Thursday, March 01, 2018

The Pentagon is trying to figure out the true cost the F-35

via CNBC
"To better inform our target glide path, I want to know what it truly costs to produce the aircraft," said Navy Vice Admiral Mat Winter, program executive officer for the Pentagon's F-35 joint program office.

"The number of quality escapes and what we call production line defects needs to get better," Winter told reporters during a roundtable Wednesday.


"The price is coming down, but it's not coming down fast enough," said Winter, saying he believes Lockheed Martin is negotiating in good faith — but with a caveat.

"I will tell you that I am not as satisfied with the collaboration and cooperation by Lockheed Martin," he added. "They could be much more cooperative and collaborative, and we could seal this deal faster; we could. They choose not to, and that's a negotiating tactic."

As it stands now, the unit price for an F-35A — including aircraft, engine and fees — is $94.3 million.

"We are targeting a reduction from that for lot 11 and for obviously lot 12, 13 as we go forward," Winter said.
Winter added that the projected sustainment costs on the F-35 are poised to become unaffordable as the fleet grows from 280 aircraft to 800-plus by the end of 2021.

Despite tough contract talks, Winter said that pressuring the defense giant into an unilateral contract agreement is an "endgame tactic" and "we are nowhere near that."

"I'm negotiating for the best deal," he said. "I'm gonna go for the best deal for the taxpayer, for my partners and as importantly as the next negotiation starting point for lot 12 and on."
Story here. 

*  Needs to know the true COST of the airplane.

*  The number of defective aircraft needs to go down.

*  Sustainment costs are poised to make the airplane unaffordable.

This sounds like the F-35 program is still in trouble.

The Pentagon has a problem that has embraced the worst aspects of capitalism.  Double digit profit margins as the norm, not the exception. That pressures Lockheed Martin to keep the price as high as possible to keep returns as high as possible.

The Pentagon is trying to defend the country and LM is trying to win for its stockholders.

I don't know if those are compatible positions.  

The reality is simple.  The Pentagon placed all their eggs in the Lockheed Martin basket and they're gonna have to force a price on them with the information they have.  Will that make other defense firms skittish?  Doubtful. Everyone is well aware of the games that Lockheed Martin plays.  If you don't believe me ask Patria!

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