on relative value.

Birkey praised the Senate version of the 2021 National Defense Authorization Act for calling on the Air Force to explain how it would apply cost-per effect analysis. “Progress is being made,” he said.

LaPlante, Mitre Corporation vice president and the former Air Force acquisition executive, said the B-21 bomber program probably survived cuts because of the exhaustive analysis of its future effectiveness compared to other capabilities.

“It was a complex look … at capabilities across long-range strike,” LaPlante said. “Looking at manned/unmanned … degrees of stealth, payload, range, looking at ISR, the weapons, standoff/stand-in, electronic attack, and today we’d even say [Joint All-Domain Command and Control].” That effort yielded the B-21.

When compared “holistically … across the kill chain … it’s a much more effective way to do it,” LaPlante said. “And it proves we can do it.”

LaPlante was a member of the “Section 809” commission created by Congress to improve acquisition, which recommended doing this kind of effects-based analysis up front and also “that you manage it that way, as a portfolio.”

Harris, head of the Air Force Warfighting Integration Capability, said these analyses must take place before ideas become programs of record. Russia and China are starting to capitalize on fifth-generation technology, because “of what they can do back to us.” The peer adversaries are beginning to understand and apply multi-domain operations, “and building more into the fifth-generation schemes than we are, at this point.”

LaPlante said the services should still look at development costs and unit costs, but sustainment is “the harder one.” He would start with those three, then “set up a portfolio, these families of systems, across the kill chain, and set up the analytical cells with the operator running it. And then the acquisition people pick it up as the systems and capabilities start being honed. … Not the other way around.”

There also has to be a commonly-trusted method of campaign analysis to get the services to all buy in to the results. Unit costs remain important as a means of guarding against cost growth. “But when you’re talking effects,” effects, costs, and sustainment can all be traded. This enables pairing, for example, as when hypersonic weapons are mounted on conventional platforms. “If you can get the unit cost down to a certain level,” a given approach becomes preferable, he said.

Harris sees an opportunity for a “Joint Warfighting Integration Capability” to tackle issues like the A-10 vs. Apache debate. “We can look across services and see exactly what we’re doing, so we’re not redundant and we reduce some of the inefficiencies,” he said. “You have to look at costs DOD-wide.” The existing Cost Assessment and Program Evaluation (CAPE) office tends toward a more business-based lens, he said. That “is why I’m a fan of AFWIC, where we focus on the warfighting aspect: the effect we want to achieve.”

LaPlante said it would be a “huge mistake” not to focus on effects, because “we’ll be penny-wise and pound-foolish.”

Deptula said a glaring problem right now is “encroachment” by rival services on each others’ roles and missions, which is bleeding resources unnecessarily. “It’s ridiculous” for the Army to pursue 1,000-mile weapons, he said. “Some say it’s good to have a variety [of capabilities],” he said. But that only works “in a world where you’ve got unlimited budgets.”

Editor’s Note: This story was updated on July 9 at 10:04 a.m. EDT to reflect the updated title of the Mitchell Institute report.