The Pentagon is exploring the idea of getting countries to commit to the number of F-35s they plan to purchase by offering cost incentives as a way to keep prices stable for the United States and other nations lined up to buy the fifth-generation fighter jet, the Pentagon’s top weapons buyer said Thursday.
Frank Kendall, the undersecretary of defense for acquisition, emphasized that officials were still in the early stages of discussing such a plan and said it wouldn't be useful until the program itself was more stable and under consistent, higher rates of production. Persuading countries to formalize quantities would avoid price fluctuations that come when numbers are lowered or pushed back, he said.
Kendall noted that like the United States, other countries are experiencing budget difficulties and have their own political processes and military procurement priorities, but said once countries have worked through their plan it could be beneficial to get them to commit to numbers through price incentives.
“Looking forward, we would consider an idea that would provide some positive and negative incentives for people to sign up to specific numbers of buys, once their political process supports that so that you would incentivize everybody to stay in,” Kendall told reporters on a conference call. “There’d be a positive incentive for meeting your commitment and a negative incentive if you didn’t.”
“We haven’t gotten to that yet, but it’s something we’re just barely beginning to talk about as a possibility,” he added.
There are seven international partners at varying tiers of investment on the F-35’s development, including the United Kingdom, Italy, the Netherlands, Canada, Denmark, Norway and Turkey. Some have changed their plans because of budgeting issues and political pressures, in part related to technical and design problems that have caused costs to skyrocket and massive delays.
Lockheed Martin [LMT] is the prime contractor for the stealth aircraft. Pratt & Whitney, a division of United Technologies [UTX], is the engine maker.
Canada has been re-evaluating its participation in the program, although a Reuters report earlier this month said a government task force intends to recommend the purchase of 65 F-35s. Italy and Turkey are also taking a second look at their role and may delay their plans to buy the aircraft or reduce the numbers.
Israel, Japan and South Korea have announced plans to buy the F-35s as well under the U.S. foreign military sales program. After Japan announced it had selected the F-35 in a competition more than two years ago, Tokyo quickly warned that the decision was conditioned on getting costs under control.
The Pentagon is continuing to work to bring cost down by keeping pressure on the contractors to improve performance in engineering and production, and by also looking at ways to lower operational and sustainment costs once the airplanes are delivered in the fleet.
Kendall conceded that over the last year the F-35’s reliability, meaning the failure rates of the aircraft systems and parts, has only made small gains. “There (is) some marginal evidence of improvement but it’s not enough,” he said.
However, the program has been implementing “specific plans for how to get them where they are to where they need to be,” including by finding better ways to measure performance and failure rates, he said, adding he expects that to begin paying off in the near future.
“It takes a little while to see those results when you look at the whole fleet of aircraft, but in the more recent aircraft with the fixes in we should be seeing results pretty quickly,” he said.