By Marina Malenic
LONDON–Pentagon and Lockheed Martin [LMT] officials expect to reach an agreement in the coming days on a fourth production lot of F-35 Joint Strike Fighter aircraft, several officials confirmed this week during the Farnborough Air Show outside London.
The Defense Department’s top arms buyer Ashton Carter told reporters that he is working to keep the program from incurring massive cost growth in the coming years, as predicted in independent cost estimates.
“We cannot allow that to come true,” Carter said during a July 19 meeting with reporters. He added that “every dime spent” on the program must be spent efficiently.
The fixed-price deal has taken longer to negotiate than Lockheed Martin officials had anticipated, Tom Burbage, the company’s executive vice president and general manager of F- 35 programs, said during a press briefing earlier that day. He said Pentagon officials were negotiating very aggressively with the company and pledged that the talks would yield a price tag more than 20 percent below the Pentagon’s most recent cost estimates for the airplane.
Earlier this month, Lockheed Martin CEO Robert Stevens said he was ready to sign a fixed-price contract with the government for the fourth production lot of the jets two years ahead of schedule. The company is currently working under a cost-plus development contract, which means that the government absorbs any overage.
The projected cost of the F-35, expected to replace the majority of the Pentagon’s aging fighter aircraft, has reached $112.4 million per airplane–approximately 81 percent over the 2002 baseline, Defense Department officials have told Congress (Defense Daily, June 3). The F-35 program’s cost growth and schedule delays are the result of a major wing redesign, higher than expected labor costs and delivery delays from components suppliers, according to both the Pentagon’s cost-estimation division and the Government Accountability Office.
The Pentagon now estimates the total cost for the program at $382 billion–65 percent higher than the $232 billion estimated when the program started in 2002, according to documents provided to lawmakers on June 1. The figures are all in 2002, inflation-adjusted dollars.
The production cost alone of each airplane has reached $92.4 million, according to the Pentagon’s cost estimation division. The originally envisioned price tag for the airplane, seen as a low-cost replacement for F-16s, A-10s and other legacy fighters, was $50 million per copy.
However, Lockheed Martin executives believe that estimate is too high. Steve O’Bryan, Lockheed Martin’s president for the F-35 program, told reporters in Washington earlier this month that the fighter would ultimately cost about as a much as a “comparably equipped” legacy fourth-generation fighter like the Boeing [BA]-built F/A-18 or Lockheed Martin’s F-16, approximately $60 million in 2010 dollars.
The company is building three variants of the F-35 for the Air Force, Navy and Marine Corps and several international partners. O’Bryan also said the efficiencies across the three variants are much higher than the Pentagon’s cost model presumes.
Earlier this year, Defense Secretary Robert Gates ordered that the F-35 program be restructured because of independent cost estimates that pointed to looming problems. Officials extended the current development phase, delayed the purchase of 122 production-model aircraft until after 2015 and added test assets to ramp up that portion of the program.
U.S. military trainers have said they are counting on the first production-model aircraft to roll off the Lockheed Martin line in Fort Worth, Texas, by this fall to begin flight training by the end of the year (Defense Daily, May 28).