Bearded sage [er, make that "previously bearded sage"] and barbed wit Bill Sweetman is back on the F-35 beat for the Ares blog after an involuntary, 51-day absence prompted by a Lockheed Martin-bashing Facebook update.
True to form, Sweetman picks up exactly where he left off on his last F-35-related blog update on 3 May by hitting the F-35 program where it counts: the bank.
His first F-35-themed blog entry today attempts to decipher what is for me -- and many others -- the most puzzling riddle about the current F-35 debate, and that is the yawning gap between Secretary of Defense Bob Gates' "indepedent" cost estimators and Lockheed Martin's recent statements about the price of the next lot of low rate initial production (LRIP).
Gates' auditors -- called the CAPE for cost analysis and program evaluation -- say the F-35 costs are spiralling upwards, rising from $297 billion in the previous official estimate to $382 billion over 30 years. Lockheed says that actual pricing for the LRIP-4 contract for 43 aircraft will likely fall 20% below the CAPE's estimate. As a result, some aerospace journalists, including Defense News Editor Vago Muradian, have described the CAPE estimate as "pessimistic".
Most others, including myself, remain thoroughly confused and half-wishing we had taken Accounting 101 in college more seriously.
Sweetman, an outspoken critic of the F-35's cost, performance and basic need, suffers from no such hesitation. He doesn't accuse Lockheed of lying, but of merely talking around the cost debate by discussing price, which is not the same thing.
"One thing we know for sure is that Lockheed Martin and the team have not significantly changed the cost of the aircraft over the time span of the LRIP-4 negotiations," Sweetman writes.
Sweetman argues that Lockheed is keeping price down by pressuring suppliers to accept losses today in order to recoup margins at a later time. The logic of the argument is difficult to question, but it could be made stronger by presenting evidence of such a ploy.
There's another statement in Sweetman's entry I want to discuss. It's this: "Keep in mind that Lockheed Martin has been talking only about the F-35A price and that only 23 of the 43 aircraft in LRIP-4 are A-models."
It's my understanding that's no longer true. As of late April and early May, it was accurate to say that Lockheed intended to negotiate a fixed-price contract for only the F-35A model. That strategy appears to have changed since then under pressure from Gates. On two occasions since early May I have been told by Steve O'Bryan, Lockheed's F-35 vice president of business development, that the fixed-price deal for LRIP-4 will include all three variants, including the carrier variant which only flew for the first time less than a month ago.
True to form, Sweetman picks up exactly where he left off on his last F-35-related blog update on 3 May by hitting the F-35 program where it counts: the bank.
His first F-35-themed blog entry today attempts to decipher what is for me -- and many others -- the most puzzling riddle about the current F-35 debate, and that is the yawning gap between Secretary of Defense Bob Gates' "indepedent" cost estimators and Lockheed Martin's recent statements about the price of the next lot of low rate initial production (LRIP).
Gates' auditors -- called the CAPE for cost analysis and program evaluation -- say the F-35 costs are spiralling upwards, rising from $297 billion in the previous official estimate to $382 billion over 30 years. Lockheed says that actual pricing for the LRIP-4 contract for 43 aircraft will likely fall 20% below the CAPE's estimate. As a result, some aerospace journalists, including Defense News Editor Vago Muradian, have described the CAPE estimate as "pessimistic".
Most others, including myself, remain thoroughly confused and half-wishing we had taken Accounting 101 in college more seriously.
Sweetman, an outspoken critic of the F-35's cost, performance and basic need, suffers from no such hesitation. He doesn't accuse Lockheed of lying, but of merely talking around the cost debate by discussing price, which is not the same thing.
"One thing we know for sure is that Lockheed Martin and the team have not significantly changed the cost of the aircraft over the time span of the LRIP-4 negotiations," Sweetman writes.
Sweetman argues that Lockheed is keeping price down by pressuring suppliers to accept losses today in order to recoup margins at a later time. The logic of the argument is difficult to question, but it could be made stronger by presenting evidence of such a ploy.
There's another statement in Sweetman's entry I want to discuss. It's this: "Keep in mind that Lockheed Martin has been talking only about the F-35A price and that only 23 of the 43 aircraft in LRIP-4 are A-models."
It's my understanding that's no longer true. As of late April and early May, it was accurate to say that Lockheed intended to negotiate a fixed-price contract for only the F-35A model. That strategy appears to have changed since then under pressure from Gates. On two occasions since early May I have been told by Steve O'Bryan, Lockheed's F-35 vice president of business development, that the fixed-price deal for LRIP-4 will include all three variants, including the carrier variant which only flew for the first time less than a month ago.
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