DoD planning large block buy of F-35

The Pentagon is planning on a large block purchase of F-35s, to number 450, covering 2018-2020. The block would include foreign partner and FMS aircraft, and is expected to provide between a 5% and 15% savings in cost per aircraft. It would also incentivise foreign partners to stick with their orders.

They're also planning on switching from a Contractor Logistics Support system to a Performance Based Logistics program. Historically going to a PBL system provides a 10-15% savings, as it switches to a performance based structure where the contractors get paid for availability and readiness of the aircraft, instead of a per hour pay scale.

The Pentagon says it has enough confidence in the F-35 Joint Strike Fighter programme to start planning for a three-year block buy that would purchase about 450 jets from prime contractor Lockheed Martin.

The block buy would include F-35s for programme partners and foreign military sale (FMS) customers, and would cover aircraft procurement for fiscal years 2018 to 2020. The deal needs the blessing of Congress to proceed, and those discussions will begin soon.

“We’re feeling optimistic enough about the programme that we’re going to proceed with the planning on that, and we’ll be talking to the Congress about it,” DOD acquisition chief Frank Kendall told reporters in a teleconference call from Oslo, Norway.

By bundling the orders into a single, three-year production contact, Kendall says he expects to see “double-digit savings”, with multiyear procurements historically achieving a 5% to 15% cost reduction. The block buy is not covered under the same statute as a multiyear procurement, but has the similar effect of guaranteeing production quantities several years out instead of having to negotiate single-year lots, or exercise options in a base-year agreement.

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Aaaaahhh gotta love Bean counters in their element.

As a procurement person this makes so much sense. I remember negotiating Tranch 2 prices on Typhoon and everyone (press and government) were complaining the price kept going up even though they were buying more!

If they locked in all the Aircraft in Tranche 1 it would have saved them millions.

It's the way the government budgets work over hear, hard to invest if you don't have the money guaranteed, its a gamble and a smart move, they must be confident in the aircraft, I hope this allowed the UK to buy more.