Deal Could Trim Aircraft’s Skyrocketing Price Tag

Posted July 15, 2014 at 5:47pm

As officials grapple with the fallout from the recent grounding of the F-35 fleet, the Defense Department is working to get the troubled fighter program’s escalating costs under control.

Last week, officials signed an agreement with F-35 prime contractor Lockheed Martin and its partners Northrop Grumman and BAE Systems to reduce the production costs for the F-35.

Specifically, the contractors will invest as much $170 million through 2016 to drive down costs. But they also stand to gain — if they are successful. Once they cut costs, the companies will recoup their up-front investment, plus profit from the accrued savings.

The U.S. government also has the option of investing additional money from 2016 to 2018, if the contractors drive down costs for both the United States and its international partners on the program over the next several years.

Lt. Gen. Chris Bogdan, the F-35 program executive officer, called the agreement a “significant change in business approach” for the program that will ultimately lead to a less expensive fighter jet.

“By 2019, we expect that the F-35 with its unprecedented 5th generation capability will be nearly equal in cost to any other fighter on the market, but with far more advanced capability,” Bogdan said in a statement.