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F-35 Modernization Costs Cloud Lockheed, DoD Negotiations

March 8, 2018
Pentagon’s program head estimates $16-billion fee, on top of new production costs

The F-35 Lightning II Joint Strike Fighter program is on course for more controversy concerning cost overruns – an issue which has dogged the program’s lead contractor Lockheed Martin Corp. and its major partners for much of the past decade. In testimony before the House Armed Services committee this week, the U.S. Dept. of Defense for the first time revealed that modernization costs for the fighter jets will run to about $16 billion through 2024, a figure that is in addition to the cost of new jet construction.

No contract for new F-35 fighter jets is expected soon, according to comments by Lockheed CEO Marilyn Hewson. "We have been open and collaborative throughout this process on this negotiation, but what I will tell you is it's a complex negotiation,” she told CNBC, “because, … when you consider 130 aircraft for this next lot, it's very important to understand the cost."

The F-35 Lightning II is a single-engine, aircraft designed for deployment for ground attack and combat, and deployed by the U.S. Air Force, U.S. Navy, and U.S. Marine Corps, and the defense forces of multiple allied nations

Vice Admiral Mathias Winter, who heads the Pentagon’s F-35 Joint Program Office, explained that “continuous enhancements and improvements will be made to increase capabilities that make the F-35 more lethal and survivable,” according to several reports.

The $16-billion estimate covers $10.8 billion for new software development and $5.4 billion to deploy the updates. Concerning the software development $3.7 billion of the cost would be allocated to the other nations that participate in the F-35 program.

To date, 270 F-35 aircraft have been deployed by the USAF, USN, and USMC, though the Pentagon has not determined how many of these jets will require the modernization effort.

The cost of the modernization emerges as Lockheed and the DoD continue to negotiate the cost of the next round of construction for the fighter aircraft, 130 units in Lot 11 of the series that has been in production since 2010.

Lockheed, as well as Northrop Grumman Corp, Pratt & Whitney, and BAE Systems plc, have worked for several years to make the F-35 program’s supply chain more cost-effective, and cut the delivery cost.

The DoD has credited the cost-cutting efforts in the past, and both Lockheed and the Pentagon have set a goal to reduce the F-35A unit cost to $80 million by 2020.

Even without an agreement on funding the next round of aircraft production, the F-35 program is planned to continue expanding. Lockheed is due to delivery 90 new jets this year, building toward a peak production rate of 160 new jets per year by 2023.

About the Author

Robert Brooks | Content Director

Robert Brooks has been a business-to-business reporter, writer, editor, and columnist for more than 20 years, specializing in the primary metal and basic manufacturing industries. His work has covered a wide range of topics, including process technology, resource development, material selection, product design, workforce development, and industrial market strategies, among others. Currently, he specializes in subjects related to metal component and product design, development, and manufacturing — including castings, forgings, machined parts, and fabrications.

Brooks is a graduate of Kenyon College (B.A. English, Political Science) and Emory University (M.A. English.)

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