F-35 programme costs down $4.9bn, says Pentagon report

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A summary of the Pentagon's 2012 selected acquisitions report (SAR) shows that the cost of the tri-service Lockheed Martin F-35 Joint Strike Fighter decreased by about $4.94 billion.

The document states that the cost of the aircraft programme itself dropped from $331 billion to $326 billion. The fall was due to decreased labour costs, which declined by $7.85 billion, and the actual build cost of early production models, which fell by $1.12 billion.

Further decreases were made "to correct cost allocations between the aircraft and engine sub-programmes" that were reported in the previous 2011 SAR. That shaved off another $981 million. Meanwhile, the estimates for the need for spare parts and other support functions dropped by $698 million. Additionally, the cost of setting up new bases for the F-35 dropped by about $1.03 billion.

 

US Air Force

But some of the cost decreases were cancelled out by cost growth in other areas, including the aircraft's Pratt & Whitney F135 engine. "These decreases were partially offset by the application of revised escalation indices" totalling just over $7 billion, the document reads.

The cost of the F135, which is a separate sub-programme, increased by $442 million, from $63.9 billion to $64.3 billion. The rise in price was due "primarily to revised escalation indices [of $1.3 billion], correction of cost allocations between the aircraft and engine sub-programmes", the report says.

That cost rise totals $981 million, while a slower near-term production ramp-up adds $231 million to the price. However, the increases were partly offset by lower estimates for the actual cost of early production engines, which came in $849 million below target, along with "out-year offsets of new escalation indices" worth $865 million.

The reduced cost of spares also shaved $363 million off the cost of the engines.

"Lockheed Martin is pleased with the $4.5 billion reduction in acquisition, operating and support costs reflected in the 2012 selected acquisitions report," the company says. "This is the first year a cost reduction was noted. We will work with the F-35 Joint Program Office to implement further cost saving measures, which will result in additional significant decreases to the total programme cost."

P&W officials were not available for comment.