Lockheed Martin, prime contractor for all hardware and software on the F-35 fighter other than the engine, has proposed to the government that the company assume most of the risk for keeping the plane in a high state of readiness
Share to twitter. The company would guarantee a fixed price to reach and exceed 80% fleet readiness by 2025, higher than most U.S. combat aircraft achieve today.
What Lockheed Martin is proposing is that the Department of Defense transition F-35 to a performance-based logistics approach in which contractors are incentivized to reduce costs. Traditional sustainment concepts measure inputs, whereas performance-based logistics measures success in terms of outputs—in this case, readiness and affordability.
What makes the offer of a fixed price unusual is that Lockheed doesn’t actually control most of the costs driving F-35 sustainment outlays. The company says it accounts for roughly 40% of sustainment costs, with engine maker Pratt & Whitney accounting for 10% and the government generating the remainder .
Capability and affordability are usually traded off against each other in Pentagon arrangements for supporting combat systems, so analysts will inevitably wonder why Lockheed Martin thinks it can simultaneously increase readiness and decrease costs. The short answer is that it has analyzed processes surrounding the sustainment function and has identified numerous ways in which money can be saved without sacrificing readiness.
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