The Pentagon plans to offer deals to international buyers of the F-35 fighter jet that would undercut the price paid for planes destined for U.S. forces, the program’s military chief said Thursday.This article has my spidey sense tingling.
Lt. Gen. Chris Bogdan said he planned to offer multiyear deals to overseas buyers, a move that would help boost production of the jet and aid efforts to reduce its average cost.
The Pentagon negotiates deals on behalf of overseas nations with the F-35’s prime contractors, Lockheed Martin Corp. and the Pratt & Whitney unit of United TechnologiesCorp.
However, U.S. weapons-buying rules bar the Pentagon from negotiating multiyear deals for the Air Force, the Marine Corps. and the Navy until 2019 at the earliest.
Gen. Bogdan told reporters that this would allow overseas governments to secure cheaper pricing than the U.S. and others who didn’t sign up for the multiyear deals, though didn’t detail the potential savings.
A contract for the latest batch of F-35s—known as LRIP-8—is expected to be completed with Lockheed by Thanksgiving, said Gen. Bogdan. The two sides have reached a preliminary deal that would reduce the cost of the planes—which are destined for the U.S. and five other countries—by 3.4% from the previous batch.
He's going to offer multi-year buys to boost production? Does he really think allied air forces are going to go for this?
Uh...NO!
The only thing this will do is to add a bit of clarity to the entire situation. Everyone is waiting to see how this turns out, and foreign forces will still wait. No one trusts a fire sale and that's what the Program Manager is offering. All this will do is take the cost excuse off the table. Looks like allied generals will need to find a new excuse.
But what really has me jazzed is the blurb that the writer buried. The Pentagon can't make multi-years buys by law until the plane has finished flight testing..and 2019 is the hoped for date.
I've lost track of the numbers but consider this exhibit XXXX-X to prove that the death spiral has already hit and the program office is scared shitless.
It is illegal. Congress passed laws that state you cannot sell something to a foreign military cheaper than what the U.S. military can buy it for. So in order to get around that... you have DELTA SDD which states each foreign F-35 has a different configuration. For example: a Japanese FMS F-35 will have less stealth quality than a U.S. one. (JPO doesn't decide what stealth quality is legally exportable. LO/CLOEXCOM (U.S. gov team) does.
ReplyDeleteCorrect.
DeleteArms Export Control Act (AECA)
(d) Competitive pricing
(1) Procurement contracts made in implementation of sales under this section for defense articles and defense services wholly paid for from funds made available on a nonrepayable basis shall be priced on the same costing basis with regard to profit, overhead, independent research and development, bid and proposal, and other costing elements, as is applicable to procurements of like items purchased by the Department of Defense for its own use.//
In other words the prices must be HIGHER than the current procurement costs the DOD pays for prototypes. They must include "independent research and development, bid and proposal, and other costing elements."
FY2015 UNIT PRICES w/o those extra charges--
procurement only including 2014 advance procurement funds
26 F-35A @ $163m
6 F-35B @ $234m
2 F-35C @ $384m
So probably, as Eric suggests, they will say "Oh, your F-35 is not like ours" as I describe in A Tale of Two Lightnings .
This applies to Foreign Military Sales (FMS) and not to the eight JSF partners who have invested in development. But the partners have not been enthusiastic about purchasing F-35 prototypes, and so only 15 have been sold so far. Understandable. Three partners have been a no-show: Turkey, Canada and Denmark. Australia bought two, and none projected. Same with Netherlands. UK cut back from 14 more to four. Italy has budget problems and an active anti-JSF movement. Norway is the only hot prospect.
DeleteBogdan has been promoting a "ramp-up" of foreign prototype sales, and when asked 'to whom' he has responded with non-partners: South Korea (ROK), Israel and Singapore. ROK is frequently in the news "buying forty F-35," Israel is a US-funded given, and Singapore? -- who knows. That's it.
Then there's the issue that US law forbids selling FMS aircraft for less than what a USG buyer would pay, plus a management fee. Time to set the lawyers loose...
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteThis stinks of paying for other country's aircraft.
ReplyDeletemaybe - but also spells to me "sell them to anyone who will take the" get them out the door and out of buying budget. i.e. in trading terms - sell the crap out of crap stock before it hit the wall.
Deleteyou're right...this looks every bit like a stock broker calling out for a fire sale.
DeleteDon't underestimate the Dark Force Sol'... don't underestimate the human stupidity, corruption and lobbing of LM.
ReplyDeleteSolomon nailed it -- desperation hits.
ReplyDeleteThere's blood in the water, can you smell it?
They need to "ramp up" to get the unit price down when there' nothing but bad news, and hardly any buyers for their snake oil.
Five more years (at least) of development and testing, with the more rigorous testing yet to come, with a weak engine and the avionics and sensors not even tested yet, --place your bets, gentlemen.
Pratt wins $1.05 billion US deal for 48 more F-35 engines - Reuters
ReplyDeleteThat's $22m each, or twice what an A-10 Thunderbolt II twin-engine cost twenty years ago.
And the Pratt engines overheat and throw off parts which destroy the plane! Bummer.
Cheaper and less stealthier versions of the F-35 for export?
ReplyDeleteLike this?
http://youtu.be/Kn6nx_GGERQ