Lockheed: F-35 Can Compete On Cost

Lockheed Martin is aggressively countering the belief that the F-35Joint Strike Fighter is becoming unaffordable, claiming its cost willbe competitive with the latest F-16s and F/A-18s — if plannedproduction rates are achieved.
“If we secure theproduction volume to drive down the learning curve, we expect theacquisition cost to be approximately comparable to a similarly equipped[F/A-18E/F] or F-16 Block 60,” CEO Robert Stevens said during a mediaevent near Washington June 17.
The company isprojecting a unit recurring flyaway (URF) cost of “about $60 million”(in 2010 dollars) for the conventional takeoff and landing F-35A,including engine. This compares with the $80 million URF estimate bythe Pentagon’s Cost Analysis and Program Evaluation (CAPE) group, saysSteve O’Bryan, vice president F-35 business development.

Lockheed’sdefinition of URF is not used by the Pentagon to measure F-35 costs.Instead it uses average procurement unit cost (APUC), which includesassociated military construction and is an average across all three JSFvariants. The CAPE estimates the APUC has increased by more than 80%since the program began in 2001, to $92.4 million (in 2002 dollars).Cost growth forced the Pentagon to recertify the F-35 program in May(Aerospace DAILY, June 3).
Lockheed’s assertionis based on contracted costs for the first three lots of low-rateinitial production (LRIP), plus the negotiated price for the fourth lot— a “handshake agreement” which is expected within two weeks. O’Bryansays the aircraft price is 20% below the CAPE estimate for LRIP 3 andwill be “at least 20%” below for LRIP 4.
“Similarlyequipped” is an important caveat, as the price of the F-35 includes theradar, targeting pod, electronic warfare system, jammers,helmet-mounted display and other equipment not included in unit costsfor the F-16 and F/A-18, O’Bryan says.
Lockheedexpects to achieve its $60 million price goal for the F-35A around theend of LRIP in 2016-17, based on the assumption that production willachieve its targeted rate of between 120 and 200 aircraft a year,including production for international partners. “It depends on theramp rate,” he says.
International customers willpay a price “at or below the unit recurring flyaway cost” for an F-35A,O’Bryan says. The short-takeoff and landing F-35B and F-35C carriervariant will be more expensive than the A-model, he says.
Fromthe initial two-aircraft production lot to the negotiated price for the32-aircraft LRIP 4, Lockheed has reduced the air-vehicle cost by 50%,Stevens says. The price does not include the F135 engine, which ispurchased separately from Pratt & Whitney.
“Withadequate production volume and ramp rate, the [fifth-generation] F-35will be very competitive on price tag with fourth-generation aircraftin production today,” he says.
Whereas the firstthree lots were cost-plus, LRIP 4 is being negotiated as a fixed-priceincentive contract, two years earlier than originally planned. Stevenssays this underlines the company’s confidence in its cost estimates.

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