It the F-35 worth the cost?
I don’t know if the jet is “worth” its price tag. I don’t have the necessary expertise to have an opinion. What I do know is that each jet currently is priced at $82.5 million (per Audrey Decker’s July, 2024, article at DefenseOne). However, the price may rise for future lots being negotiated now. Per BreakingDefense (Valere Insinna, September, 2024) negotiations are not going well. DoD and Lockheed Martin have been trying to settle on a price for more than a year. Originally, the parties anticipated shaking hands before the end of 2024; however, it now appears that won’t happen—prompting Lockheed Martin to warn shareholders of a hit to both forecasted revenue and cash flow.
Not to mention, the program has been significantly delayed. For much of 2023 and 2024, “completed” aircraft have been piling up on runways because DoD would not accept them. The contractor was unable to finish “Technology Refresh 3” in time and DoD refused to accept aircraft without the required TR3 updates. Citing a GAO report, Defense One reported that “the Pentagon has refused delivery of so many F-35s that Lockheed Martin is running out of places to put them.” News reports state that the Pentagon was withholding $7 million per undelivered plane. Even when deliveries started to be accepted (with incomplete or “truncated” TR3 updates), the Pentagon continues to withhold $5 million per jet (source: Defense One).
Speaking of deliveries, that same Defense One article reported that Lockheed Martin estimates it will take 12 to 18 months to “unwind” the backlog of undelivered aircraft. The article quoted Lockheed Martin executive Greg Ulmer as saying “The company plans to ‘unwind’ by delivering about 20 aircraft a month—13 newly-built aircraft and seven of the jets that were in storage.”
We may have heard this before.
From articles on Apogee Consulting’s website (available via keyword search)—
August 2009: “In its August 13, 3009 edition of Flight Daily News, Flight International magazine asks whether Lockheed Martin can actually ramp-up production of its F-35 “Lightning II” Joint Strike Fighter (JSF) from its current pace of one aircraft per month to an unprecedented pace of 20 aircraft per month, assembling three production variants on the same line while managing a global supply chain. … Flight International notes that ‘current acquisition plans call for dramatically raising output until a new fighter is delivered every working day, excluding holidays and weekends, or about 240 jets in a year.’”
April 2010: “… on April 16, 2010, InsideDefense.com reported to its subscribers that the Air Force had halted plans to increase JSF production to 110 aircraft per year, and has decided to ‘top-out’ its purchases at 80 planes per year, starting in GFY 2016. The article quotes Air Force Chief of Staff General Norton Schwartz as saying, ‘As the program continues to progress, we will analyze production capacity and available funding for potential production rate adjustment beyond the 80 aircraft per year rate reflected in the current program.’ The article further notes that Lockheed Martin stated ‘that once its … assembly line reaches its optimal production rate in 2016, it could build as many as 230 jets per year’—so LockMart is ready ‘to build more jets if requested.’
May 2016: “… according to … Defense One, ‘F-35 production is slated to hit full steam in 2019, and Lockheed Martin is reshaping its final assembly line to get ready. … By 2020, one year after the Fort Worth plant hits its full 17-jet-per-month stride, there will be more than 600 F-35s, including nearly 180 sent to U.S. allies.’”
March 2019: “… Lockheed Martin delivered 91 aircraft in 2018, which was about double its production of only two years before. Looking ahead, the JSF will enter ‘full rate production’ and LockMart has committed to deliver 130 aircraft before the end of 2019.”
Then COVID hit.
From Air & Space Forces Magazine.com, February, 2024: “Lockheed Martin expects that F-35 production will remain at about 156 aircraft per year through 2028…” according to executive Greg Ulmer.
So, what’s the point? The point is … nobody knows. Nobody knows what production at full capacity looks like for the F-35. Early (perhaps optimistic) forecasts said that number was 240 aircraft per year. More recently, Lockheed Martin said that number was 156 aircraft. However, now it seems as if we are back to 20 per month (240 per year), though only seven of those 20 will be “new” fresh off the line aircraft. Seven per month is 84 per year.
So … who knows? The Full Rate Production at full capacity number is all over the place.
No wonder it takes more than a year to negotiate the next buy.
Okay. Now to the reason I wrote this blog article.
I tracked F-35 contract actions during Government Fiscal Year 2024 (ending 30 Sept 2024). Each day, the Pentagon reports contract actions exceeding $5 million in value. I watched for F-35 activity, and I recorded what I saw in a spreadsheet.
Based on DoD reports, the Pentagon awarded $16.232 billion to Lockheed Martin and other F-35 contractors through 61 individual contract actions.
Lockheed Martin received the most, of course, at $12.972 billion. But RTX (including Raytheon and Pratt & Whitney) received $3.212 billion in that same period. BAE Systems received $77 million. And HDR Engineering received $16.4 million.
In one year.
Of the 61 reported contract actions, 18 were new contract awards. The remaining 43 actions were modifications to existing contracts. The new contract awards included Undefinitized Contract Actions (UCAs) as well as orders against previously placed Basic Ordering Agreements (BOAs). New contract awards were primarily focused on international program customer needs, though $348.5 million was awarded for Lot 18 spares—even though Lot 18 hasn’t been negotiated yet. Nothing like long-lead money, am I right?
Modifications included $70 million for TR-3 redesign efforts. One might have thought TR-3 was included in previous prices, since that is the reason DoD refused to accept new aircraft. Oh, well. Another mod (for $111.9 million) was to extend the period of performance for Block Four flight testing. It seems the more one delays, the more one gets paid.
Let’s wrap this up. The largest defense program in the history of the United States continues to move forward, albeit with schedule and technical delays, as well as with cost growth that stems from many causes, including (apparently) schedule and technical delays.
I will be happy to report on a stable, sustainable program, once one shows up.
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