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WASHINGTON — The general in charge of the multinational F-35 Joint Strike Fighter effort is making organizational changes within the Pentagon’s program office, and he has a message for the jet’s prime contractor, Lockheed Martin, and engine-maker, Pratt & Whitney: Do the same thing.
Air Force Lt. Gen. Christopher Bogdan said Tuesday that he is “not quite ready” to disclose the changes within the government program office yet.
“I am making housekeeping changes. You just don’t know about them yet,” he told a small group of reporters after speaking at a conference here sponsored by Credit Suisse and McAleese and Associates.
“Mark my word, I am reorganizing and I’m making personnel changes,” said Bogdan, who in December took over the nearly $400 billion program to build jets for the Air Force, Navy, Marine Corps and U.S. allies.
Asked how much he plans to reorganize the program office, Bogdan said, “I plan on leaning out my program office at the same rate that I want to see Lockheed Martin and Pratt & Whitney lean out their program offices.”
The government has about 2,000 people working on the F-35 program at the Arlington, Va.-based headquarters and multiple sites around the country.
Bogdan is “considering different organizational alignments within the program office,” program spokesman Joe DellaVedova said. “These are improvements within the organization to make us better, streamline processes and improve how we do business.”
Frank Kendall, the Pentagon’s undersecretary for acquisition, technology and logistics, said the size of the contractors’ F-35 program offices is considerable.
“One of the things that we observed when going through the structure of Lockheed was that they do have a very large program office,” Kendall told reporters after speaking at the same conference. “It’s one of the cost items that we talked about during the course of the negotiation.”
DellaVedova said Bogdan was not referring reducing staff sizes, but other methods of leaning out their program offices.
A Lockheed F-35 program spokesman disagreed.
“Our program office staff is properly sized for the F-35 development, production and sustainment scope for our current contracts,” Michael Rein said in an email. “We continuously examine staffing as we submit proposals in response to new or additional government requests, and we make adjustments as necessary and appropriate.”
Pratt pushed back saying it has “a lean organization that supports not only the F135 engine program, but our other engine programs as well.
“It is important to note that even though the F135 program is the single biggest program at Pratt & Whitney, we only have a single executive dedicated to the program; the great majority of our staffing is engineering and manufacturing labor,” said company spokesman Matthew Bates. “We staff to meet our contract requirements and would make adjustments based on any contract modifications from the F-35 Joint Program Office.”
Bates said the company has “offered unsolicited proposals to the government that would have eliminated unproductive requirements and reduced the need for additional headcount, saving the government millions of dollars. Although the government rejected these proposals — such as us accepting a firm fixed price rather than incentive fee contracts — we will continue to pursue ways to cut costs and strengthen the overall program.”
Getting the Price Down
The price tag of the F-35 continues to come down with each jet purchased, but there are many variables influencing the numbers.
For instance, when the Turkish government delayed buying two airplanes from the seventh production batch to the ninth, the price of the remaining F-35s in the seventh production lot went up $1 million each.
“In a lot of 36 airplanes, just moving two airplanes out created about a 1 [percent] to 1.5 percent increase from all the other airplanes in that lot regardless of the variant,” Bogdan said.
“What I tell my partners and I tell the services is, we’re all going to hang together or we’re all going to hang separately,” he said. “If we start moving airplanes out and each of us takes our own course in when we want airplanes, everyone else is going to pay a price for that.”
Bogdan said he believes the cost of the jet will continue to fall with each batch purchased.
“I believe that trend is going to continue on and on and on until we get to a point where the airplane is going to almost, in then-year dollars, cost what we thought it would cost in the early years of this program,” Bogdan said. “I think we can get there.”
Lockheed Martin and Pratt & Whitney are getting more efficient in production, and manufacturing quality is improving, Bogdan said.
“I believe that, relative to the rest of the program, that production costs are moving in the right direction,” he said.
In 2019 or 2020, a conventional F-35A, with an engine, is expected to cost about $90 million in then-year dollars. An A-model F-35 currently costs about $119 million.
As production costs decline later in the decade, the F-35 will become more affordable and “fit within the budget,” Bogdan said.
On Monday, the Government Accountability Office said the F-35 program had made strides in 2012 but still has lots of testing ahead.
F-35 acquisition funding requirements average $12.6 billion annually through 2037, according to the GAO report.
“The GAO finding that the program is on more stable footing reflects tremendous effort to rebaseline the program and aggressively manage development, production and cost,” Bogdan said in a statement. “We have more work to do and we’re committed to delivering on the promise of the F-35; it will form the backbone of U.S. air combat superiority for generations to come.”
The Impact of Sequestration
With mandatory defense spending cuts — known as sequestration — on the horizon, Bogdan said his top priority is keeping F-35 development funded over production.
If the Pentagon has the authority to choose where it makes the cuts mandated by sequestration, program officials will have more flexibility in making F-35 program decisions.
“I can’t do anything that takes me off course to 2015 and 2017 in terms of development,” Bogdan said at the conference, referring to key battle-ready dates for the Marine Corps and Air Force, respectively. “The first dollar that comes out of the program will not, should not, come out of development.
“If I can’t get to 2015 and 2017 with the capabilities that the war fighter wants, why in heck would I continue building airplanes that come off the production line without the capability we want?” he said.
If money is taken from the F-35 program, Bogdan said it should be done in a balanced way. For instance, he said spare parts should not be sacrificed to save an aircraft.
“Don’t kill all of my spares to save a tail, because in two years when I have no spares, I’ll have airplanes out in the field, hundreds of them, that I can’t fly,” he said.
Despite sequestration, Kendall said, “we still have a budget that is adequate to support F-35.”
Kendall discussed another pressure that could potentially affect the F-35 program: the start of an effort to find its replacement. In his remarks at the conference, Kendall said he has been working with the Defense Advanced Research Projects Agency on the Air Dominance Initiative, designed to start the preliminary work on the next-generation fighter. How quickly that program proceeds will partially be driven by the success of the F-35 program.
“There are going to be footsteps behind Lockheed eventually from the next generation, whatever it is, of air dominance system,” Kendall said. “At some point, we’re going to go beyond F-35 to whatever comes next, and the point at which we choose to do that will depend in part on how well we get the cost of the F-35 down and on how well it performs.”
Defense News staff writer Zachary Fryer-Biggs contributed to this report.