Sequestration deadline speeds F35 negotiations

Sequestration deadline speeds F35 negotiations

Top Pentagon and Lockheed Martin leaders have confirmed the two sides are close to reaching a deal for the fifth, and possibly the sixth, production lots for the F-35 Joint Strike Fighter.

Lockheed Martin’s executives said Thursday they are “confident” the deal for lot five, which includes 32 aircraft, will be completed by the end of the year. Marillyn Hewson, the appointed successor to long time CEO Bob Stevens, said she’s also confident the framework for a deal for lot six will be completed by the end of December.

“We are progressing well with favorable dialogue and I do feel confident that we are going to get some closure on lot five this year,” Hewson said. “We want to line that up and I think our customer wants to line that up with quickly getting at least some contract on lot 6 even if it’s undefinitized.”


Hewson’s comments come a day after Defense Under Secretary Frank Kendall told Reuters at the Credit Suisse 2012 Aerospace & Defense Conference that he had a “very positive meeting” with Hewson and he thinks the two sides are “getting close” to a deal.

The Pentagon and Lockheed have spent the past year negotiating the F-35’s production lot five contract with talks becoming tense. Air Force Maj. Gen. Christopher Bogdan, who takes over as the F-35 program executive officer next week, said in September the U.S. military’s relationship with Lockheed’s F-35 program was “the worst [he’s] ever seen.”

The $500 billion in cuts to the defense budget stipulated by sequestration played a major role in motivating Pentagon and Lockheed Martin leaders to reach a deal for lots five and six before the end of 2012. Congress has until Jan. 2 to reach a deficit reduction deal or the sequestration cuts found in the Budget Control Act will be enacted. Those cuts include an across-the-board 10 percent cut to planned defense spending over the next decade.

However, the sequester cuts can’t touch previously obligated funds. If Lockheed and the Pentagon can agree to contracts for lots five and six, they could insulate funding for the 64 new Joint Strike Fighters in those production lots.

“I think it’s in all of our interests, the company’s as well as the government’s, to get that next tranche of funding for lot six in place before the end of the calendar year. And as I said here today I’m pretty confident that’s going to occur,” said Bruce Tanner, Lockheed Martin’s chief financial officer, who spoke with Hewson and Stevens at the Credit Suisse conference.

Lockheed Martin selected Hewson to lead the world’s largest defense company after Stevens’ previous successor,  Christopher Kubasik, resigned. She is scheduled to take over as CEO in January. She has already started to take part in the F-35 production lot negotiations.

Defense consultant Loren Thompson said the sequestration deadline has played the largest role in moving toward an agreement on the  production lots, but Hewson’s involvement can’t be underestimated.

“They were working against the dealine and it created the forcing function to get an agreement,” Thompson said. “However, Marrilyn can help break up log jams. Hewson is very good at dealing with customers and sub contractors. It has probably made a difference.”

Protecting the production lots is vital to keeping costs down for the Joint Strike Fighter program, Thompson said. As production progresses, the costs per plane drop. Pentagon officials hope that by the tenth lot, the Air Force version of the F-35 price tag per aircraft could drop to the level of a current F-16, Thompson said.

However, the sequestration cuts could put that progress in jeopardy unless the Pentagon and Lockheed Martin can insulate the funding by completing the lot five and six contracts before the end of 2012.

Tanner said the sequestration cuts pose the greatest risk to Lockheed Martin’s F-35 contracts compared to the rest of the company.

“I think where we have the most exposure is the current negotiation for the lot 5 contract for F35,” he said when asked about sequestration. “And the next tranche of funding for lot 6 of the F-35 program.”

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Too bad we need more F-22s and F-15 upgrade. Not more small little F-35 which may not survive sequestration.

They may order more but it $500 billion in cuts come they may have to cancel it.

