Lockheed Martin [LMT] has received a more than $2.2 billion sustainment contract for the F-35 fighter through December next year, DoD said on Dec. 8.

The contract “exercises an option to provide logistics support, to include ground maintenance activities, action request solution, depot activities, automatic logistics information system [ALIS] operations and maintenance, reliability and maintainability, supply chain management, pilot training, maintainer training, and training system sustainment in support of delivered F-35 Lightning II Joint Strike Fighter air systems for the Air Force, Marine Corps, Navy, Foreign Military Sales (FMS) customers, and non-Department of Defense (DOD) participants,” the Pentagon said.

The Dec. 8 contract is part of a $6.6 billion three-year sustainment deal

–the first multi-year sustainment in the history of the F-35–awarded in September last year (Defense Daily, Sept. 14, 2021).

At the time of the award last year, the F-35 Joint Program Office (JPO) said that the multi-year arrangement could be a stepping stone to a performance-based logistics (PBL) contract revision this year, if Lockheed Martin met cost per flight hour (CPFH), parts availability, and full mission capable (FMC) rate goals.

With three weeks left in 2022, it looks uncertain whether that PBL contract revision will happen this year.

While the F-35’s annual sustainment contracts evaluated Lockheed Martin on the aircraft’s mission capable rates, last year’s three-year sustainment contract is to judge the company on FMC rates and the on-time availability of parts to ensure FMC rates improve. Last year, the Government Accountability Office (GAO) said that the F-35’s FMC rate is 54 percent–18 points below the goal.

The F-35 JPO has said in the past that FMC rates depend on sufficient investments by the Air Force, Navy and Marine Corps in spare parts and flying hours.

The sustainment contract, as other military contracts, apparently contains company-proprietary information and is thus not released by the government. The specific FMC, parts availability, and CPFH goals in the contract for fiscal 2021, 2022, and 2023 were thus unavailable, and the F-35 JPO has not released those specific goals.

“Under this [multi-year sustainment] contract, the cost per flight hour (CPFH) for the global fleet improves by 8% from $36.1K in 2020 to $33.4K in 2023, in constant year 2012 dollars,” the F-35 Joint Program Office said on Sept. 14 last year. “Specifically, this represents a $3.6K reduction in CPFH for the USAF A-model from $33.6K in 2020 to $30.0K in 2023. The contract also drives improvements to performance through a refined performance incentive structure focused on year-over-year improvements in full mission capable (FMC) rates and supply metrics.”

While the $30,000 CPFH goal for the Air Force F-35A is a goal, factors could intervene that could make that goal more difficult to achieve, such as a change in requirements, rising fuel costs, or the establishment of a program for an additional or alternate engine beyond the existing Pratt & Whitney [RTX] F135 engine.

Lockheed Martin has said that it has invested $500 million in cost reduction initiatives for its 40 percent of the F-35 sustainment program. Pratt & Whitney and the government make up the remaining 60 percent of the sustainment program.

Pentagon officials, including those from the Cost Assessment and Program Evaluation (CAPE) office, have voiced skepticism about reaching the $25,000 DoD CPFH goal by 2025 for the F-35. In the summer of 2020, the F-35 JPO said that the CPFH overall was $35,000, down from $44,000 in 2019.

It is unclear whether last year’s three-year sustainment deal or a PBL contract revision will reduce costs to the objective levels.

“Understanding that DoD wanted to transition eventually to performance based logistics contracts, we recommended in October 2017 that DoD reexamine the metrics that it will use to hold the contractor accountable under a performance-based logistics contract,” per a GAO report in April this year. “We reported that the metrics used needed to be objectively measurable and fully reflective of processes over which the contractor has control. Furthermore, we recommended that DoD ensures it has sufficient knowledge of actual sustainment costs, such as the actual costs of parts and repairs, and the technical characteristics of F-35 aircraft, such as reliability and maintainability of systems and parts, before entering into these types of contracts. DoD concurred with these recommendations. However, as of April 2022, these recommendations remained unimplemented.”