USAF Rejects DoD Cost Estimates for F-35 Negotiations

The U.S. Air Force's top acquisition official said June 18 that the service is not using the Pentagon's latest cost estimates as its baseline price in its negotiations for the F-35A Joint Strike Fighter.

"There is no vectoring by the [F-35] negotiating team" based on estimates by the Pentagon's Cost Assessment and Program Evaluation (CAPE) office released this month predicting that the overall costs of the airplanes could reach as high as $92 million each, David Van Buren, assistant secretary of the Air Force for acquisition, said during a briefing. "We're focused on the instant contract proposal at hand."
The Pentagon's top weapon buyer, Ashton Carter, "holds us accountable not to accept a will cost [estimate] but to drive for the lowest cost across the board," added Van Buren.
This means that Air Force negotiators are pushing aggressively for what "we believe is the appropriate cost" for the jets, Van Buren said. He did not elaborate on those numbers.
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's December 2009 cost estimate for the program, which at the time pegged the costs at roughly $76 million per plane in 2010 dollars.
Officials from the Bethesda, Md.-based firm first said in April that the final contract for LRIP 4 will be signed at more than 20 percent below the December 2009 CAPE estimates.
On June 17, Steve O'Bryan, Lockheed's vice president of F-35 business development, reiterated the company's stance that its LRIP 4 jets will be priced more than 20 percent below those estimates, noting that the price of its LRIP 3 lot of jets also came in at a price 20 percent below the Pentagon's 2009 predictions.

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