By Doug Cameron
The Pentagon said Friday that it plans to push Congress to
approve a deal for more than 400 F-35 fighter jets worth as much as
$34 billion in what would be the largest-ever weapons'
contract.
Frank Kendall, the Pentagon's acquisition chief, said that
committing to buy that many jets over three years starting in
fiscal 2018 could yield cost savings as suppliers would be able to
plan with more certainty, buy materials in bulk and triple
production from existing levels to about 150 planes a year.
The Pentagon said boosting production is crucial to cutting the
cost of the F-35 from the $108 million average paid for the main
type of the jet in a 43-plane deal agreed last November. Lockheed
Martin Corp, the F-35's main contractor, and engine maker Pratt
& Whitney recently submitted proposals for the next two batches
of aircraft, and alongside other suppliers have pledged to cut the
average cost to $80 million to $85 million by 2019,
Even a rise in output to 150 jets a year would fall short of the
200-plane capacity of Lockheed's mile-long assembly plant in Fort
Worth, Texas, which currently produces four F-35s a month. Many
analysts believe official projections of demand for more than 3,000
jets--including more than 2,400 for the U.S. -- won't be realized.
Italy and Japan also plan to assemble some jets.
"We had viewed a 200-a-year rate as a reach and remain of the
view that program numbers for F-35 akin to F-16 are fanciful," said
Byron Callan, a defense expert at Capital Alpha Partners LLC.
Lockheed's F-16 fighter jet has garnered more than 4,500 orders,
and many analysts expect the F-35 to secure at most 2,000,
depending on international demand.
The Pentagon plans to commission an independent study of the
cost benefits of a block buy that would be by far the largest
conducted by the department. The Navy last year signed a $17.6
billion deal for 10 submarines from General Dynamics Corp. and
Huntington Ingalls Industries Inc.
The forecast double-digit cost savings from a F-35 block buy are
also higher than previous Pentagon deals. A recent report from the
Congressional Research Service highlighted the difficulty of
measuring potential benefits, though cited a Pentagon study showing
savings of 2% to 8% over single-year deals on four previous
aircraft programs.
Mr. Kendall was speaking following a meeting in Oslo of industry
and government officials involved in the F-35, including Lockheed
Chief Executive Marillyn Hewson, Northrop Grumman Corp. CEO Wes
Bush and BAE Systems PLC's Ian King. Pratt & Whitney, a unit of
United Technologies Corp. was represented by its president, Paul
Adams.
Mr. Kendall said the tone of the annual meeting had changed
following years of technical problems that delayed the jet's entry
into service and inflated costs, with the focus on fielding the
planes with the U.S. and overseas customers and reducing operating
expenses.
The U.S. Marine Corps plans to have the first combat ready
squadron of F-35s fielded during the summer, and this week tested
six of the planes at once on an aircraft carrier. The U.S. Air
Force plans to introduce the plane next year, with the Navy
following in 2019, by which time the aircraft is expected to enter
full-rate production. Critics note that some of the plane's most
advanced features, including some weapons and sensors, won't be
ready for several more years.
The U.S. and nine other counties have ordered the plane, with
Denmark and Canada also evaluating potential deals.
Write to Doug Cameron at doug.cameron@wsj.com
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