DOD Finalizes Purchase Plan for F-35 Aircraft
(Source: US Department of Defense; issued Oct. 29, 2019)
Among the many questions raised by this Lockheed infographic is why, if the Pentagon is paying $34 billion to buy 478 F-35s (= $71.1 million each), unit costs for Lot 12-14 aircraft
Ellen M. Lord, undersecretary of defense for acquisition and sustainment, announced yesterday's agreement between DOD and aircraft manufacturer Lockheed-Martin during a briefing today at the Pentagon.
The F-35s will form the backbone of the U.S. and allied fifth generation inventory for the foreseeable future, she said.
According to Lord, the agreement involving Lot 12 includes 149 aircraft, Lot 13 includes 160 aircraft, and Lot 14 includes 169 aircraft.
Air Force Lt. Gen. Eric T. Fick, the F-35 program executive officer, said those lots include 351 of the F-35A aircraft, which is the standard model used by the Air Force. There are also 86 of the F-35B aircraft, which is the vertical-takeoff model used by the Marine Corps, and 41 of the F-35C aircraft, which are for carrier-based operations.
Those aircraft are not all for the United States. Some of the planes are for partner nations, as well as nations that have purchased through foreign military sales.
Lord said acquisition and sustainment and the F-35 Joint Program Office are "laser-focused" on reducing costs for the aircraft, bringing up quality, and achieving timely deliveries.
"We will reach a unit recurring flyaway cost-per-aircraft target of $80 million for a U.S. Air Force F-35A price, by Lot 13 —which is one lot earlier than planned," she said. "A significant milestone for the department."
Lord also said that there's a per-unit cost reduction for each variant of the aircraft that averages around 12.7% when comparing Lot 14 purchases to Lot 11 purchases. "These represent some of the largest achieved savings lot-over-lot for the program."
NEWS: Alongside the @DeptofDefense we have finalized a contract for 478 F-35s to be delivered around the world. More here: https://t.co/R3Zs4axEOU pic.twitter.com/6BUDffVINh
— F-35 Lightning II (@thef35) October 29, 2019
Fick said that the most recent contract award slows production of the F-35 from previous awards, giving a break to contractors involved in the aircraft's manufacture. The lot 12 purchase of 149 aircraft, for instance, is just slightly higher than the 141 aircraft in Lot 11.
"With this award we see from a production perspective the most dramatic rate increases in the production line are now behind us," Fick said. "This dramatic production rate increase has proven to be challenging for the supply chain, but the comparatively minor quantity changes across lots 12 through 14 should give it some breathing room as we move forward."
He said that breathing room for manufacturers allows for more timely delivery of parts to the production line and spares and repair parts to the field.
Currently, some 440 F-35 aircraft have been delivered to military organizations around the world — including the United States, Norway, Israel, Italy, the United Kingdom, Australia, Korea and Japan.
Click here for the transcript of the related press conference by Ellen M. Lord, undersecretary of defense for acquisition and sustainment, and Lt. Gen. Eric T. Fick, the F-35 program executive officer, on the Pentagon website.
(EDITOR’S NOTE: Pending a more detailed report of this latest contract, here are some off-the-cuff observations:
-- No explanation was provided for the stunning jump in the readiness rate of combat-coded F-35s from 55% to 73% in just one year – a year-on-year increase of nearly 50%.
-- No explanation was provided as to how on-time delivery rate jumped from 64% in 2018 to 96% in 2019 – a year-on-year increase of 50%.
-- Dividing the total $34 billion contract value by the 478 aircraft being bought means each will cost just $71.1 million --$10 million less than the unit costs mentioned.
-- Using the figures in the graphic above, the cost of these 478 aircraft works out to $41 billion -- $7 billion more than announced.
Clearly, there is a lot of creative bookkeeping going on, as is often the case with this program.
-- No explanation was provided as to why the Pentagon is still buying 478 aircraft even though Turkey, which was to order 24 aircraft (8 in each lot) has been kicked out of the program.
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Pentagon and Lockheed Martin Reach Agreement Reducing F-35A Cost by 12.8 Percent
(Source: Lockheed Martin; issued Oct. 29, 2019)
In the agreement, the F-35 Enterprise meets and exceeds its long-stated cost reduction targets for each variant – and the F-35A unit price, including aircraft and engine, is now below $80 million in both Lot 13 and Lot 14, the F-35A unit cost represents an estimated overall 12.8 percent reduction from Lot 11 costs for the conventional landing variant, and an average of 12.7 percent savings across all three variants from Lot 11 to 14.
"Driving down cost is critical to the success of this program. I am excited that the F-35 Joint Program Office and Lockheed Martin have agreed on this landmark three-lot deal. This agreement achieves an average 12.7 percent cost reduction across all three variants and gets us below $80 million for a USAF F-35A by Lot 13 - one lot earlier than planned," said Air Force Lt. Gen. Eric Fick, F-35 Program Executive Officer. "This $34 billion agreement is a truly historic milestone for the F-35 Enterprise."
The agreement includes 291 aircraft for the U.S. Services, 127 for F-35 International Partners, and 60 for F-35 Foreign Military Sales customers. Price details include:
Please note: Final prices for F-35 variants following adjustments for Congressional plus-ups and other contractual settlements are as follows: F-35A - $89.3M; F-35B - $115.5M; and F-35C - $108.8M.
"With smart acquisition strategies, strong government-industry partnership and a relentless focus on quality and cost reduction, the F-35 Enterprise has successfully reduced procurement costs of the 5th Generation F-35 to equal or less than 4th Generation legacy aircraft," said Greg Ulmer, Lockheed Martin, F-35 Program vice president and general manager. "With the F-35A unit cost now below $80 million in Lot 13, we were able to exceed our long-standing cost reduction commitment one year earlier than planned."
The sub $80 million unit recurring flyaway cost for an F-35 represents an integrated acquisition price for the 5th Generation Weapon System. With embedded sensors and targeting pods, this F-35 unit price includes items that add additional procurement and sustainment costs to legacy 4th Generation aircraft.
Program Progress
With more than 450 aircraft operating from 19 bases around the globe, the F-35 is playing a critical role in today's global security environment. More than 910 pilots and 8,350 maintainers have been trained, and the F-35 fleet has surpassed more than 220,000 cumulative flight hours. Eight nations have F-35s operating from a base on their home soil and seven Services have declared Initial Operating Capability.
In addition to strengthening global security and partnerships, the F-35 provides economic stability to the U.S. and International Partners by creating jobs, commerce and security, and contributing to the global trade balance. The F-35 is built by thousands of men and women in America and around the world. With more than 1,400 suppliers in 46 states and Puerto Rico, the F-35 Program supports more than 220,000 direct and indirect jobs in the U.S. alone. The Program also includes more than 100 international suppliers, creating or sustaining thousands of jobs.
Headquartered in Bethesda, Maryland, Lockheed Martin is a global security and aerospace company that employs approximately 105,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.
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