DoD may award a five-year Performance-Based Logistics (PBL) contract for the Lockheed Martin [LMT] F-35 fighter this year, if the program is able to meet conditions set out in the fiscal 2022 National Defense Authorization Act (NDAA).

Section 356(b) of the fiscal 2022 NDAA provides that the secretary of defense “may not enter into a performance-based logistics sustainment contract for the F-35 airframe or engine programs, or modify an existing contract for the F-35 airframe or engine programs to require the use of a performance-based logistics sustainment contract, unless the secretary submits to the congressional defense committees a certification that the secretary has determined such a performance-based logistics contract will reduce sustainment or operating costs for the F- 35 airframe or engine programs; or increase readiness rates, full and partial mission capability rates, or airframe and engine availability rates of the F-35 weapon system.”

Such a DoD certification is to include a cost-benefit analysis comparing a current F-35 airframe or engine contract with a PBL contract.

“Assuming the PBL meets the conditions laid out in Section 356, the PBL could be awarded by the end of 2023,” the F-35 Joint Program Office (JPO) said on Feb. 17.

In September 2021, Lockheed Martin received a possibly $6.6 billion three-year sustainment deal–the first multi-year sustainment contract in the history of the F-35 (Defense Daily, Sept. 14, 2021).

At the time, the F-35 JPO said that the multi-year arrangement could be a stepping stone to a PBL contract revision in 2022, if Lockheed Martin met cost per flight hour (CPFH), parts availability, and full mission capable (FMC) rate goals.

Yet, “the PBL award is not tied to a specific CPFH goal, parts availability metric, or FMC goals,” the F-35 JPO said on Feb. 17.

Unlike past F-35 sustainment contracts, “this PBL contract is outcome-based over a five-year period, whereas previous annualized contracts have been transactional in nature,” the F-35 program said. “The PBL contract structure and performance metrics – Gross Issue Effectiveness (GIE) and Supplier Response Time (SRT) – are designed to provide the contractor greater flexibility to meet performance requirements for the warfighter. The fixed price structure and longer period of performance incentivize industry investment in achieving performance outcomes and lowering lifecycle costs.”

GIE measures the delivery of the correct parts to the right place at the right time.

While the F-35’s annual sustainment contracts evaluated Lockheed Martin on the aircraft’s mission capable (MC) rates, measuring the percentage of planes able to accomplish one designated mission, the three-year sustainment contract in 2021 was to judge the company on FMC rates and the on-time availability of parts to ensure FMC rates improve.

Last April, the Government Accountability Office (GAO) said that the F-35’s MC and FMC rates continue to lag significantly behind military goals. Whle the F-35A’s minimum MC rate is to be 80 percent with an objective of 90 percent, the F-35A’s MC rate in fiscal 2019 was 59.2 percent in fiscal 2019, 71.4 percent in fiscal 2020, and 68.8 percent in fiscal 2021.

The F-35A’s FMC rate, which is to be a minimum of 64 percent and an objective of 72 percent, was 39.8 percent in fiscal 2019, 54 percent in fiscal 2020, and 50 percent in fiscal 2021.

A report by the Congressional Budget Office (CBO) this month said that between 2021 and 2022 F-35As’ availability fell by 11 percentage points, while F-35Bs’ availability fell by 7 percentage points, and F-35Cs’ availability rose by 5 percentage points. Last year, availability rates ranged from 54 percent for the F-35A and F-35B to 58 percent for the F-35C, CBO said. Availability rates are calculated by dividing the number of hours that aircraft are both mission capable and in the possession of operational squadrons by the total number of aircraft hours for the entire fleet, including aircraft undergoing depot-level maintenance.

Repairing stealthy aircraft, such as the F-35 and the Lockheed Martin F-22, may involve removing and then reapplying stealth coatings–a process that lengthens repair time and decreases aircraft availability rates.

CBO said that the availability rate of an F-35A with five years of age was around 40 percent, while an F-22 of that age had an availability rate of more than 50 percent, and an F-15E of more than 70 percent. In addition, while F-15Es recorded about 25 flying hours per month at five years of age, F-22s and F-35As of the same age recorded about half that number.

Retired Air Force Lt. Col. Mike “Pako” Benitez, the former director of staff for the Air Force 53rd Wing, the service’s primary operational test wing, wrote in a LinkedIn discussion on the new CBO report that F-35 availability rates have suffered because of the decision to eliminate intermediate “I-level,” backshop maintenance “from the program (putting more pressure on depots); the lack of investments in depots (30-day turnaround program goals are still four times that); and the lack of spare parts due to plus-ups in production (Congress) which has thrown the balance of aircraft and spare parts out of whack.”

The specific FMC, parts availability, and CPFH goals in the September 2021 multi-year sustainment contract for fiscal 2021, 2022, and 2023 have been under wraps, and the F-35 JPO has not released those specific goals.

Under the potentially, $6.6 billion three-year sustainment contract awarded in September 2021 the 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 in September 2021. “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 FMC rates and supply metrics.”

The Air Force F-35A has had a $30,000 CPFH goal, and, overall, the program has in the past targeted a $25,000 DoD CPFH goal by 2025 for the F-35.