Pentagon Ramps Up Pressure On F-35 Price

The Pentagon is demanding lower prices for the F-35 Joint Strike Fighter, pressuring Lockheed Martin and engine supplier Pratt & Whitney to go below their most aggressive cost targets.

Procurement chief Ashton Carter says he does not expect to pay the projected $92-million average unit cost (in 2002 dollars). JSF procurement “is not happening at that price,” and the Defense Department cannot afford the cost to go higher, ­Carter told the Credit Suisse/Aviation Week 2010 Aerospace and Defense Conference in New York last week. He says the Pentagon can “manage out some cost” from this estimate, produced by the Pentagon’s Cost Analysis and Program Evaluation (CAPE) group.

Lockheed Martin signed a fixed-price incentive contract for the $3.9-billion low-rate initial production (LRIP) Lot 4 on Nov. 19, which Carter says is a lower cost than the CAPE predicted. This covers 31 F-35s, but does not include 37 Pratt F135 engines to be procured under a separate contract. Pratt & Whitney hopes to sign for the fourth batch of engines within weeks, having accepted a government request to negotiate a fixed-price incentive contract instead of the originally planned cost-plus deal.

Pratt proposed LRIP 4 prices based on a cost-reduction plan targeted on getting the F135 down to the same cost as the F-22’s F119 engine by the 250th delivery, says Bennett Croswell, vice president of F135/F119 programs. “We developed a ‘should-cost’ curve that was independently validated by the [Pentagon’s] Joint Assessment Team and AT Kearney,” he says. “We are now talking to the JSF program office about our ability to go below the should-cost curve.”

LRIP 4 is the first batch to be priced based on the should-cost learning curve, but Croswell says the 20 flight-test and production F135s delivered so far have tracked the curve required to achieve the cost target by the 250th engine.

Lot 4 will cover 18 conventional-takeoff-and-landing/carrier-variant (CTOL/CV) and 19 short-takeoff-and-vertical-landing (Stovl) engines. It will include fixed prices on lift-system components for the Stovl engines, costs for which are less mature. “We’re just starting down the curve on Stovl,” says Croswell. The first production Stovl engine, and first production lift-fan from Rolls-Royce, will be delivered soon, he says, acknowledging the higher risk in agreeing on fixed prices for the lift system.

David Van Buren, acting U.S. Air Force procurement chief, says a near-term reduction in the F-35’s unit recurring flyaway price is one of several measures on which the Air Force is relying to produce the savings demanded by Defense Secretary Robert Gates. Other areas targeted for major savings from increased efficiency are space programs and services. Van Buren expects Lockheed Martin, as the Pentagon’s largest contractor, to “step up” to the demand for cost savings.

With Carter “unhappy” with the performance of the $380-billion JSF program, Ralph Heath, Lockheed Martin’s executive vice president for aeronautics, told the conference: “We understand well the things that need to be addressed. Most have been addressed. It is not a question of any weakness or deficiency in the design.” The company has “underperformed,” he ­acknowledges, particularly in slower-than-expected development of the F-35B Stovl variant.

Lockheed Martin has resumed Stovl flight testing at NAS Patuxent River, Md., after a hiatus, but has yet to restart vertical landings. Because of the delays, development of the F-35B Stovl variant looks likely to be stretched out. But asked whether the F-35B could be canceled as part of a deficit-reduction plan, Carter simply said: “All three variants are part of the program.” U.S. Marine Corps Gen. James Cartwright, vice chairman of the Joint Chiefs of Staff, says no decisions on the fate of the Stovl variant have been made.

Pratt & Whitney expects initial service release (ISR) for the Stovl engine in December, essentially completing development of the F135 except for continuing support of F-35 flight testing. ISR for the CTOL/CV engine was achieved in January, launching production. “If Stovl slips to the right, there would not be much impact on engine cost because of the commonality between the variants. But the lift system would be impacted,” Croswell says, adding: “I would be surprised to see the Stovl variant go away.”