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Pentagon Announces New F-35 Cost-Cutting Measures

FARNBOROUGH, England -- The Pentagon's notoriously pricey F-35 Joint Strike Fighter is on track to cost just $85 million a copy by 2019, officials with the military and manufacturer Lockheed Martin Corp. said Monday.

As the Farnborough International Airshow kicked off Monday, the Defense Department's top weapons buyer, Frank Kendall, announced the Pentagon was extending its "Blueprint for Affordability for Production" program an additional two years to encourage industry to continue to find cost savings.

First announced in 2014, the effort launched with a two-year, $170 million commitment from Lockheed and partners Northrop Grumman Corp. and BAE Systems Plc to invest in cost reduction initiatives. The next two-year phase of the project will include an investment of up to $250 million from the companies, with a target of finding $1 billion worth of savings during the four-year period from fiscal 2018 to 2022.

The measures are aimed at achieving a target price of $85 million per plane by 2019. Currently, F-35s cost between $98 and $115 million apiece, with the Navy's F-35C carrier variant costing the most and the Air Force's F-35A conventional variant costing least.

Marillyn Hewson, chief executive officer of Lockheed Martin, said extension of the cost-reduction program was set to shear some $4 billion off the costs over the life of the program. The long-term price tag, including maintenance, is set to top $1 trillion through 2070, according to estimates from this year.

Hewson said 198 cost-cutting measures were already in effect, ranging from reducing the amount of aluminum used to make bulkheads, saving 4,700 pounds of metal and cutting $204 million of cost from the F-35 program life, to developing a laser surface-preparation process that nets another $38.4 million worth of savings.

"The numbers speak for themselves," she said.

Officials were reticent to speak ahead of a decision about how international buyers would affect program cost. Goals for overall cost reduction are tied to the prospect of an international block buy, which would lower individual unit cost by increasing production volume.

Air Force Lt. Gen. Christopher Bogdan, program executive officer for the F-35 Joint Program Officer, said he expected a decision to be made regarding international block buys in the 9 and 10 lots of low-rate initial production by the end of this year.

"We do have partners … who would like to enter into a block buy as soon as possible," Bogdan said.

On the heels of the news that Canada now may buy Boeing F/A-18E/F Super Hornets instead of F-35s, officials said the overall cost impact of that decision has yet to be seen, and Canada will continue in its role as a partner in the F-35 program.

Kendall, the department's undersecretary for acquisition, technology and logistics, acknowledged that any partners dropping plans to purchase the aircraft would affect the program's cost, but suggested the impact could be small, depending on the number of aircraft that the partner had planned to purchase. Canada had been expected to purchase 65 Joint Strike Fighters.

"We'll just see what their decision is going forward," Hewson said.

In a year characterized by optimism about the F-35, Kendall's tone describing the aircraft and current development was particularly striking. Kendall in 2012 told an audience at the Center for Strategic and International Studies that putting the aircraft into production ahead of test flights amounted to "acquisition malpractice" and the Pentagon was subsequently "paying the price."

On Monday, he reiterated his faith in the program and the trajectory on which development was set.

"I for some time now have not considered the F-35 to be one of my problem programs," he said.

"Several years ago… that was not the case."

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