With All the Major US Think Tanks suggesting either cutting the Junk Strike Fighter way back to very limited numbers, for various reasons but with emphasis on it’s Costs & Short Legs, with our move to the Pacific. As well as Canada making it Official that they will have a Competition for their future Fighter Plans. LM has to be very worried, and the should be with this Lemon. I think we should just Cancel the JSF & the LCS, restart the F-22 line and upgrade the current F-15’s to the Silent Eagle standard, then look for a ship that can actually defend it self & support other assets.
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. http://​defense​.aol​.com/​2​0​1​2​/​1​1​/​2​8​/​i​t​s​-​t​o​o​-​l​a​t​e​-to
. http://​www​.csbaonline​.org/​p​u​b​l​i​c​a​t​i​o​n​s​/​2​0​1​2​/​1​1​/st
.http://​economictimes​.indiatimes​.com/​n​e​w​s​/​n​e​w​s​-​b​y​-​i​n​d​u​s​t​r​y​/​e​t​-​c​e​t​e​r​a​/​b​u​d​g​e​t​-​c​u​t​s​-​t​h​e​-​n​e​w​-​e​n​e​m​y​-​f​o​r​-​u​s​-​c​o​s​t​l​i​e​s​t​-​j​e​t​-​f​-​3​5​/​a​r​t​i​c​l​e​s​h​o​w​/​1​7​4​1​2​8​9​1​.​cms.
. http://​news​.nationalpost​.com/​2​0​1​2​/​1​1​/​2​3​/​h​a​r​p​e​r​-go
. http://​www​.flightglobal​.com/​b​l​o​g​s​/​t​h​e​-​d​e​w​l​i​n​e​/​201

Hopefully, LM and DoD can get closer to the point of agreement on not only LRIP5 but also 6&7. With LM reducing the “Touch” time per increment, the closing to a “fixable” price should be in sight for both parties.
Increased production rates should be in the short term plans to impact both the F-16 and the AV-8B. Starting up the second production line should be in the short term plans for LM and progress of the startup should be kept in the “public eye”.

For the “armchair” generals; please identify which F-16 and AV-8B squadrons should stop flying today, if not to be replaced by the F-35. :)

The New York Times published a very detailed overview article on the F-35 and put it on its front page. It called the program F-35 program an example of “how the Pentagon can let huge and complex programs veer out of control and then have a hard time reining them in.” The F-35 is now facing a crisis situation and this was not very good publicity for it. It was a very interesting read. Here’s a link: http://​www​.nytimes​.com/​2​0​1​2​/​1​1​/​2​9​/​u​s​/​i​n​-​f​e​d​e​r​a​l-b

On a side note that is entirely unrelated to this article, please check out this video of the amazing advances in upgrades that Boeing is providing to the Super Hornet: http://​www​.boeing​.com/​F​e​a​t​u​r​e​s​/​2​0​1​2​/​0​7​/​b​d​s​_​f​1​8​_en

The US Navy knows that an upgraded Super Hornet Block III would be much better than the F-35C for their needs.

Here’s my pro & con. First the con.
How much capability is the military going to sacrifice in other areas to keep the F-35? This platform is so slow to IOC that the window for it having an edge is closing quickly with the rapid advances in technology to counter it. The Russian S-400, and soon S-500 & T-50 (and Chinese copies) will erode it’s edge. All the bells and whistles the F-35 has can be put on gen 4 platforms, except “stealth.” Stand-off weapons are going to be used for SEAD anyways, and UCAV’s are progressing and maturing very well to where they would be much more cost effective than the F-35.

The most effective and indisputably superior quality the F-35 does have is making LM and it’s suppliers an incredible amount of money.
In my opinion, it was designed more to be a cash cow than an asset to the free-world’s arsenal of Democracy.
If America had more money, maybe I’d be ok with it, but America doesn’t. The F-35’s cancellation would benefit America in enough other areas that could be funded without it.
America’s credit rating could even be positively affected with the cancellation of the F-35. America’s financial situation is actually a greater strategic threat.

Here’s my pro.
We aren’t being told everything about the F-35’s capability, and from what I’ve read, many foreign governments want to get their hands on it after they are privately briefed on it’s capability. I.E. Japan, Korea, etc.
Also, if it’s something foreign governments want to buy, then why kill a program that will give America some great exports, which support a strategic industry and really good high paying jobs. Even India may end up buying the F-35, possibly, and many others not on the list now.
The F-35B will be the only VSTOL in production, which will be the only kind of fighter able to get in the air immediately, if air-fields are taken out with missiles in a preemptive strike.
Lastly… maybe a lot of the F-35’s cost is ACTUALLY funneled to black programs, and America is actually getting something to show for the money spent!

Cool video. Although I would think LockMart’s marketing arm would know enough to use a narrator that doesn’t put the viewer to sleezzzzzzzzzzzzzzzzzzz.….….….….

