November 23, 2011 F-35 assembly area bi-monthly photo shoot forWASHINGTON: The Pentagon and F-35 maker Lockheed Martin have agreed on the terms of a deal for the Defense Department to buy two lots of F-35s for $7 billion.

The big question now is the average price per plane for each tranche (LRIP 6 and 7). While we’ve confirmed with two sources that the deal is as Reuter’s Andrea Shalal-Esa has reported it, no one has yet squealed on the money question. This will be the number that JSF critics probably will fasten on. The last batch (LRIP 5) of 32 F-35s went for $3.8 billion.

While they didn’t release the price per plane, Lockheed did say this morning that the price will come down 8 percent from LRIP 5.

“Cost details will be released once both contracts are finalized; however, in general, the unit prices for all three variants of the U.S. air vehicles in LRIP-6 are roughly four percent lower than the previous contract,” Lockheed and the Pentagon’s Joint Program Office said in a joint statement. “LRIP-7 air vehicle unit prices will show an additional four percent reduction. The LRIP-7 price represents about an eight percent reduction from the LRIP-5 contract signed in December 2012.”

Perhaps the most important part of this agreement is its timing. Once the deal is inked that locks the planes in to the Pentagon budget and guarantees numbers for production and maintains the program’s pace for testing. At a time of enormous budget uncertainty, this commitment looms large as a sign of the Pentagon’s belief in the program as it now stands. The head of acquisition, Frank Kendall, and Deputy Defense Secretary Ash Carter clearly have decided to move as briskly as is prudent to lock in as many big deals as possible. Witness the multiyear deals for the V-22 and Chinook helicopters. Just before the Paris Air Show, the Pentagon announced the deals: $4.89 billion deal for 99 Ospreys; the Chinook deal for 177 aircraft included an option for another 38 choppers and could be worth up to $4 billion.

But a few immediate clouds do loom over the F-35 program, as Andrea pointed out in her piece. Civilian furloughs imposed by sequestration are likely to result in testing delays of a month. While that isn’t really within control of the program, it won’t help the program’s optics if they can’t point to being on schedule for testing after all the problems they have faced over the last five years.

Comments

  • Don Bacon

    Lockheed’s profits in the last quarter were up ten percent, so they will supposedly, reportedly, maybe, drop unit costs eight percent, benefiting from the manufacturing learning curve. Nice of them.

    Meanwhile foreign F-35 critics in buyer countries, which are critical to the F-35 program, are waiting to pounce on any unit cost over $100 million (of course) together with high O&S cost (program) estimates. The whole thing hangs by a thread. Which major country will be the first to cancel — Italy? Canada?

    • TerryTee

      Canada, will be first and it looks like South Korea will go next, considering they “Capped their Fighter buy at $7.45 Billion Today and the “Junk Strike Fighter ” would cost them a 2-3 Billion more. And Boeing was only 3% over the cap in June. Next round Aug. 12-16th. I foresee “Silent Eagles” in South Korea’s future.

      http://www.defense-aerospace.com/article-view/release/146901/korea-caps-fighter-buy-at-%247.45-billion.html

      • Don Bacon

        Speaking of Canada, check out this video.

        my transcript:

        Opposition member speaking in parliament:
        –Mr. Speaker, the Minister of Defence has said, quote: This is the right plane, this is the right number, this is the right aircraft for our Canadian forces and for Canada, and if we don’t make this purchase there is a real danger that we’ll be unable to defend our airspace, unable to exercise our sovereignty, and unable to share our responsibility with both NORAD and NATO.
        –More arguments from the minister, wrong on the plane, wrong on the numbers, wrong altogether.
        –enough is enough, Mr. Speaker. When will this minister resign.

        government legislator, Peter Van Loan:
        –Mr. Speaker, as I have said, our government HAS a plan for the replacement of the CF18 (?) a/c
        –we are continuing with that seven-point plan and as part of that seven-point plan this government will be providing a comprehensive public update before the House retires for Christmas.

        seven-point plan! Before Christmas!

  • PolicyWonk

    While the price drop is adorable, it does little to get the F-35 into the price range into the region called “reasonable”: it is still far higher than it ever should’ve been or will be (and cost is hardly the entire problem).
    The aircraft has yet to meet performance goals, so they simply changed the goals to create parameters the plane is likely to meet.
    The F-35 is remains a staggering loss to the US taxpayers.

    • Don Bacon

      AviationWeek May 31, 2013

      USAF Accepts Limited Capability With 2016 F-35 IOC

      The U.S. Air Force, by far the largest presumed user of the F-35 fighter, has agreed to declare initial operational capability with a much more limited software and weapons capability that initially planned, according to a report sent to Congress May 31.

