Constant dollars

Kendall to review F-35A maintenance costs


Secretary of the Air Force Frank Kendall, who led a two-year production hiatus for the United States Marine Corps version Lockheed Martin [LMT] F-35 as the Pentagon’s chief procurement officer under the Obama administration, said he intended to study the Air Force’s F-35A sustainment costs and recommend ways to reduce them.

“We have to work very hard to improve the F-35A,” Kendall said in response to a question during a media roundtable on September 20 at the Air Force Association’s Air, Space & Cyber ​​conference. . “Sustainment costs have been high for a long time. We were able to reduce them to some extent before I left my old job, but there is still a lot of room for improvement.

“I don’t think, quite frankly, that we can get the kind of numbers we’ve been talking about,” he said of the Air Force’s 1,763 F-35A target. “I don’t think they’re realistic, frankly, but I think we can do a lot better than we are.”

Incentive payments for Lockheed Martin in the new three-year F-35 sustainment contract, possibly $ 6.6 billion, are dependent on meeting cost per flight hour (CPFH) targets, availability Full Mission Capable Aircraft (FMC) parts and rate targets for fiscal year 2021, 2022 and 2023 (Daily Defense, September 17).

The sustainment contract award is a stepping stone towards a possible review of the Performance Based Logistics (PBL) contract next year, if Lockheed Martin meets CPFH, parts availability and FMC rate targets.

The F-35 Joint Program Office (JPO) and Lockheed Martin have refused to release the cost per flight hour, parts availability and FMC targets Lockheed Martin must meet for fiscal years 2021, 2022 and 2023, and Daily Defense filed a Freedom of Information Act to obtain these records. The Pentagon has generally not published the terms of its awarded contracts, apparently due to concerns about the disclosure of classified and company-owned data.

“I haven’t had the opportunity to see what Lockheed’s goals are in this latest contract,” Kendall said on September 20. “I will. I haven’t had a chance to review the plans of the program office in detail… I will be doing a deep dive on the F-35. I will be looking specifically at sustainment costs. and what we can do to get the numbers out there. I’m a big believer in putting financial pressure on people and creating strong incentives. I hope this deal we just struck will give Lockheed a strong incentive.

While the old F-35 sustainment contracts assessed Lockheed Martin on the aircraft’s mission capability rates, the new sustainment contract involves judging the company on FMC rates and on-time availability. parts to ensure improved CME rates. Overall, the Government Accountability Office said the F-35’s CME rate is 54% at 18 points below target.

The F-35 JPO has said in the past that FMC tariffs are dependent on sufficient investments by the Air Force, US Navy and Marine Corps in spare parts and flight hours.

“Under this contract, the cost per flight hour (CPFH) of the global fleet improves by 8%, from $ 36.1,000 in 2020 to $ 33.4,000 in 2023, in constant dollars of 2012, “the F-35 JPO said of the new sustainment. Contract. “Specifically, this represents a reduction of $ 3.6,000 in the CPFH for the USAF Model A from $ 33.6,000 in 2020 to $ 30,000 in 2023. The contract also drives performance improvements through a Refined performance incentive structure focused on year-over-year improvements in Full Mission Capability (FMC) rate and procurement metrics.

Although the $ 30,000 CPFH target for the Air Force F-35A is a target, factors could intervene that could make this target more difficult to achieve, such as changed requirements, increased fuel costs , or the establishment of a program for an alternative engine beyond the existing one Pratt & whitney [RTX] Engine F135.

Lockheed Martin said the fiscal year 2021 to 2023 sustainment contracts “include an incentive structure to meet cost and performance targets.”

“If Lockheed Martin does not meet contract targets, incentive payments are reduced accordingly,” the company said.

The three-year sustainment contract “prompts Lockheed Martin to provide Full Mission Capable (FMC) tariffs for the F-35A, F-35B and F-35C,” according to Lockheed Martin. “It also prompts Lockheed Martin to improve supply availability and ensure parts are delivered with the required Electronic Equipment Log (EEL) data. “

Lockheed Martin said it has invested $ 500 million in cost reduction initiatives for its 40% of the F-35 sustainment program. Pratt & Whitney and the government make up the remaining 60 percent of the sustainment program.

Air Force General Mark Kelly, Chief of Air Combat Command (ACC), said last February that he was not convinced the F-35 will meet a $ 25,000 CPFH target of 25,000 $ CPFH by 2025 (Daily Defense, February 26).

Over the past two years, Pentagon officials, including those in the Office of Cost and Program Assessment (CAPE), have expressed the same skepticism about meeting the $ 25,000 goal. In the summer of 2020, the JPO F-35 said the overall CPFH was $ 35,000, up from $ 44,000 in 2019.

Lockheed Martin CEO James Taiclet told defense analysts on a second quarter earnings conference call in July that the government, Lockheed Martin and Pratt & Whitney needed to be “all-in” to reach the goal. ’25 out of 25′ objective.

While House Armed Services Committee Chairman Adam Smith (D-Wash.) Suggested drastically reducing the purchase of F-35s, Kendall suggested on September 20 that there was no viable alternative that would correspond to the loss-to-trade ratios of the F-35A in combat.

“There are always alternatives, in a sense, but the F-35A is such an operationally superior platform that its value is very high relative to its costs,” he said. “If you look at exchange rates, for example, it works incredibly well, especially against high-end threats. We need an F-35, but we need one that we can afford. “

On September 20, Air Force Lt. Gen. Clinton Hinote, the department’s deputy chief of staff for strategy, integration and requirements, said Kelly told him last week that 46 of the 297 Air Force F-35As – over 15 percent – are grounded for engine or engine-related needs, parts or fuel systems, including engines that have not completed the maintenance of the deposit.

“It’s not acceptable,” Hinote said. “We have to do better. “


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