Lockheed Martin F-35 Sets F-35A Unit Price Below $80 Million Target

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After years of struggling to get planes into the air, the Joint Strike Fighter program has substantially boosted its mission capable readiness rates from 55 percent last October to 73 percent, Ellen Lord, the head of Pentagon acquisition, told reporters today.

While that new readiness rate does not match the 80 percent minimum set by former Defense Secretary Jim Mattis, it certainly indicates Lockheed Martin has substantially improved its management of the supply chain.

A shortage of parts, particularly the canopy adhesive Breaking D readers know about, had effectively crippled the program with the miserable 55 percent rate. If you can barely get half your 440 planes into the air you don’t really have a useful fleet of 440 planes at any one time.

The readiness rates were revealed this morning during a press briefing at the Pentagon to announce the final agreement on the largest procurement in American history, the $34 billion purchase of 478 F-35s in Lots 12-14 of Low Rate Initial Production.

Follow-on orders are expected to run under full-rate production. For the first time, the cost of an F-35 fighter jet and its engine drops below US$80 million in Lot 13 and 14.

The sub $80 million per unit for recurring flyaway cost for an F-35 represents an integrated acquisition price for the 5th Generation Weapon System.

With embedded sensors and targeting pods, this F-35 unit price includes items that add additional procurement and sustainment costs to legacy 4th Generation aircraft.

According to Lockheed Martin, the agreement reflects the F-35 Enterprise goal to meet its long-stated cost reduction targets for each variant.

“Driving down cost is critical to the success of this program.

I am excited that the F-35 Joint Program Office and Lockheed Martin have agreed on this landmark three-lot deal.

This agreement achieves an average 12.7 percent cost reduction across all three variants and gets us below $80 Million for a USAF F-35A by Lot 13 – one lot earlier than planned,” said Air Force Lt. Gen. Eric Fick, F-35 Program Executive Officer. “This $34 billion agreement is a truly historic milestone for the F-35 Enterprise.”

Under the agreement, the Pentagon awarded a US$7 billion modification to the firm-fixed-price, fixed-price incentive firm target cost-reimbursable contract F-35 procurement contract reflecting the procurement of 114 aircraft under Lot-12 buy, for the Air Force, Marine Corps, Navy, and Foreign customers. Specifically, the modification procures 48 F-35A aircraft for the Air Force, 20 F-35B aircraft for the Marine Corps, nine F-35C aircraft for the Navy, 12 F-35A aircraft for the government of Norway, 15 F-35A aircraft for the government of Australia, and eight F-35A and two F-35B aircraft for the government of Italy. The above U.S. aircraft quantities are inclusive of fiscal 2019 (Lot 13) plus up aircraft.

The total multi-year buying agreement includes 291 aircraft for the U.S. Services, 127 for F-35 International Partners, and 60 for F-35 Foreign Military Sales customers.

“With smart acquisition strategies, strong government-industry partnership and a relentless focus on quality and cost reduction, the F-35 Enterprise has successfully reduced procurement costs of the 5th Generation F-35 to equal or less than 4th Generation legacy aircraft,” said Greg Ulmer, Lockheed Martin, F-35 Program vice president, and general manager.

“With the F-35A unit cost now below $80 million in Lot 13, we were able to exceed our long-standing cost reduction commitment one year earlier than planned.”

More than 450 F-35 aircraft are operating now from 19 bases around the globe. Eight nations have F-35s operating from a base on their home soil, and seven Services have declared Initial Operating Capability (IOC).

More than 910 pilots and 8,350 maintainers have been trained, and the F-35 fleet has surpassed more than 220,000 cumulative flight hours.

The F-35 program includes 1,500 direct suppliers, 1,400 of them are in the USA, and 100 located internationally.

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