      The Air Force now plans to declare initial operational capability (IOC) with 12 F-35As (and trained pilots and maintainers) in December 2016, before the long-awaited 3F software package is fully tested. The service previously planned to wait for the 3F package because it allows for an expanded engagement envelope and more diverse weapons.

  • TerryTee

    In the Senate today and I quote ““The bill fully funds the requested 29 joint strike fighter aircraft in
    fiscal year 2014. But it reduces advanced procurement for fiscal year
    2015 out of concern that we must focus on the existing challenges in
    testing, design and development before ramping up,” Durbin said.” So I see only 29 for 2014 and a reduced buy for 2015 according to Durbin.

    http://www.defensenews.com/article/20130730/DEFREG02/307300010/Senate-Panel-Approves-594B-DoD-Spending-Bill

    • http://www.breakingdefense.com/ Colin Clark

      True, but Durbin’s version of the bill is highly unlikely to become law. It doesn’t even have a great chance of making it to the Senate floor at this stage, from what I hear.

      • TerryTee

        I think the Senate & House are taking the latest GOA report a lot more seriously this time, from what I have read. Also the Pentagon & LM can say what ever they like,but it’s Durbin as his crowd who ultimately cut the checks.

    • Another Guest (from Australia)

      Hi Terry Tee,

      Take a look at this very interesting article. You’ll like it.

      http://rt.com/usa/pentagon-f35-stealth-bomber-963/

      Regards Another Guest (from Australia)

  • M&S

    You’ll forgive me my math games, I need to see numbers to understand ‘second place decimal changes’…

    3,800,000,000 / 32 = $118,750,000.00 per plane _unit_ (as a commercial not military pricing term) costs.

    X.04 = 4,750,000

    X.08 = 9,500,000

    Let’er Rip 6 savings then yielding a minimum of average price of 114 million dollars for all three variants and a best case of 109.25 million dollars, probably for the USAF A model.

    For comparison, last I heard, the F/A-18E/F was still down around 65 million each and the Eurofighter and Rafale were hovering around 90 million.

    So… What does the JSF give us?

    1. ‘Durable Stealth’. Because the coatings are ‘baked right in!’. Except.

    A. 50% of LO is supposed to be about the shape as creating minimum direct path returns for various bandwidths that the RAM/RAS has to compensate for and we already know that the F-35 is nothing if not compromised by it’s wing leading edge sweeps, it’s massive gear, engine and weapons bay fairings. As well as the shape of it’s intakes which are protective against X/Ka band threats but form a corner reflector against longer wavelengths and the equivalent problems with the tail and particularly the exhaust.
    If the RAM has to work harder to compensate for these shortcomings, is the jet really _signature_ better than the F-22?

