F-35, Pentagon and Lockeed negotiate for $ 4 billion "22th block"

Lots of news for Lockeed Martin's F-35 platform costs, according to the latest Department of Defense Acquisition Report sent to Congress last week and obtained by Bloomberg News, 

The total estimated price for research and procurement has increased by $ 22 billion, adjusted for inflation, according to the Pentagon's latest annual budget. The estimate for the operation and support of the fighter fleet for the next 60 years it has grown by almost 73 billion dollars reaching the record 1.196 trillion dollar figure.

The increase in acquisition costs from $ 406,2 billion to $ 428,4 billion, or a 5 percent increase, is not due to delays or excessive costs for labor or materials. The increase reflects the implementation of important updates planned in the upcoming changes to “Block 4”.

The Pentagon in an e-mail reported that: "The F-35 program remains within all cost, planning and performance thresholds and continues to make steady progress." The office "is committed to containing costs in all areas of the program".

But estimating the long-term costs of operating the fleet from 2011 to 2077 has always been problematic, even before the latest Pentagon report estimated an increase of up to $ 1.196 trillion.

Expected exam

The expected increase will likely be scrutinized by lawmakers, Pentagon acquisition chief Ellen Lord, and Defense Secretary Pat Shanahan. Lockheed will be pushed to reduce operations planned for support costs.

As a sign of concern, the budget proposed by the Pentagon for 2021 foresees 17 F-35 fewer than planned. So in 2021 only 81 copies will go to the US military.

"According to current estimates, planned outlays for F-35 support based on planned fleet growth could jeopardize future related service operations," the report said. Lockheed also “must address the necessary accessibility initiatives to supply chain management, optimizing priorities along the supply chain for spare parts and new production parts” and share data rights with certain F-35 software with the Pentagon.

Lockheed's vision

Carolyn Nelson, a spokesperson for Lockheed, based in Bethesda, Maryland, said in an email that the contractor "is taking aggressive actions to build supply chain capacity, reduce supply chain costs and improve parts availability to help reduce support costs and increase readiness ”.

He went on to say that the US defense will plan to review supply chain tenders, supplier contracts, synchronization of reserve purchases, improved parts reliability and accelerated changes to previous aircraft. Lockeed for its part has already "reduced the share of the cost per aircraft" each year by 15% since 2015 and will continue to look for ways to further reduce costs ".

The United States plans to purchase 2.456 F-35 jets in its variants: 1.763 for the Air Force, 420 for the Marines and 273 for the Navy.

The total number does not include the 700 units sold to foreign armed forces.

Speed ​​of negotiations

The Pentagon report called for better cooperation from Lockheed to accelerate contract negotiations while the pace of F-35 production continues to rise.

Talks for the twelfth and largest manufacturing contract to date, worth a whopping $ 22 billion, are running fast and are on track to culminate in mid-May. But that wasn't always the case. The Pentagon's office of the F-35 program "continues to experiment with new negotiations to unnecessarily slow down the timing for awarding the contract," the report noted.

Nelson said: "We continue to trade in good faith" and in the current talks "we have used actual data from the last 11 contracts as the basis of our offer".


F-35, Pentagon and Lockeed negotiate for $ 4 billion "22th block"

| Economics, EVIDENCE 4 |