The Pentagon expects to pay $480 million less than expected only nine months ago for retrofits to the first 90 fighters based on revised cost projections of changes anticipated to emerge through the end of development in 2017.
The updated cost figures were sent to Congress in May in its second review of so-called “concurrency costs” for the Lockheed Martin F-35. Because the program was crafted in 2001 to conduct production in parallel with testing activities, officials are tracking these concurrency costs, for retrofits that must be made to bring early production jets to an operational standard based on findings in ongoing testing. One example is a fix to the fuselage Station 496 bulkhead, found to be experiencing unexpected cracking.
As of last year, Pentagon officials estimated the total concurrency cost for the first 90 aircraft—including all aircraft on contract in low-rate, initial production (LRIP) Lots 1-5—was $1.71 billion. However, since the first report was issued to Congress on these costs last September, the F-35 Joint Program Office, in concert with experts from , have reviewed more closely the “actuals,” or costs already known from work on earlier LRIPs, as well as refined how models of retrofits from past fighter programs ( , E/F, for example) are applied to the F-35, according to an official from the F-35 Joint Program Office (JPO).
The estimates are projected out through LRIP 10, when the development—and presumably the retrofit discoveries—will end. Across all 10 LRIPs, the projected retrofit estimates come down by even more, or $820 million.
These are, however, still projections. Only about 35% of flight trials are complete and Lockheed Martin still has much to do with testing the structural durability of each of the variants over multiple lifetimes of use.
For each LRIP that is on contract (Lots 1-5), the estimates are clearer owing to the percentage of known issues that will be addressed with retrofits. The JPO and Lockheed Martin are nearing closure on contracts for LRIPs 6-7, and so those do not yet have firm projections for such known costs. However, the report notes that 80 retrofits are already known to be necessary in the 36 aircraft expected for retrofit in LRIP 6.
Even for the two F-35As in LRIP 1, long delivered to the U.S. Air Force, not all retrofit costs are known. Estimators included figures for each lot for “to-be-discovered” retrofits. They based these estimates on models of previous fighter programs and inflation estimates.
The largest anticipated per-unit retrofit cost is for aircraft in LRIP 2, which included 12 US jets, at $16.7 million, based on the May numbers. The estimate from last year projected each unit to cost about $25.8 million.
The cost is expected to slowly decrease until LRIP 10, when each unit is projected to require $760,000 to retrofit over last fall's estimate of $1.1 million per aircraft.
The retrofit estimates include non-recurring engineering for the fixes. Though foreign F-35 buyers will not have to pay for these non-recurring costs (those are included in the U.S.-specific development contract), they will have to pick up the tab for the actual retrofits if they decide to install them on their aircraft, according to the JPO official. Additionally, the U.S. services have the discretion on which retrofits to install. The program office is categorizing them by those that are essential to operate the aircraft (such as safety or durability issues) versus those that are “nice to have,” the JPO official says.
Lawmakers requested these concurrency cost reports as a result of concerns that these estimates were very high, adding significantly to the per-unit price of the actual aircraft. Based on the contracted target cost for LRIP 5 aircraft, the F-35A is estimated at $105 million, the F-35B at $113 million and the F-35C at $125 million. Based on the revised concurrency estimates, the Pentagon can expect to pay an additional $10 million per aircraft for retrofits, about 10% of the price of the F-35A.
Air Force Lt. Gen. Christopher Bogdan, F-35 program executive officer, said last winter he expects to be able to stabilize the price of the F-35A, the predominant model sought for export, at between $80-90 million. At that point, in full-rate production, there should be virtually no retrofits required.