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Despite Signs of Stability, Senate Concerned on JSF

New JSFs Cost Less, Mark Firsts for 3 Countries

Jul. 30, 2013 - 03:45AM   |  
By AARON MEHTA   |   Comments
An F-35A joint strike fighter performs a test flight in March.
An F-35A joint strike fighter performs a test flight in March. (Lockheed Martin)
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WASHINGTON — The next batch of F-35 joint strike fighters will cost 4 percent less and will include the first purchases for three partner nations — good news for the troubled program.

But despite the price reductions, a US Senate committee voted this week to slow a planned ramp-up in production of the stealthy jet.

On July 30, prime contractor Lockheed Martin announced an agreement in principle with the Pentagon to purchase low-rate initial production (LRIP) lots six and seven. The two buys will cover the production of 71 new jets, including the first models for Italy, Australia and Norway.

LRIP-6 procures 18 F-35A conventional takeoff models for the US Air Force, six F-35B jump-jet variants for the Marine Corps and seven F-35C carrier models for the Navy, as well as three F-35As for Italy and two F-35As for Australia. Deliveries of this block will begin in mid-2014.

LRIP-7, which will begin deliveries in mid-2015, will supply the Pentagon with 19 F-35As, six F-35Bs and four F-35Cs. Internationally, the lot procures three more F-35As for Italy, two F-35A models for Norway and one F-35B for the UK.

While the agreement has been reached in principle, cost details were not included. Those are typically released a month or so after the initial agreement is announced.

The announcement said that “in general,” unit prices for the US jets in LRIP-6 are 4 percent lower than in LRIP-5, which was $4 billion for 32 planes. The LRIP-7 unit prices will show an additional 4 percent reduction.

That 4 percent drop mirrors the cost reduction between LRIP-4 and LRIP-5, but a Lockheed spokeswoman said it was just coincidence, as each contract is negotiated separately. Still, the steady cost reductions point to “a very good trend,” according to Rebecca Grant, an analyst with the IRIS Group.

“These are positive signs that this program is taking the next step towards full-rate production,” Grant said. “This puts it on solid ground.”

Members of the US Senate disagree. The same day as the deal was announced, the Senate Appropriations defense subcommittee approved a $516.4 billion base budget for the Pentagon that fully funded the Pentagon’s desire to purchase nearly 30 F-35 fighters in 2014.

But lawmakers’ concerns over concurrency led to a reduction in advanced procurement for fiscal 2015 so the program can “focus on the existing challenges in testing, design and development before ramping up,” committee Chairman Sen. Dick Durbin D-Ill. said.

“Aggressive overlap in designing, testing and procuring this aircraft earlier in its history got us into serious trouble,” Durbin said, “and this committee is eager to avoid a repeat of these problems.”

Smoother Negotiations

In LRIP-5, the F-35A variant cost $105 million per jet, the F-35B cost $113 million per jet, and the F-35C cost $125 million per jet. Based on those costs, reducing 4 percent for each of the follow-on lots should bring unit costs to around:

■ F-35A: $100.8 million in LRIP-6, $96.7 million in LRIP-7.

■ F-35B: $108.4 million in LRIP-6, $104.1 million in LRIP-7.

■ F-35C: $120 million in LRIP-6, $115.2 million in LRIP-7.

The negotiations, which took six months to complete, were much smoother than the contentious, year-long process of negotiating LRIP-5. That’s not a surprise. In the time since, both Lockheed and Pentagon officials have said the LRIP-5 discussions forced the sides to agree on how to make future purchases easier to complete.

Grant credits both Pentagon acquisition chief Frank Kendall and Lockheed CEO Marillyn Hewson for keeping the program on track.

“After 2010, Lockheed Martin got this program in shape on their end,” Grant said. “Negotiations are popping up in a more timely manner, and you’re not seeing the big backlogs in negotiations we’ve seen in the past.

“I think Hewson is clearly trying to keep this program on the good pace it’s starting to achieve,” she said. “And credit [goes] to Frank Kendall for working to mature the relationship with Lockheed.”

The F-35 is a key part of the Pentagon’s plan to maintain air superiority into the coming decade and modernize an aging fleet of fighters. In addition to the US, the program has eight international partners, as well as two nonpartner nations in Israel and Japan that have committed to purchasing the fifth-generation, low-observable fighter.

Italy’s inclusion in LRIP-6, its first official purchase, comes amid internal debates on whether the country should be buying the single-engine fighter. The country plans to purchase 90 jets. AL-1, the first Italian F-35, will be delivered in the fourth quarter of 2015 and assembled at the final assembly and checkout facility in Cameri, Italy.

While the Lockheed agreement covers the planes themselves, DoD negotiates separately with Pratt & Whitney for each block of F-135 engines, which power all three variants. The company plans to negotiate the LRIP-6 engine block by itself, then potentially will negotiate the seventh and eighth blocks of engines together.

Pratt has“reduced costs by 40 percent since delivery of the first production engine,” Matthew Bates, a Pratt spokesman, said. “We’ve reduced costs for each new lot of engines, and we expect to keep that momentum going forward. We are completing negotiations with the government on LRIP 6 and expect a final agreement soon.”

Pratt’s contract for the fifth lot of engines, signed in late May, was worth $1 billion.

John Bennett in Washington contributed to this story

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