    B. No one has yet convinced me why, when you have -maybe- five or ten, high capability S2A threats (S-300/400 class batteries) in a given Tier-1 threat state, you need to have more than FNOW as First Night Of War stealth to begin with. Because it will be satellites and UAVs which find these dispersed/hardened/concealed targets. And a matter of 10-20 weapons each to kill even the best goal keeper defended sites still only comes up to maybe 50-60 jets, total.
    After which, _the plan_ was that the platinum bullet force could retire and the legacy effectors ‘flow in’ to do the bread and butter work against forces in the field and factories as transport, as needed.
    The idea being that you rapidly deployed the VLO effectors to begin an air campaign without much support and then, as the conventionals started arriving, you immediately transitioned to ground attack so that another 1991 Desert Storm campaign effort was not so needlessly over-built by the nature of heavy-systems logistics.
    Now, I suppose, if the world transitions rapidly to DEWS and hunting weapons because Stealth is such a boogey man that they can’t beat it any other way, RFLO would at least keep them from using radar to point their lasers at us.
    But given the trend is towards electro optical targeting anyway, I don’t see how an aspect vulnerable stealth aircraft is going to be any less subject to eyeblink destruction than a narrow bowtie UCAV. Whose mother will not be receiving The Visit.
    2. All Round Targeting.
    Given we have RTIP, I’m not going to touch AESA because it seems to me that any jet can do simultaneous mapping and air search with LPI to be determined by instantaneous bandwidth (electronics hardware) and code deftness (software bias). If so, an F-16E can probably also do electronic attack as high peak power loaded cyber insert or direct damage effect. Last I heard, those ran around 55 million each.
    Which leaves us with electrooptics. The EOTS is, for all intents and purposes, an internal Sniper Pod, ‘nuf said.
    The AAQ-37 EODAS, for all that it is talked up as an SAIRST, A Persistent Wide Areas Ground Target Search ISR system and a Navaid, is, in reality, just an overassuming MAWS.
    Indeed, if the system has any key ‘feature’ in it’s design, it is that VLO has required multiple, individual, apertures as opposed to single scanning arrays (AAR-58/60) to provide equivalent global coverage from half as many installations.
    The question then becomes whether or not we need such a marvel for the 90% of the time when _there is zero S2A or A2A threat_.
    Or if it is essential, why it could not be part of an artificial visionics as traffic avoidance capability on a UCAV which costs .5 as much as the JSF.
    3. The Wonders Of Deficient Kinetics.
    I always assumed that there was some kind of DEWS on the F-35 because only HPM (and invulnerability to counter HPM) would justify the low levels of onboard weapons. Lately, I have been revising that hope rather than belief because, when I look at the history of a program which began in 1994, I see a one-plane question to a question that was better answered by cruise missiles: what does it take to knock out fixed, high value, targets? In 1991, the answer was the F-117 as a 2X 2,000lb class weapons platform and I have a nasty feeling that the sole reason the F-35 is configured as it is: with two, deep, weapons wells instead of two wide ones (cough, Raptor) is simply because of a legacy misconception as to what Stealth really does, best.
    Today we know better. Today we know that you don’t attack fixed targets with laydown ballistic weapons because the defense will be waiting, in ambush layers, to shoot you up as you pass by. And yet the F-35s weapons bays remain so tiny that we are only now starting to see the forced ‘benefits’ of smaller weapons as weapons with extended reach in the form of the GBU-53 and the T3/JRADM.
    Again, my question is: Why would these systems not further benefit an essentially defenseless UCAV with F-22 providing target mapping as illuminator (missile) steering, post launch? The UCAV will almost certainly have better VLO and it will not be something which you lose sleep over shootdowns in that critical FNOW condition where -finding- the threat matters.
    A shortcoming is still a shortcoming but once you know the remedial solution, you no longer have to accept the initial premise condition which lead to the ‘mission need’. Gen-5 weapons are their own better bullet justification and are vastly cheaper.
    CONCLUSION:
    I do not see the need to proliferate VLO technology. I never did.
    A small force of IADS killing door kickers that can open the way for a much larger force of conventionals, UCAVs and CMs or aeroballistics _makes sense_.
    But only if it is not technologically compromised by too many foreign customer nations jumping on the stealth bandwagon.
    And only if it is purchased in sufficiently small numbers that we end up paying less for the system tactic as the fleet size over it’s lifetime O&M costs than we would for an matching attrition ratio fleet of conventional jets.
    The fact that the JSF is seen as being so important because of it’s export potential tells you Lockheed’s motive in pushing the jets inventory numbers at home.
    The fact that the JSF is seen as needing to be purchased in such large numbers at home tells you how much real confidence there is in it’s penetrability over the long term, once we begin to sell the technology of LO to so many customers.
    The safety of a secret is inherent to the inverse square of the number of people who know it.
    Finally, where any and all secondary electronics imbeds of the jet can be ported to other airframes, there is limited justification to the notion that the F-35 is the only answer to common capability need for better SA and better targeting.

    • TerryTee

      But those prices are without “Engines” did you want an “Engine” with that Aircraft? Well now that is going to cost you EXTRA !!!

  • Don Bacon

    F-35 unit costs are just in from Aviation Week on the latest contract for 71 aircraft. (60 – US, 11 – Australia, Italy, Turkey and Britain.)

    The F-35A variant, designed for conventional takeoff and landing (and the version with greatest appeal to international partners) is projected to cost $100.8 million in LRIP 6 and $96.8 million in LRIP 7. This is the first time since the program began production that the projected unit cost will be under $100 million.

    The F-35B, optimized for short takeoff and vertical landing, is expected to cost $108.5 million in LRIP 6 and $104.2 million in LRIP 7.

    Finally, the F-35C, designed with a larger wing for aircraft carrier operations, is expected to cost $120 million in LRIP 6 and another $115.2 million in LRIP 7.

    • PolicyWonk

      The pricing games are both incredible and incredibly sad.
      The per-unit cost for either variant of the F-35 are so out of control that they’ve given up talking about the “fly-away” cost of the individual models. Now you get the cost of an airframe, but then when you want to FLY it, just add another $29-39M.
      Outstanding: The USA is stuck with yet another corporate welfare program; An inferior aircraft that cannot meet the very performance standards it was designed for; Per-unit costs more than double what it was supposed to be; Test results that are not encouraging; and no other significant design in the pipeline.
      The Communist Chinese, Russians, and boardroom at LM might as well claim victory – because it is doubtful that anyone will have the guts to kill this flying turkey.

  • JohnJubly

    Loving how the pathological F-35 haters are starting to seizure and foam at the mouth.

    • Don Bacon

      It’s contagious — you’d better stay clear.

    • Another Guest (from Australia)

      John Jubly,

      Just another spin from LockMart. Again the price tag will keep continuing to increase, it will never be reduced, despite the Pentagon and Lockheed Martin have agreed on the terms of a deal for the Defence Department to buy two lots of F-35s for $7 billion.

