CPFH is just one factor of total ownership cost. Sustainment is the area with the most potential to reduce cost, Kendall says. Development is well underway, with more than 40% of flight testing complete. Though risk is still present, especially in software work, Kendall says he is “cautiously optimistic” about F-35 development.
Production pricing is, for now, fairly well-known based on “actuals,” or numbers gleaned from early production lots, he says. The early aircraft will cost roughly double the predictions from 2001, when Lockheed Martin beat Boeing for the work. This alone has prompted international buyers to delay their purchases, contributing to a higher per-unit cost early in the program. For example, when Turkey announced it was shifting its buy two years, each aircraft in the lot in which the country was expected to buy increased about $1 million, Bogdan says.
But Bogdan remains hopeful that the F-35A can reach a per-unit price of $80-90 million, based on current purchase plans from partners.
So, while the program office is focusing on lowering ownership cost, Bogdan says he expects to continue pushing Lockheed through annual production contracts to take on more risk in delivering ever lower pricing. Furthermore, he is shifting to the company some cost of potential retrofits to early production aircraft. These aircraft could need as much as $5 million in retrofits following discoveries made in flight-testing—which is ongoing even as new aircraft roll off the Fort Worth production line.
Meanwhile, Kendall's staff is conducting yet another review of F-35 sustainment after the Pentagon received feedback from contractors during an industry day. He says performance-based logistics are being considered for the fleet, which is slated to replace Navy, U.S. Marine Corps and Air Force fighters.
F-35 Production Cost – Early Lots
|Contract||Number of Aircraft||AIRCRAFT DELIVERED||TARGET COST at Award*||Current Estimate||TARGET Unit Cost|
|LRIP 1||2||2||$511.70||$561.60||F-35A, $222.1|
|LRIP 2||12||12|| 2,349.60|| 2,671.60||F-35A, 161.7F-35B, 160.7|
|LRIP 3||17||17|| 3,290.10a|| 3,801.70||F-35A, 128.2F-35B, 128.0|
|LRIP 4||32||14|| 5,082.20|| 5,408.80||F-35A, 111.6F-35B, 109.4F-35C, 142.9|
|LRIP 5||32||0|| 3,800.00||N/A||F-35A, 105F-35B, 113F-35C, 125|
|Notes: Cost in $U.S. millions, excluding engines. Engine pricing for LRIP 3, for example, is as follows: $16 million for F-35A/C and $38 million for F-35B. Potential retrofit cost could be as high as $4.86 million per aircraft.*Costs for LRIPs 1-4 include sustainment. Cost for LRIP 5 does not.Sources: Government Accountability Office and F-35 Joint Program Office|