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Lower buys raises overall F-35 acquisition costs by 7%

Lower procurement rates for the Lockheed Martin F-35 have reversed the programme’s positive gains since 2015, raising overall development and procurement costs by almost 7% through Fiscal 2044.

After years of stabilizing and reducing total programme costs under Joint Programme Office executive officer Lt Gen Christopher Bogdan, lower planned procurement rates over the next 27 years drove overall, inflation-adjusted costs from $379 billion to $406.5 billion, according to a Selected Acquisition Report (SAR) summary released on 11 July.

The US Air Force decreased its maximum annual aircraft procurement rate from 80 F-35As per year to 60. The change extended planned purchases of F-35s by the Department of Defense by six more years from Fiscal Year 2038 to 2044.

The decreased production quantities and and six-year procurement phase extension not only led to higher programme costs, but an increase in unit recurring flyaway estimates over the programme’s lifetime and an increase in average procurement unit cost and program acquisition unit costs, according to the JPO.

The JPO maintains that research, development, test and evaluation costs have remained steady and that negotiated near term unit recurring flyaway costs continue to decline.

At the start of the JSF programme, the June 2002 SAR estimated total acquisition costs at $226.4 billion, or $312.3 billion in current dollars.

The US Marine Corps, Navy and USAF had also planned to order 2,866 aircraft in 2002, but the navy later lowered its buy, reducing the total F-35 purchase to 2,443 aircraft today.

The overall cost estimate was released a day after the DOD awarded Lockheed a $4.49 billion undefinitised contract adjustment with a $5.57 billion ceiling for the 11th lot of low-rate initial production (LRIP). The deal is a placeholder while the JPO negotiates final LRIP lot 11 prices with Lockheed for 90 airframes and with Pratt & Whitney for F135 engines.

The JPO says the negotiations for Lot 11 should result in a lower price than finalised in LRIP lot 10, which resulted in a $94.6 million flyaway unit cost for the F-35A.

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