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Negotiations continue between Lockheed and the Pentagon

Negotiations between the Pentagon and Lockheed Martin started last year to iron out all the details for the purchase of 32 F-35 fighters. The reason negotiations on pricing have dragged on for so long is due to the Pentagon's use of new pricing data according to Defense News. DOD officials are now using what's being called a "should-cost" estimate for the purchase of the F-35 fighters based on data from the previous four F-35 purchases.
Undersecretary of Defense for Acquisition Technology and Logistics, Frank Kendall, says that the Pentagon's move to "should-cost" estimates were used to develop a "bottoms-up cost estimate based on that previous history."
“We started negotiations on the government side with a very well-documented set of costs, called the should-cost, and then we were able to compare that to the bid that we received, item-by-item, line-by-line,” Kendall said during a July 16 meeting with a small group of reporters in his Pentagon office. “Going through and trying to resolve the differences has been the process that has taken so long.”
Kendall also notes that once negotiations conclude, "We’ll be in a very good place to go ahead and negotiate for future lots."

A group of Lockheed F-35B Lightning II fighters [Source: Lockheed Martin]
The Pentagon has been working hard to put pricing pressure on Lockheed Martin for F-35 purchases despite reducing the number of aircraft required over the next five years by 179 units. Typically, every time purchase plans are reduced by any partner nation, pricing for the F-35 increases.
Kendall also believes that sequestration, or mandatory spending cuts that will go into effect in January, will not affect every F-35 acquisition contract. Sequestration only applies to funding that is not yet obligated according to Kendall.

The Pentagon is fighting for every penny it can save on the F-35 fighters as the overall lifetime cost of the F-35 program continues to soar.

Source: Defense News

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By DennisB on 7/18/2012 4:01:55 PM , Rating: 2
I'm still scratching my head as to why the U.S. originally wanted over 2000 copies of the F-35 and 750 of the F-22 upon program development launch. (As if 350 F-35's and 150 F-22's shouldn't suffice to complement existing military fleet in trying to keep America safe...)

That's because you need 3 contingencies for war fronts and/or one for reserve. If you only have enough for one contingency you can only either fight or defend not both. And you can't have replacement or changed out your tired troops.

Since the situation can't really be saved, why not have 3 types instead of 3. The F-22 and F-35 are only needed for the vary front of the battle line. The less dangerous support/combat line can be done by any other types or drones.

By Jeffk464 on 7/18/2012 4:07:59 PM , Rating: 3
What about thecontingency where we go broke because these defense contractors are absolutely soaking the taxpayer?

By bjacobson on 7/18/2012 9:24:54 PM , Rating: 2
meh, its good for the economy right? interest rates low and headed even lower...

By Apone on 7/19/2012 12:06:29 PM , Rating: 2
Makes sense, thanks for clarifying. But wouldn't 250-300 units of the F-35 to each of the 3 contingencies and reserve be sufficient? (so about 1000-1200 total order) Honestly it still looks excessive originally asking for 2400+ copies....

By Manch on 7/19/2012 1:12:11 PM , Rating: 2
2400 copies were supposed to replace F16s, F18s, A10s, and AV8s. Plus this was supposed to be over the lifetime of the program, which accounts for ac loss, retirements, etc.

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