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To me, three key issues emerged from the Senate Armed Services Committee's long hearing on the F-35 program today (May 19): the possible impact of horrendous initial estimates of lifetime sustainment costs; concerns expressed about Lockheed Martin's ability to execute on even the revised delivery schedule; and Sen. John McCain (R-Ariz.) questioning whether Lockheed is bearing any of the pain.Pentagon acquisition chief Ash Carter made clear that a major reason why F-35 procurement is being held flat at 32 aircraft in fiscal 2012 is because it is pointless to ask for more as the company's Fort Worth facility can't build more than 32 a year. Lockheed's ability to execute is also behind the decision to limit the ramp rate from fiscal 2013 onwards to 1.5 times year-on-year. While it may be a sensible plan, it constrains the program's ability to reduce costs through higher production rates and puts greater emphasis on finding other ways to drive out cost from the per-unit price -- and that is a much harder task.Making it harder to get production rates up and deliveries on schedule is the fact that the F-35's design is still not stable, and the majority of flight testing -- and opportunity for "discoveries" that require design changes -- still lies ahead.While so-called change traffic is coming down, "design changes are still at a higher rate than expected, and may continue into flight test," the Government Accountability Office's (GAO) Michael Sullivan said, adding "the design is still not fully stable several years after CDR [critical design review]."With Christine Fox of the Pentagon's Cost Accounting and Program Evaluation (CAPE) group telling the committee that its per-aircraft cost estimate for the F-35 has held steady at $95 million ($113 million in FY11 dollars) since 2008, the "sticker shock" factor at the hearing was reserved for the $1 trillion sustainment-cost estimate.Several of the senators' questions indicated a growing concern (okay, horror) over the estimated sustainment costs, not assuaged by the responses of the CAPE's Fox or GAO's Sullivan. While it should be possible to reduce the cost of repairables and contract support, Fox doubted they could get f-35 sustainment cost "down to legacy' costs. Sullivan labelled sustainment costs the progam's biggest challenge.With Carter and Venlet's strong words about driving down the aircraft's per-unit cost allaying some of the outrage over the F-35's price, it is possible Congress could seize on the sustainment cost figure as an excuse to begin cutting procurement numbers (and driving up per-unit cost, of course. Carter, Venlet and Lockheed's JSF executive Tom Burbage all cautioned the trillion-dollar number is not real, because the estimate is parametric and its assumption preliminary. Carter said the figure should not be believed, and will never be paid -- but it is out there in public now, ready to do damage.And, finally, Lockheed can expect fallout from McCain's apparent belief the company is avoiding shouldering any of the cost overrruns caused by its poor performance on the program. Carter said the current cost-plus development contract only allows the Pentagon to withhold awards fees. But the contract is being renegotiated...
ar99, tacair, f-35, jsf
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