Latest F-35 Contract Agreement Hard to Decipher (Corrected)
(Source: defense-aerospace.com; published Dec. 3, 2012)
By Giovanni de Briganti
PARIS --- Given that Lockheed Martin and the Pentagon have been negotiating for a full year to finalize the F-35’s fifth Low-Rate Initial Production (LRIP 5) contract, it is hard to understand how the agreement announced on Nov. 30 (see at bottom) can be considered to constitute an advance worthy of an announcement.

Reuters reported Nov. 30 that “the deal is valued at around $3.8 billion, although the two sides are still finalizing details.” As they have been finalizing details for well over a year, why announce an agreement that is not final?

The Nov. 30 announcement appears to have no other objective than to allow outgoing F-35 Program Executive Officer Vice Admiral Dave Venlet to leave his position on a positive note. In fact, Venlet implied as much when he stated that “the LRIP-5 agreement will end the year on a positive note.”

However, given what he has achieved in getting the program on an even keel, some may question whether it was necessary to fabricate an “agreement” to mark his departure, instead of dwelling on how he injected a badly-needed dose of realism into the troubled program.

In addition, by claiming an agreement has been reached when it clearly hasn’t, the announcement muddies even further the already murky waters surrounding LRIP 5 costs. And, as it does not contain a cost figure, this “agreement” makes it difficult to understand what progress it could possibly embody in the F-35’s long-standing struggle against rising costs.

Lockheed spokeswoman Laurie Quincy told defense-aerospace.com in a Nov. 30 e-mail that “The cost for LRIP 5 jets is significantly less than the cost of LRIP 4 jets. Our production performance has been very good despite a three month strike in 2012. Even with flat production rates from LRIP 4 to LRIP 5, the cost for LRIP 5 jets will be about 50 percent less than LRIP 1 jets. Also, LRIP 5 labor costs are 14 percent below LRIP 4 actual costs.”

(EDITOR'S NOTE: This article was substantially edited Dec. 4 to correct mistakes in estimating the cost of LRIP 5 aircraft. We will revisit the issue once the costs of the final contract are released. We apologize for the errors.)

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Principle Agreement Reached On Fifth Production Lot of Lockheed Martin F-35s
(Source: US Defense Department; issued Nov. 30, 2012)
WASHINGTON, D.C. --- The U.S. Department of Defense and Lockheed Martin have reached an agreement in principle to manufacture 32 F-35 Lightning II stealth fighters as part of Low-Rate Initial Production 5 (LRIP-5). The contract will also fund manufacturing-support equipment, flight test instrumentation and ancillary mission equipment.

“It’s been a long journey, but I’m pleased we’ve achieved an agreement that is beneficial to the government and Lockheed Martin,” said Vice Admiral Dave Venlet, F-35 Program Executive Officer. “Production costs are decreasing and I appreciate everyone’s commitment to this important negotiation process. The LRIP-5 agreement will end the year on a positive note and sets the table for the program to move forward with improving business timelines for the greater good of all the nations partnered with us.”

Under the contract, Lockheed Martin will produce 22 F-35A conventional take-off and landing (CTOL) variants for the U.S. Air Force, three F-35B short takeoff/vertical landing (STOVL) variants for the U.S. Marine Corps and seven F-35C carrier variants (CV) for the U.S. Navy. Aircraft production was started in December 2011 under a previously authorized undefinitized contract action.

“We remain committed to working with our government and international customers, and we continue to see excellent production performance,” said Orlando Carvalho, Lockheed Martin F-35 Program General Manager. “Our top priority is to deliver the F-35’s 5th generation capability to our U.S. and partner national warfighters.”

The LRIP 5 aircraft will join 63 F-35s contracted under LRIPs 1-4. To date, 29 LRIP aircraft along with 19 previously built System Development and Demonstration aircraft have been delivered from Lockheed Martin's production facility in Fort Worth, Texas.

The most recent deliveries took place in November when three STOVL aircraft were delivered to Marine Corps Air Station Yuma, Ariz. The U.S. and eight partner nations plan to acquire more than 3,100 F-35 fighters. Israel and Japan have also announced plans to purchase the jet under Foreign Military Sales agreements. (ends)

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