Friday, July 16, 2010

Canada's Sole-Source Buy Boosts F-35

In a badly needed shot in the arm for Lockheed Martin's embattled F-35 fighter program, Canada will purchase more than five dozen Lightning IIs, with the first delivery slated for 2016, Ottawa and the company announced July 16.

The Canadian government said it plans to buy 65 Lightning II jets to replace its aging F-18 fighter fleet. Those fighters entered service in the early 1980s.

This announcement comes on the heels of a troubled spring for the program, which was completely retooled following numerous predictions by Pentagon planners that the jet's costs are at risk of skyrocketing out of control.
Richard Aboulafia, an aviation analyst at the Teal Group, said the deal is important for the program because "it's the first export customer commitment for a production batch of F-35s."

The Canadian commitment "could also start a series of long-awaited orders from JSF partner nations," he said. "The production numbers also help stabilize program's economics. This is a program predicated on volume."
While Canada has been a partner in the JSF program for years, some Canadian lawmakers from the Liberal Party oppose buying the jet in a sole-source contract.

The version the Canadian Air Force is buying is the least expensive of the three variants and in today's dollars it will be around $60 million per aircraft, said Lockheed spokeswoman Kim Testa.

DoD officials told lawmakers in June that the F-35 fighter program could cost as much as $382.4 billion, with an average through-life per-plane price tag of $92.4 million.

That estimate assumes the program continues down the current path, but senior Pentagon officials say efforts are underway to move the overall cost of the F-35 program "as close as possible" back toward substantially smaller estimates crafted in 2002.
U.S. Air Force and Lockheed officials have said the airplane will cost less than the CAPE estimates.
Just weeks after last month's cost estimates for the jet came out the Air Force's top weapons buyer, David Van Buren told reporters that his negotiating team is not using the CAPE numbers as a guideline in hammering out a price tag for the air service's 1,763 F-35s.

Lockheed Martin has said for months that the Pentagon's initial offer for the latest batch of 32 low-rate initial production F-35s, known as LRIP-4, was 40 percent below the CAPE office's December 2009 cost estimate for the program, which at the time pegged the costs at roughly $76 million per plane.

Also speaking last month, Steve O'Bryan, Lockheed's vice president of F-35 business development said that he expects the final price of LRIP 4 to be more than 20 percent below the CAPE's numbers.

Along with the U.S. and its northern neighbor, several of Washington's top allies are involved in the fighter development effort and have said they will buy F-35s. The U.S. is leading development of three variants of the F-35, a conventional takeoff-and-landing model, a vertical takeoff-and-landing version, and a carrier-based jet.

"We're very pleased with the decision and are committed to supporting the government of Canada in moving forward with the F-35," said Tom Burbage, Lockheed Martin executive vice president and general manager of F-35 Program Integration. "The Lightning II will help ensure Canada's national security, and also positions Canadian industry to immediately capture long-term work that will endure for the next 30 years." Designers say this was made possible by reducing the number of

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