By Marina Malenic

Negotiations on the Defense Department’s order for a fourth production lot of F-35 Joint Strike Fighter aircraft are on the verge of completion, officials said yesterday.

While the talks are “taking longer than we’d hoped,” Tom Burbage, executive vice president for F-35 program integration at Lockheed Martin [LMT], said he expects a deal “any day now.”

Air Force Secretary Michael Donley, the service’s senior civilian official, also said yesterday that he expects a final handshake “soon.”

The officials briefed reporters at the Air Force Association’s annual conference in Washington.

Burbage said that Defense Secretary Robert Gates effort to lean out overhead and management inefficiency at the Pentagon contributed to a tougher negotiating position on part of the government.

“They are looking for the tightest wrapping around F-35 they can possibly have,” he said. He added that the negotiations have been “more protracted…than we had wanted.”

Lockheed Martin officials have said the delay is primarily due to the fact that the company and the government have agreed to transition to a fixed-price from a cost-plus, award-fee deal two years ahead of the acquisition plan (Defense Daily, Sept. 7). Company officials have been saying since June that they are weeks from completing the negotiations (Defense Daily, June 18).

By shifting to a fixed-price agreement, the Pentagon hopes to decrease risk to the government of any additional cost overruns in the program.

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 is now estimated at $92.4 million, according to the Pentagon’s cost estimation division. The originally envisioned pricetag 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 have asserted that that estimate is too high. They have said that the Pentagon’s official estimate is based on theoretical projections for three separate fighter aircraft programs, while the company’s numbers are based on “actuals.” They have predicted that the fighter would ultimately cost approximately $60 million in 2010 dollars. This price presumes that orders remain at about the same level or higher over the life of the program, the officials have said.

The company is building three variants of the F-35 for the Air Force, Navy and Marine Corps and several international partners.

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).