Pentagon eyes three-year block buy of F-35s from fiscal 2018

Reuters News
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Posted: May 29, 2015 10:27 AM

By Andrea Shalal

WASHINGTON (Reuters) - The Pentagon said Friday it would talk to U.S. lawmakers about approving a three-year block buy of Lockheed Martin Corp F-35 fighter jets beginning in fiscal 2018 that would include U.S. purchases and international buyers.

U.S. Defense Undersecretary Frank Kendall told reporters via teleconference from Oslo, Norway, that such a deal would not constitute a formal "multi-year buy," but would still require congressional approval.

A block buy of more than 400 jets would allow for "double-digit" cost savings from larger economies of scale when orders reach around 150 planes a year, said Kendall, who was attending an annual meeting of top U.S., international and industry officials on the F-35 program.

Kendall, the Pentagon's chief arms buyer, said the $391 billion F-35 program was meeting or exceeding performance and cost milestones set during a 2011 restructuring of the program.

It remained on track for a key milestone this summer when the U.S. Marine Corps expects to declare an initial squadron of jets ready for combat use, followed by the Air Force in 2016.

"I'm very encouraged by the progress that we're making," he said.

Kendall said he saw a "fundamental change" during this year's "CEO" meeting, away from past technical challenges and toward fielding jets, future upgrades, and how to maintain and operate thousands of jets around the world in coming years. Lowering production and operating costs remained a key priority.

Lockheed and engine maker Pratt & Whitney, a unit of United Technologies Corp, service the aircraft under traditional contracts with the Pentagon, but officials hope to shift to more fixed-price "performance-based logistics" deals in coming years.

Such contracts typically generate savings of 15 percent by allowing companies to sign longer-term orders with suppliers.

Lieutenant General Jon Davis, the top Marine in charge of aviation, said six F-35 B-model jets this week completed 108 flights and flew 85.5 total hours during operational testing on board the assault ship USS Wasp.

Lockheed is building three F-35 models for the U.S. military and eight partners that funded the jet's development: Britain, Norway, Canada, Denmark, the Netherlands, Italy, Turkey and Australia. Israel, Japan and South Korea have also placed orders.

(Reporting by Andrea Shalal; Editing by Chizu Nomiyama)