Lockheed Martin and the Pentagon have inked a new agreement that will see the F-35 fighter jet’s sustainment costs drop precipitously in the coming years.
A Smart Deal
The contract, worth $6.6 billion with all its options included, encompasses a phased sustainment costs reduction plan: the cost per flight for the global F-35 Lightning II fifth-generation fighter fleet will drop from $36,100 in 2020 to $33,400 in 2023. Sustainment costs for the F-35A jet, by far the most numerous of the three F-35 variants, will drop from $33,600 to $30,000 during this period.
“Working together with our Industry Partner, the F-35 Joint Program Office team negotiated aggressive cost savings and performance targets that will benefit the global F-35 sustainment enterprise, and all F-35 customers,” Lt. Gen. Eric Fick, program executive officer of the F-35 Joint Program Office, said in a statement. “The JPO remains committed to working with industry partners and F-35 stakeholders to deliver the capabilities our warfighters require at a cost our taxpayers can afford. This ’21-23 sustainment contract agreement is a positive step in securing affordable lifecycle costs for our customers.”
The contract involves “on-site support of day-to-day operations from LM field service representatives, engineers, and Autonomic Logistics Information System (ALIS) administrators,” as well as pilot training, and other supply chain optimizations, as well as measures to improve mission capable rates. No less importantly, the deal paves the way for a future transition to a performance-based logistics (PBL) contract. A PBL contract commits providers to delivering products at a specific level of performance and reliability within a certain time period. With its renewed focus on outcomes, a PBL approach can incentivize suppliers to fulfill the military’s performance criteria in ways that the typical “goods and services” transactional model cannot. Lockheed has advocated for a PBL contracting strategy for years, positing in 2019 that such an approach could yield as much as $1 billion in savings for the Defense Department.
Lockheed Martin vice president Bridget Lauderdale hailed the agreement as a milestone in joint efforts to deliver the F-35 jet’s class-leading capabilities as affordably as possible. “These contracts represent more than a 30% reduction in cost per flying hour from the 2020 annualized contract, and exemplify the trusted partnership and commitment we share to reduce sustainment costs and increase availability for this unrivaled 5th generation weapon system,” she said.
Low Cost, Crazy Performance
Any substantive discussion of cost-per-flight metrics must also consider that a single F-35 jet can perform missions that would potentially require multiple fourth-generation fighters, and with far less risk of fighter/pilot loss. This means that direct, one-to-one sustainment cost comparisons between the Lightning II and older, less capable fighters can obfuscate more than they reveal about the real, day-to-day of operating the F-35 jet in combat sorties.
The contract comes as a sharp rebuke to the F-35 program cost critics, who have recurrently expressed skepticism that the fighter’s sustainment costs can be significantly reduced. As previously explained by the National Interest, these and similar concerns are not only wildly out of step with the realities of the F-35 program as it stands today, but dangerously shortsighted about what it can become tomorrow.
Lockheed’s ongoing progress in cutting F-35 costs across the board gives the American taxpayer every reason to believe that the fighter is firmly on a downwards cost trajectory, offering steadily rising value throughout its lifecycle.
Mark Episkopos is a national security reporter for the National Interest.
Image: Flickr / Air Force