美 국방성과 F-35 JSF LRIP 4차 계약을 앞두고 있는 Lockheed Martin

 

 

 

Down to the Wire

Lockheed Martin forecasts current F-35s will come in under ceiling price

Aviation Week & Space Technology, 10/03/2011

 

As Lockheed Martin enters the crucial final months to closing out F-35 testing goals by year-end — worth millions of dollars — it is once again predicting improved per-unit-cost performance on production. Though year-over-year improvement has been made in reducing the price, this progress may not be enough.

 

The program continues to take hits for high cost and late deliveries, as customer countries struggle with their growing national debts.

 

The F-35s in low-rate initial production (LRIP) Lot 4 are expected to exceed the contracted target but fall below the negotiated ceiling price, says Tom Burbage, vice president of F-35 program integration for Lockheed Martin. The company is roughly 30% of the way through building the aircraft, so the estimate is “immature,” he notes.

 

The LRIP 4 contract, the first fixed-price, incentive-fee deal for the Joint Strike Fighter, allows for 50/50 cost-sharing, with government liability not to exceed 120% of the contract ceiling. The pressure is mounting for Lockheed to rein in costs. The price of the 28 aircraft in LRIPs 1-3 exceeded projections by $918 million, or up to 15%. This includes the Pratt & Whitney engine cost, a part of the program not managed by Lockheed. Under the earlier LRIP arrangement, the company paid for 30% of any overrun up to the ceiling; overruns beyond that were the government’s responsibility.

 

The LRIP 4 per-unit cost targets are:

 

• $111.6 million for the conventional takeoff-and-landing (CTOL) version.

• $109.4 million for the short-takeoff-and-vertical-landing (Stovl) aircraft.

• $142.9 for the first production carrier variant (CV).

 

Burbage says the company is working to reduce the cost of these LRIP 4 units. “Everybody is actually feeling reasonably good about it,” Burbage says. “It doesn’t mean that we aren’t going to have any overruns, but it is within the bounds of being manageable.”

 

Pentagon officials opted to shift from a cost-plus to a fixed-price incentive-fee contract as LRIP 4 was being negotiated. Burbage says the time it would have taken to solicit fixed-price contract revisions from the company’s suppliers, as well as an expectation of added supplier cost owing to the higher-risk contract type, prompted Lockheed to keep most supplier deals as cost-plus. Lockheed, Burbage says, is carrying the financial risk of this disparity; the prime is held to a fixed price by the government but must pay the suppliers for their cost. “Even though I am on a fixed-price contract, I have to honor the terms” with suppliers, Burbage says.

 

Only those subcontractors that have passed qualification testing were shifted to fixed prices. This does not include BAE Systems and Northrop Grumman, which provide major structures for the aircraft, Burbage says. “It is our risk… It is our contract to manage.” Meanwhile, the company expects to have improved performance on the development contract in 2011 after a dismal showing in 2010. Last year, Lockheed earned only $7 million of $35 million in the available award fees for development. The problems were in large part due to delayed test aircraft deliveries and poor Stovl performance.

 

Lockheed recently achieved one of five major milestones linked to financial reward in 2011 with the completion of F-35C static structural testing. Earlier work was done on the A and B versions, Burbage says. This is arguably the least complex of the five goals for 2011.

 

After losing more than $600 million of the available award on the development contract last year, the company is eligible for $52.5 million in award fees this year, roughly $10.5 million for each of these five milestones:

 

• Conducting F-35B shipboard trials.

• Executing initial catapult-launch and trap-landing testing.

• Commencing training with the Block 1B software.

• Releasing Block 2 software for flight testing.

• Carrying out static-model trials for the F-35C carrier version.

 

Also complete is modification work prerequisite to moving specially instrumented F-35B Stovl aircraft to the amphibious landing ship USS Wasp this week. This will kick off a series of shipboard tests to assess the interface between the stealthy, single-engine jet and the ship. The test force plans to conduct 67 vertical landings on the ship.

 

Lt. Gen. Terry Robling, Marine Corps aviation chief, says he is “very confident” of Stovl performance on the Wasp, but he is “not as confident” in Lockheed’s progress on software. Block 2B is needed for Marine Corps initial operational capability, which Robling acknowledges has likely slipped to 2015. It was first slated for 2012, then 2014. Though he believes Lockheed can deliver the software, he sees risk with the time line.

 

Burbage acknowledges that the company put extra resources into Block IB software to deliver it in time for training. As a result, he says Lockheed may not achieve the 2011 financial goal of delivering Block 2A to the test force by year-end. But they plan to “make up that time” where possible, he says.

 

The F-35 test team, including the U.S. Navy, conducted jet-blast deflector trials to assess the impact of catapult launches on the deflectors, which shield the ship and other aircraft from hot exhaust. Burbage says no changes to the deflectors are required to introduce the F‑35C into the carrier-based fleet. The F-35C will begin testing on an aircraft carrier in the spring of 2013, he says.

 

To date, the program has executed 156 Stovl tests. Lockheed Martin officials say that despite a temporary halt in test flights, they are 8% ahead of plan in year-to-date flights. The company has completed 314 F-35A CTOL, 226 F‑35B Stovl and 102 F-35C CV flights so far this year.

 

Despite progress in testing, the program continues to face headwind in financing. Burbage says the company is still assessing the impact of a deep funding cut proposed by the Senate Appropriations defense subcommittee in the fiscal 2013 budget.

 

 

  ⓒ Lockheed Martin

 

  ⓒ Lockheed Martin

 

  ⓒ Lockheed Martin

 

  ⓒ Lockheed Martin

 

  ⓒ USAF

 

  ⓒ USAF

 

  ⓒ USAF

 

  ⓒ USAF

 

  ⓒ USAF