Total Acquisition Estimate for F-35 Rises to $406.5 Billion

 - July 12, 2017, 3:33 PM
The U.S. Air Force has reduced its annual rate of procuring F-35As from 80 to 60, the JPO said. (Photo: Lockheed Martin)

The Pentagon has increased its total acquisition estimate for the F-35 Lightning II fighter by 6.8 percent to $406.5 billion, and the total program cost by 1.8 percent to $1.53 trillion. A reduction in the annual buy rate of F-35As by the U.S. Air Force drove the acquisition cost increase and contributed to a “slight uptick” in unit costs, the Department of Defense (DOD) said in its latest F-35 selected acquisition report (SAR) to Congress.

In a summary of the SAR released on July 11, the Pentagon’s F-35 Joint Program Office (JPO) provided cost estimates in both 2012 base-year and current—also known as then-year—dollars, with the latter metric containing inflationary increases expected over the duration of the program. The SAR estimates represent only U.S. costs, but take into account cost efficiencies gained from the contributions and procurements of F-35 partner nations and foreign military sales, the JPO said. The latest SAR reflects program cost, schedule and performance as of June 2016.

F-35 acquisition cost, a figure that includes the cost of research, development, test and evaluation, procurement and military construction, rose by $11.3 billion to $324.6 billion in base-year dollars. Total program cost, which adds operating and support costs over the life of the fighter, increased from $934.1 billion to $945.4 billion in base-year dollars.

The Air Force has reduced its maximum annual rate of F-35A procurement from 80 fighters to 60, which extended its timeline of planned purchases by six additional years to Fiscal Year 2044. The reduced annual buy and time extension drove the total acquisition cost increase, caused the uptick in unit recurring flyaway (URF) cost and also slightly increased average procurement unit cost (APUC) and program acquisition unit cost (PAUC) metrics, the JPO said.

In current-year dollars, the estimated URF cost of the F-35A increased from $100.6 million in SAR15 to $111.3 million in SAR16. The estimate for the U.S. Navy’s F-35C increased from $110.7 million to $112.4 million, and the U.S. Marine Corps F-35B from $122.9 million to $123.4 million.

Actual negotiated prices of the fighter and its Pratt & Whitney F135 engine have been lower than SAR estimates, however. In February, the DOD and prime contractor Lockheed Martin concluded a low-rate initial production lot (LRIP) 10 contract, which priced the F-35A conventional takeoff and landing variant at $94.6 million, the F-35C carrier variant at $121 million and the F-35B short takeoff/vertical landing variant at $122 million, according to the latest JPO statement.

On July 7, the DOD awarded Lockheed Martin a $5.6 billion contract modification to LRIP 11 for 74 U.S. military F-35s, adding to advance LRIP 11 awards dating to 2015. It expected to award a further, $2.2 billion contract modification to fund the procurement of 50 F-35s destined for partner and allied countries this month. 

At the Paris Air Show in June, Jeff Babione, Lockheed Martin’s F-35 program general manager, said the manufacturer hopes to negotiate of block buy of 440 fighters that would represent LRIPs 12 through 14. By aggregating those production lots, industry can more efficiently order parts and drive down the annual cost of the program, he said.