JSF IN PERIL

The price of the first F-35 Joint Strike Fighters coming off Lockheed Martin's assembly line could jump by 25-35% per aircraft to as much as $58-62 million or more in today's dollars if Congress puts the brakes on early production of the aircraft, say U.S. Air Force and Lockheed Martin officials.

Along with the U.S. Air Force, Australia and the U.K. stand to bear the burden of the additional cost. "The impact [on those two countries] could be significant," says Tom Burbage, executive vice president and general manager for Lockheed Martin's F-35 Joint Strike Fighter. "But it would have to go up a lot before we would be threatened [by Eurofighter or Gripen] from a per unit cost basis," he adds.

Currently the average unit cost of the JSF conventional takeoff and landing aircraft is projected at $46-47 million each if the production plan remains intact, he says. The short takeoff and landing and aircraft carrier versions are running "about $10 million more per copy," Burbage says. The JSF program, the largest procurement in Pentagon history, was designed to capitalize on global demand in an effort to keep cost down. So, stabilized production is paramount as the program moves forward.

"I won't say the business case goes away, but [delay] always puts it at risk," says Kenneth Krieg, the Pentagon's top procurement official. "It's part of why the program was structured the way it was."

JSF's long-term viability is teetering in the balance as lawmakers are weighing two plans, both aimed at reining in its momentum. The Senate's suggestion is to delay low-rate initial production by a year, while the House proposes to cut production from 16 to as few as four. Lockheed Martin says it needs to sustain production at one JSF per month to avoid cost increases. Final negotiations on the defense authorization bill are underway. Either change, however, will drive per unit cost up at a critical time for the program. Eight member countries are now reviewing draft plans of their industrial participation and procurement numbers.

"Unfortunately, as programs get larger, they look like better targets," says U.S. Air Force Secretary Michael Wynne. Any Pentagon program is a balance among the requirements community, Congress, program management and industry, he notes.

"If one of those partners backs out, then the program [enters] the classic spiral" of delays and cost growth, Wynne adds. After the fiscal cuts are inflicted by Congress, they then accuse the program of being late and over budget "on its own merit, forgetting conveniently that it was some [congressional] fiscal discipline that started it down the road."

Government JSF officials have projected increases of $12-16 million depending on the course of congressional action. Yet, those numbers are being eyed with some skepticism.

"The numbers don't make sense to me, because if you're talking about the first four or five airplanes, the impact is probably quite a bit more," says an aerospace industry official with insight into the program. "If you're talking about averaging the recurring flyaway cost, it's a lot less." Yet, it's clear the cost impact--no matter how high--will be realized in the first lots of production. Furthermore, the impact could be greater if Congress cancels long-lead procurement for Fiscal 2008. An official from the JSF Joint Program Office says that would essentially extend the production delay as long as 21 months.