      Only a mindless idiot would sign up to buy the failed F-35 which is a massively
      overpriced jet with full of junk that flies like an elephant.
      If I were the defence minister for my country (Australia) ok doing the defence acquisitions, if Lockheed makes me or wants me to participate the failed F-35 program for the RAAF’s fighter/strike force. You know what I’m going to do with the F-35 John, I shove the aircraft in their LM’s backsides and I will burn the F-35 paperwork.

    • Another Guest (from Australia)

      I also reckon the pro-F-35 fanboys/advocates will start to seizure and foam at the mouth if the F-35 gets completely scrapped.

  • Don Bacon

    One of the problems in determining costs is that both development funds and production funds are being used concurrently for contracts. So in determining engine costs you have to factor in awards like this (Navy money) —

    Jun 10, 2013 – Navy – United Technologies Corp., Pratt and Whitney, Military Engines, East Hartford, Conn., is being awarded a $648,769,404 modification to a previously awarded cost-plus-incentive-fee contract (N00019-02-C-3003) to extend the F135 System Development and Demonstration contract period of performance. In addition this modification is for the procurement of the technical baseline review design, verification, validation and qualification tasks; two spare flight test engines, and additional spare parts to support the F-35 Flight Test Program.

    and add it contracts like this —

    Dec 28, 2011 Navy – A total of $358,597,078 is being obligated at time of award. The contract includes both fixed price incentive and cost plus incentive contract line items. This undefinitized modification provides for the Lot V Low Rate Initial Production of 21 F135 Conventional Take Off and Landing (CTOL) Propulsion Systems for the Air Force; 3 Short Take-off and Vertical Landing (STOVL) Propulsion Systems for the Marine Corps; and 6 Carrier Variant (CV) Propulsion Systems for the Navy.

  • Mehmet Emre

    What gets on my nerves is that they dont tell the price per plane and they keep delaying the delivery date :Q . In the meantime you can have a look at some great F-35 photos :

    F-35 Joint Strike Fighter Pictures

    • Peter

      cool photos Mehmet

  • Another Guest (from Australia)

    This article is not believable. The prices for the Joke Still Flying will never come down, it’ll still keep skyrocketing.

  • bring_it_on

    The Contract announced, does not specify a Fly-away cost for the birds (or the average of the entire batch), That cost would come from the SAR. The 8% reduction being cited, is essentially a 8% drop for the same contracts from Lot 5 to Lot 7. Factoring in the engine’s is not going to change ANYTHING as even in Lot 5, this contract (Signed between LMA and the Pentagon) did not include the engine. If P&W manage to reduce their engine price, it would make the overall cost even less as far as projections based on Lot5 were concerned. True fly away cost would come from the SAR, and would be based on the Amount of money paid during the contracts, as well as the money paid in advance for long lead items etc. What this article, and this contract is telling us, quite clearly is that the F-35, is getting CHEAPER to build (It is still not CHEAP or at a cost where the program heads wants it). Hopefully P&W contract reflects a similar trend. The Goal is to get the price down to below 100 ( don’t remember what exactly Bogdon’s goal was) million, by the time the F-35 enters Full Scale production.

    • CharleyA

      These are also “target prices,” not the actual cost. No word about how the current LRIP batch is tracking against target, but historically the actual cost has been roughly 8% over the contracted/target price. That being said, LM is now responsible for a larger share of any overrun, some perhaps by magic we should start seeing contracted price paralleling the actuals.

      • bring_it_on

        You are correct, with any cost overruns in concurrency LMA would be paying 50% upto a certain amount and 100% of the overrun beyond that.

  • http://www.davidsponheim.com David Jon Sponheim 4 President

    Congress recently approved 30 Jets for $4 Billion! So, do we still need more? I agree with many of the other comments on the overall effectiveness of the F-35.
    There comes a point where we might be better served by developing a Peace Plan.
    Considering we have NEVER used the 187 F-22 Raptors in ANY WAR,
    is it safe to say this order is over the top? Do we really need to spend more while our Nation goes bankrupt?

    Here is the math: A $7 Billion Contract for 70 F-35s = $100 Million per Jet.

    Here is a brief History of the Projected Cost of the F-35:
    In 2001 Lockheed Martin claimed a potential market of 5,179 aircraft.
    As of April 2010 the United States intended to buy a total of 2,443
    aircraft for an estimated US$323 billion, making it the most expensive
    defense program in US history.[21]
    In September 2010 the US purchase plans came under review over the
    rapidly escalating development and production costs of the aircraft.
    Initial estimates of US$50M per aircraft had increased to at least
    US$92M, with some US estimates indicating US$135M.

  • Mithat