The projected cost to upgrade F-35 jets built by Lockheed Martin in Fort Worth has declined by about $920 million, or 36 percent, in less than two years, according to the Pentagon’s latest analysis.
The estimate for improvements and corrections for planes already built or planned in the first 10 contracts to be awarded through 2016 has dropped to about $1.65 billion from $2.57 billion projected in September 2012, the Pentagon said in an annual assessment to Congress. The projection is $100 million less than the one made last year.
The need to retrofit the planes stems from the Defense Department decision to produce the F-35 as it’s being developed. The Pentagon’s chief weapons buyer has criticized that approach, known as concurrency.
“Putting the F-35 into production years before the first flight test was acquisition malpractice,” Defense Undersecretary Frank Kendall said in a 2012 industry presentation. Kendall signed the latest report, showing success in reducing the projected cost of upgrades.
That’s good news for Lockheed. The Pentagon now requires the contractor to pay an increasing share of the costs for retrofitting the planes. Beginning with the sixth contract, Lockheed has had to absorb half the costs.
“This cost-sharing approach is intended to motivate Lockheed Martin to incorporate concurrency changes as quickly as possible on the production line,” says the report, dated May 1, which was obtained by Bloomberg News.
The revised estimate bolsters findings by Government Accountability Office analysts and Pentagon program officials that Lockheed is making progress in managing the jet’s simultaneous development and production at this point, before the most difficult combat testing begins.
“This is the result of improved efficiencies and total commitment to driving costs out of the program,” Lockheed spokesman Michael Rein said by email. “We will continue” to “implement further cost savings measures,” he said.
Lockheed is aiming to boost production of the next-generation fighter jet after making progress on technical issues that delayed its development. The U.S. government and the manufacturer expect that increased production will bring down the cost of the plane, currently more than $100 million apiece, to between $70 million and $80 million.
The top executive at Lockheed’s Fort Worth complex said Friday that the company expects production to increase from about 36 planes this year to more than 120 a year by the end of the decade. That would add upward of 1,000 jobs at the west Fort Worth complex, where Lockheed employs about 13,300 workers.
The reduction in projected costs stems in part from fewer anticipated technical flaws and from Lockheed working collaboratively with the Pentagon to manage the process and reduce time on the assembly line to retrofit planes, the report said.