The Pentagon yesterday afternoon announced a modification to the multibillion-dollar F-35 Joint Strike Fighter low-rate initial production contract.
Lockheed Martin Corp., Lockheed Martin Aeronautics Co., Fort Worth, Texas, is being awarded a $237,740,000 modification to the previously awarded fixed-price-incentive-fee (firm target) F-35 Lightning II Joint Strike Fighter (JSF) Low Rate Initial Production IV contract (N00019-09-C-0010) for changes to the configuration baseline hardware or software resulting from the JSF development effort. This modification increases the concurrency cap for the U.S. Marine Corps and United Kingdom short take-off vertical landing aircraft; Air Force and Netherlands conventional take-off and landing aircraft; and Navy carrier variant aircraft. The concurrency cap establishes the threshold at or under which the contractor is obligated to incorporate government-authorized changes. Work will be performed in Fort Worth, Texas, and is expected to span multiple years. Contract funds in the amount of $222,600,000 will expire at the end of the current fiscal year. This contract modification combines purchases for the Navy ($153,200,000; 64.5 percent); Air Force ($69,400,000; 29 percent); the United Kingdom ($8,200,000; 3.5 percent); and the Netherlands ($6,940,000; 3 percent). The Naval Air Systems Command, Patuxent River, Md., is the contracting activity.
DOD Expects Fourth JSF Production Batch To Exceed Target Cost By $534 Million (DefenseAlert, April 18)
The price tag for the Joint Strike Fighter's fourth production run could be $534 million higher than originally expected, a 12.5 percent increase propelled by an estimated $289 million in additional costs to correct deficiencies uncovered during F-35 flight testing, according to the Defense Department.
In testimony prepared for Congress last month, senior Pentagon acquisition officials -- including acting acquisition chief Frank Kendall and Vice Adm. David Venlet, director of the F-35 program office -- disclosed less than half the potential costs DOD expects will be required to procure the low-rate initial production (LRIP) Lot 4 aircraft.
Their testimony, submitted for a March 20 hearing of a House Armed Services air and land subcommittee, acknowledged $245 million in projected cost overruns to build the aircraft but provided no estimate for concurrency costs -- must-pay bills to address shortcomings identified during flight tests. Lawmakers did not ask about concurrency costs during the hearing.
In response to questions from InsideDefense.com, the F-35 Joint Program Office outlined potential costs beyond the original $3.4 billion deal with prime contractor Lockheed Martin for LRIP Lot 4, a batch of 32 aircraft -- including one jet each for Great Britain and the Netherlands.
"For LRIP [4], the concurrency estimate is currently $289M," program office spokesman Joe DellaVedova wrote in an email. The production run -- using funds appropriated in fiscal year 2010 -- is 57 percent complete, he added. The government is responsible for all LRIP Lot 4 concurrency costs, an arrangement the Pentagon is working to change in the Lot 5 contract that is still being negotiated with Lockheed Martin.
The projected concurrency costs plus the forecast cost overruns would total $534 million.
Asked why Pentagon officials did not mention this figure to Congress last month, Pentagon spokeswoman Cheryl Irwin said, "We don't have a budget quality estimate of concurrency costs for LRIP 4. We have indicated to Congress that there will be additional costs for concurrency."
Concerns about concurrency costs were "a major basis" for the Pentagon's decision in February to defer production of 179 F-35 aircraft beyond the fiscal year 2013 to 2017 spending plan, she said. . . .
Pentagon Finds $258 Million To Buy Back Two F-35 Jets Cut Last Fall (DefenseAlert, April 16)
The Pentagon on Friday announced a $258 million contract to buy two additional F-35 aircraft using money found during an end-of-fiscal-year-budget review, a sum nearly equal to the Defense Department's $263 million reprogramming request last summer denied by Congress that aimed to siphon funds from other Navy and Air Force accounts to finance F-35 cost growth.
The purchase of the two additional aircraft, one Air Force conventional-takeoff-and-landing variant and one Navy aircraft-carrier variant, partially reinstates four jets cut in October from the planned 34-aircraft fifth production lot (DefenseAlert, Oct. 26, 2011). Those reductions were made to help finance a $771 million bill tabulated last year to pay "over-target and concurrency" costs for the first three Joint Strike Fighter early production runs.
"In the fall of 2011, estimates for over-target and concurrency costs originally indicated the government could afford to procure 30 aircraft; however, as the program received greater fidelity on cost overruns and conducted its end-of-fiscal-year budget reviews, there were enough funds to procure two additional F-35s," Joe DellaVedova, spokesman for the F-35 program office, said today in response to questions from InsideDefense.com.
The revised profile for the fifth low-rate production lot -- LRIP Lot 5 -- is 22 F-35A conventional-take-off-and-landing variants, three F-35B short-takeoff-and-vertical-landing variants, and seven F-35C aircraft-carrier variants.
The Pentagon and F-35 prime contractor Lockheed Martin are expected in "late spring" to definitize terms for the fifth production run contract; DOD is working for the first time to get Lockheed to assume greater responsibility for F-35 concurrency costs. . . .
DOD To 'Dial' Back F-35 Production Unless Lockheed Demonstrates Progress (DefenseAlert, March 21)
The Pentagon wants a contractual framework for the next two rounds of F-35 purchases from Lockheed Martin that increase government leverage, limiting the sixth production run to 26 jets -- 20 percent below the 31 authorized and appropriated in fiscal year 2012 -- until the prime contractor demonstrates progress on specific criteria.
In joint testimony prepared for the March 20 hearing of the House Armed Services tactical air and land forces subcommittee, the three senior Pentagon officials responsible for the Joint Strike Fighter program disclosed that the notional contract structure for lots 6 and 7 of Joint Strike Fighter low-rate initial production will allow the Defense Department to increase aircraft orders as rewards for improved contractor performance.
"This strategy provides a means to have control -- a 'dial' -- on production that is informed by demonstrated development performance against the 2012 plan and concurrency cost risk-reduction," according to the prepared statement of Frank Kendall, the acting under secretary of defense for acquisition, technology and logistics; David Van Buren, the Air Force acquisition executive; and Vice Adm. David Venlet, the F-35 program office director.
"We believe our plan for negotiations for LRIP 6 and 7 will allow us to control production quantity based on the performance of the development program," they wrote. "It is important that Lockheed Martin demonstrate performance and help us to establish the confidence that the F-35 is a stable and capable platform." . . .