F-35 Cost Target Impossible Without Block Buy, Lockheed Says (excerpt)
(Source: Flightglobal.com; posted Feb 09, 2017)
By Stephen Trimble
WASHINGTON, DC --- A hand-shake agreement with US government negotiators slashes the cost of each F-35A ordered in the latest annual lot to $94.6 million, but the Lockheed Martin programme’s goal to drop the price to $85 million in three years is in jeopardy unless the Defense department invokes a package of special acquisition tools, says Lockheed chief financial officer Bruce Tanner.

The F-35 joint programme office and Lockheed have said for years that a long-sought, three-year block buy that would begin in FY2018 would be a key ingredient in reaching the $85 million unit recurring flyaway cost target a year later.

In remarks on 8 February at the Cowen Aerospace/Defense and Industrials Conference, Tanner took that approach a step further, saying the $85 million price target, including the Pratt & Whitney engine, is now impossible to achieve in the absence of one or some combination of another round of Blueprint for Affordability cost reductions in the manufacturing system, a block buy and an economic ordering quantity purchase.

“As we look at it now,” Tanner says, “one of those or combination of those are required to get to the $85 million.”

Since 2014, Lockheed has unveiled two rounds of Blueprint for Affordability initiatives with pledged investments of up to $340 million to lower unit recurring flyaway costs.

Since the F-35 remains in the low-rate initial production through FY2019, the programme is legally prohibited from using a multi-year procurement authority, which allows US government agencies to award a single contract spanning multiple years rather than an annual lots. Instead, the F-35 has pursued approval of a “block buy”, which seeks bulk discounts by offering industry an upfront commitment of purchases over multiple years, but usually without cancellation fees. (end of excerpt)

Click here for the full story, on the Flightglobal website.

(EDITOR’S NOTE: We saw this one coming from afar: Trump’s posturing gives Lockheed reason to call for block buy, which would finally punt the F-35 program beyond the point of no return.
See our Jan 16 story “Lockheed CEO Brilliantly Outmaneuvered Trump on F-35”


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