Multi-year proposal designed to encourage early orders

Joint Strike Fighter (JSF) programme officials are developing a proposal that international participants be allowed to place multi-year orders for Lockheed Martin's F-35 to avoid the pricing uncertainty inherent in US year-by-year procurement.

The proposal, which requires a change in US policy, would offset the unit-cost penalty of buying early-production F-35s by averaging the aircraft's price over a multi-year purchase. It is hoped this will persuade international participants not to delay placing orders to avoid paying a high price for early aircraft - a price that is rising as cuts in US procurement slow the planned production ramp-up.

"We are exploring all options that would help stabilise the cost of the programme for the partnership," says Jon Schreiber, director, international JSF programmes. "One such option is investigating the feasibility of issuing a multi-year buy within the annual US buy of the JSF for those partners willing to commit to that up front."

Persuading the international partners to place orders early in production will help reduce the F-35's unit cost by accelerating the ramp-up. With all eight countries having signed the JSF production, sustainment and follow-on development memorandum of understanding, talks have opened on placing orders, says Dan Crowley, Lockheed executive vice-president and F-35 programme general manager.

On present plans, the Netherlands and the UK each plan to buy their first two aircraft in 2008 as part of the third low-rate initial production (LRIP) batch. Australia plans to follow in LRIP 4 and Italy in LRIP 6. Allowing them to place multi-year contracts "will require a change of approach", says Crowley. US regulations do not allow multi-year procurement until after full-rate production approval, scheduled for 2014.

"We have talked to Australia as a starting point," says Crowley. "Multi-year would reduce the cost of early aircraft through price averaging. It requires a policy change to get stability of pricing, but there is a precedent in the [Lockheed] F-16 programme." The proposal to allow international partners to place multi-year orders is expected to be presented for approval later this year.

Source: Flight International