Jsf Cost & Risk

This is because contractors involved in manufacturing components for the aircraft, including more than a dozen Australian companies, have to make significant and risky investments in plant, equipment and staff in order to ‘tool up’ for a potential production run of several thousand aircraft. But with fewer advanced orders for early build aircraft, they will also have to increase their prices in order to amortise that risk until further orders are received.

“It is very important that the partners do what they say they will do, simply because it does have a ripple effect, both positive and negative, on this type of program,” Lockheed Martin’s vice president for F-35 business development, George Standridge, told Australian media in Fort Worth recently.

“Australia moving to the right adds some additional costs. ” The positive affect that Standridge spoke of may include opportunities for other nations such as Israel, which has requested between 25 and 75 F-35As from 2012, to jump the queue and take some of those deferred aircraft instead. But, although he wouldn’t say as much, Standridge also hinted that companies from partner nations competing for work may not be looked upon so favourably if that country defers or reduces its planned buy.

There’s no doubt Lockheed Martin and the JSF Program Office (JPO) are working hard to reduce risk in the program, but there are also signs that schedule may be being traded off for capability. A couple of reports have recently pointed out that the Block 3 aircraft, the version previously touted as the ‘go to war’ variant with the appropriate enhancements to its flight control software and weapons suites, and the version with which the RAAF expects to declare initial operational capability (IOC) with, will now only provide “limited objective functionality”.

Does this mean the RAAF and other partners may have to wait until Block 4 follows in 2017/18, up to four years after taking their first jets, before being able to declare IOC, and if so, will the maritime capabilities which were to be realised in Block 4, the basis upon which the RAAF was going to declare their F-35A fleet fully operational, now be pushed back further? Unfortunately Lockheed Martin was unable to define what capabilities are included in Block 3 at the time of writing, and Block 4 isn’t due to be locked away until 2010.

Lockheed was also unable to provide a cost estimate for the different LRIP build runs, although it is difficult to believe this has not been thoroughly modelled right down to each individual aircraft in the production run many times already. Some observers place the cost of an early LRIP 3 F-35A at around US$135m (A$142m) per unit, dropping to as low as US$60m (A$63m in 2008 dollars) once full rate production kicks in, while the more complex and lower build run STOVL F-35B and carrier-capable F-35C are expected to attract a 20 per cent premium. With the RAAF currently slated to take its first 27 aircraft from LRIP batches, these will be expensive pieces of kit, and most will not be combat capable until they receive their Block 3 or Block 4 upgrades.

But Lockheed also says it is investigating an opportunity to offer partner nations a ‘fixed price’ F-35, subject to agreement by the US government. This would mean the RAAF’s first aircraft would cost the same as the last, regardless of where it falls on the production and price curves.

And there’s little doubt this move will be ratified, as the more nations who stay in the program early, the earlier in the curve the price will start to fall, to the obvious benefit of the USAF and US Marine Corps, both of whom will take operational jets from LRIP 2 onwards.

But this will only be offered to the ‘true believers’, those countries who stick to their original scheduled acquisitions plans. o