F-35 Industry Partners Sign Cost Reduction Deal, Make Upfront Investments

Department of Defense, US signs agreement with F-35 industry partners, Lockheed Martin, Northrop Grumman and BAE Systems to reduce production costs of F-35 aircraft.

The agreement aims at reducing the price of 5th generation F-35 fighter to equivalent of 4th generation fighters by the end of the decade. It is designated as “the blueprint for affordability”.

LM, NG, and BAE will invest up to $170 million from 2014 - 2016 in affordability measures, directly resulting in a lower-priced aircraft. From 2016-2018, the US government has the option to invest additional money if the initial cost reduction initiatives are successful.

The primary way the government will realize its savings is through reduced F-35 unit recurring flyaway (URF) cost. The government is looking at similar ways to drive down the costs of operating and sustaining the F-35.

Lt. Gen. Chris Bogdan, F-35 Program Executive Officer said, "Industry partners will make an upfront investment into cost cutting measures that the government and taxpayers will reap benefits from by buying F-35s at a lower cost.  By 2019, we expect that the F-35 with its 5th generation capability will be nearly equal in cost to any other fighter and advanced capabilities." 

Three distinct variants of the F-35 are to replace the A-10 and F-16 for the U.S. Air Force, the F/A-18 for the U.S. Navy, the F/A-18 and AV-8B Harrier for the U.S. Marine Corps, and a variety of fighters for at least 10 other countries.

Earlier in a report on June 17, Pentagon planned to reduce F-35 costs by 10 to 20%.