I say just keep the F-35a in production, but scale back the F-35B&C to the R&D stage. Cancel the LCS as well

The F-22 is not a strike fighter, its air-to-ground capabilities are quite limited at the moment. Even with upgrades it will never be able to carry 2000lb class munitions internally like the F-35 can. There is no carrier or STOVL variant of the F-22 either. In terms of range, the A and C variants of the F-35 have an equal or greater combat radius than the F-22A.

If you’re looking for a modern strike aircraft with the range of the F-111, you’re not going to get it “off-the-shelf”, that would have to be a new program.

In regards to cost, say we restart F-22 production and improve the aircraft to a new “F-22C” standard, say we build 1,000 of them. How cheap do you think this is going to be? 1,000 aircraft won’t be enough to replace everything the USAF wants the F-35 to replace either. Then add whatever other modernization plans you want for the USAF and USN to this figure.

William C.

Cancelling the F-35 will indeed improve America’s credit rating. Do you not understand how crazy by continuing the failed lemon?

The problem remains that the F-35B for example will be coming in at over $300M a copy. The Marine Corps cannot afford the airplane, plain and simple and you KNOW they aren’t going to cut riflemen to make up the cost.

I like being able to fire people who can’t deliver a procurement project on time…

Think Mitt would have been any nicer? If I was Obama, I would’ve put him in charge of reducing government waste and let him at it. That was Truman’s role during WW2.

Cancel the F-35B altogether. Tell the USMC to get their support from the USN.

This is one of those examples of winning the battle and losing the war. Liberal budgeters will not be at all happy with this sort of gamesmanship, and may well end up cancelling any/all lots beyond this year’s six…

Once again, LM’s tactic is brinkmanship: force negotiations to close just before the possibility of loosing potential funding (this time sequestration; previous times, the end of the fiscal year.)

Gripen NG Demonstrator in Canada for the next 2 weeks. Hmmmmm?

Old wine in a new bottle. The Super Bug is kinematically and aerodynamically quite inferior even to 3rd generation Russian and Chinese fighters, not to mention their latest aircraft or the F-35 and the F-22.

The Chinese can do it the Russians can do it if Lokheed cant do it then get another contractor. This “failure is the only option” is getting tired.

No its better than the F-35

The list of pentagon projects that will have to die because of the F-35 even before sequestration is a mile long. The F-35 is not only the greatest reduction in USAF capability since WW2 its the greatest across the board cut in capabilities.

You cannot support America and the F-35 at the same time the only people who say that alwasy turn out to be contractor shills or simply morons.

No, William. The F-22’s A2G capabilities are not “quite limited” and are, in fact, quite superior to the F-35’s. The F-22 can carry the same payload of 8 SDBs as the F-35, but unlike the F-22, it can also carry 2 A2A missiles internally.

The F-35 is stealthy only from the front and so cannot survive in an environment infested by modern air defense systems. The F-22 can, because it is all-aspect stealthy and can defeat most air defense systems by kinematics alone, owing to its very high speed and flight altitude.

The F-22 is already much CHEAPER than all variants of the F-35, especially the B and C variants. It costs only $150 mn per copy. If 1,000 additional (or 1,000 in total) F-22s are built, the unit cost will decline dramatically, thus making the F-22 perfectly affordable. Developing STOVL and carrier-capable F-22 variants would not be expensive. And let’s not forget that the F-35’s variants are themselves suffering significant design problems.

Would any of these arguments be happening if the price tag was at grunt level? I doubt it. Us clients, (Aussies) have seen this so often– Cost added to cost, open ended and no consideration of viability over time or space. America builds great planes, then makes buying them a real ordeal, even for a rich country.

The export tag will fall off if someone doesn’t realize that:

(a) Exports can support platform costs– Provided those costs are bearable and generate demand, not reasons for not buying the planes.
(b) Clients have limited budgets
© The labyrinthine supply chain and maintenance are added costs to this platform
(d) The Russians got the basics right with the T50– Just build a massively overpowered, pretty conventional but capable plane to take the Gen 5 systems and add as many hard points as possible.
(e) Any design recidivisms and atavisms are likely to be an own goal, particularly if it involves playing with the airframe.

Go back to basic design for production– Add the bells and whistles later.

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