NATIONAL HARBOR, Md.—The Pentagon and Lockheed Martin will probably reach an agreement on lots 9 and 10 of the joint strike fighter by the end of the year, the F-35 joint program executive officer predicted Tuesday.
The government initially expected to cement a contract for low rate initial production (LRIP) lots 90 and 10 — estimated to be worth about $14 billion — early this year, but negotiations have continued into the fall.
"The biggest thing that happened, or the biggest thing that changed, is this is a pretty significant ramp up," said Air Force Lt. Gen. Christopher Bogdan, who heads the F-35 program office.
The previous contract for LRIP 8, valued at $4.7 billion, included only 43 F-35s. The JPO opted to order its next two batches of aircraft — about 150 planes, according to Bogdan — at the same time, which increased the size and complexity of the deal, he said.
"When you're ramping up like that, you're looking for economies of scale," he said. "You're looking for the confidence that they're going to be able to deliver on that schedule, and it's been tough. It's been tough making sure the taxpayers get value for their money. So it's as simple as that."
The slow pace of negotiations also has been a source of frustration for Lockheed, which has had to invest its own funds into paying off suppliers in order to keep the production line on track. The JPO has twice issued an undefinitized contracting action to reimburse the company for expenses associated with LRIP 9. Earlier this month, Pentagon acquisition chief Frank Kendall said the department is negotiating a similar UCA agreement to help pay the LRIP 10 costs Lockheed has already paid out of pocket.
Starting in lot 12, the JPO is set to begin negotiating block buys for the F-35 international customers. Bogdan said all foreign partners that plan on buying the F-35 during LRIP 12 have expressed interest in joining.
That deal will include advanced procurement funding for US airplanes, but the Pentagon will not enter into the buy until LRIP 13, he said. The hope is for Congress to approve the block buy strategy in the fiscal year 2018 budget — a plan the services are already on board.
"I have spoken to the services and despite the fact that the budget isn’t official until it goes to the president and to the Congress, we’re planning," he said. "We’re in the planning stages, but we’re planning on having the services join the block buy in lot 13."
Based on industry analysis and a study by the nonprofit RAND Corporation, the JPO believes that a block buy of 450 airplanes over LRIP 12, 13 and 14 could save about $2 billion. And that would be a conservative estimate, Bogdan said.