F-35 Price Target: $80 Million

Though F-35 program officials have been talking about hitting a then-year unit cost of $85 million by 2019, the new goal is $80 million by 2020—and that may not be the bottom, said Program Executive Officer Lt. Gen. Christopher Bogdan. Speaking at a McAleese/Credit Suisse conference in Washington, D.C., on Wednesday, Bogdan said there’s “still a lot we can do” to lower the unit cost of the F-35. Much of that will come with block buys and multi-year procurement, which will “stabilize the buy” and allow contractors to buy materials at economic order quantities, he said. Lots 11-13 will be negotiated as a single contract, covering 440 airplanes, and that, too, will allow volume discounts. However, that will largely be it for volume, as the program will achieve peak rate of about 170 aircraft a year soon after. Another approach will be “de-layering” the 1,300-company supply chain and going directly to vendors at the sub-tiers. “The price has been coming down … and I don’t expect that to change,” Bogdan said. A second phase of the contractors’ “Blueprint for Affordability” ideas—in which the contractors invest in design or process improvement, and if it works out, the government reimburses the expense—will have to prove it’s worth doing, Bogdan said. The first phase was “okay,” he said with moderate enthusiasm, but he thinks most of the “low hanging fruit” was captured in Phase I. Bogdan reported that he’s increasingly focused on sustainment, believing there’s still “20-30 percent of cost to drive out” of maintenance, manpower, and operating costs.