WASHINGTON — Lockheed Martin is pitching the Defense Department on a performance-based logistics contract for the F-35 joint strike fighter that company officials say will help improve the availability of spare parts and accelerate repair times.

The new proposal, which would run from 2022 to 2026, is a scaled down version of the more expansive proposal Lockheed floated in 2019. As such, the Pentagon likely won’t be able to rake in the $1 billion of savings that the company projected with the original offer, said Ken Merchant, the company’s vice president for F-35 sustainment. Instead, Lockheed Martin worked to shrink the scope of the contract “to something that the customers were comfortable with,” he told reporters Tuesday.

“With the new, reduced scope, we have not completely run all the models yet. We’re still working through the performance work statement and contract structure with the customer. Until we have that done, we can’t get the cost savings piece of it laid out,” he said. “I don’t suspect it will be anywhere near what we had hoped for before. But we will see performance improvements along lines of what we had hoped for previously.”

Company officials said they expect to be able to get costs per flight hour for the F-35A conventional takeoff and landing model below $25,000 (using fiscal 2012 dollars) by 2025 under the “skinny” PBL, Merchant said. Currently, it costs about $36,000 per hour to operate the aircraft.

Lockheed expects the Pentagon to issue a sole-source request for proposals “within the next month or two,” he said.

With this new offer, Lockheed focused on ensuring that spare parts are available on the flight line and reducing demand for new parts by improving the Pentagon’s ability to repair old ones, Merchant said.

The company is also interested in entering performance-based logistics contracts with some of its suppliers on the F-35 program, financially incentivizing those companies to meet the Pentagon’s specific needs. It’s already done that on certain F-35 mission systems, such as the electronic warfare system manufactured by BAE Systems.

“What we’ve been able to do is stand up the organic depot capability to do repairs for the EW system at Warner Robins [Air Logistics Complex] several months ahead of plan,” he said. “It’s put parts on shelf. What was once a 47% fill rate is now a 97% fill rate. That’s just in two years out of that five year plan, and that’s with no increase in cost.”

The F-35 joint program office has shown interest in performance-based logistics contract that would make sustainment of the jet more efficient, but has also been wary about entering into a deal that would ultimately not have its intended effect.

In March 2020, F-35 Program Executive Officer Lt. Gen. Eric Fick said that the government was still working to “crisply articulate [its] desired role” in sustaining the jet.

“Once we articulate that role, we figure out the data we need. And once we figure out the data we need we can finish the negotiations and march away towards a [contract],” he said.

Valerie Insinna is Defense News' air warfare reporter. She previously worked the Navy/congressional beats for Defense Daily, which followed almost three years as a staff writer for National Defense Magazine. Prior to that, she worked as an editorial assistant for the Tokyo Shimbun’s Washington bureau.

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