Italy, Turkey Big Winners of Future F-35 Logistics Work
The Pentagon has begun to assign potentially lucrative logistics support work to foreign buyers of the F-35 joint strike fighter. As part of a "global sustainment" effort, it selected Italy and Turkey as main providers of airframe and engine maintenance for the F-35 fleet based in Europe.
This marks the first step of a projected years-long process of allocating billions of dollars worth of future maintenance work, said F-35 Program Executive Officer Air Force Lt. Gen. Christopher Bogdan.
Under the global sustainment plan, the F-35 office divided aircraft buyers into three regions — North America, Europe and the Pacific.
F-35 aircraft manufacturer Lockheed Martin Corp. and engine maker Pratt & Whitney are the primary contractors that will support and maintain U.S. aircraft.
The Defense Department decided that foreign buyers should be financially rewarded for their investment in the program by securing logistics support work. The F-35 program office estimated that European and Asia-Pacific based buyers will need to have a maintenance infrastructure up and running by 2018 in order to be ready to support their future fleets.
Although non-U.S. buyers make up a small piece of the entire F-35 program — 723 aircraft compared to 2,443 projected to be bought by the United States — they carry disproportionate political weight. The Pentagon and Lockheed Martin are seeking to increase international sales to reduce the aircraft’s price tag, and want to show that the program is worth investing in.
While international customers will buy far fewer aircraft than the United States, they make up about half of the planned orders of low-rate production aircraft over the next few years. As Bogdan looks to bring the per-aircraft price from nearly $100 million to about $85 million, these early foreign buys are seen as crucial to keep costs down.
Current buyers — although not all fully committed — include Australia, Canada, Denmark, Israel, Italy, Japan, the Netherlands, Norway, South Korea, Turkey and the United Kingdom.
During a news conference Dec. 11, Bogdan announced that Italy had been selected to provide "regional maintenance, repair, overhaul and upgrade" work for all F-35 airframes based in Europe. The United Kingdom would be a back-up supplier if additional capacity were needed. Turkey was picked to perform heavy engine maintenance, with Norway and the Netherlands in line to take up some of the work two to three years later. "We'll need more than one nation doing engine work," Bogdan said. The winners of the Pacific region maintenance workload will be announced next week, he added.
The workload assignments will be reviewed and updated in about five years, and there will be opportunities for other countries to grab their share, said Bogdan. "As international F-35 deliveries increase and global operations expand, support provided by our international F-35 users becomes increasingly more important.”
The Defense Department surveyed all F-35 partner nations for interest in doing the work. Several candidates were evaluated and U.S. teams were sent to each country to inspect facilities. F-35 program officials weighed in on the decision on technical merit, and the Pentagon also factored in issues like geography and the projected location of aircraft.
Italy, which is expected to buy 90 aircraft, has poured nearly a billion dollars into a "final assembly and checkout facility" for the F-35. That gave the country the inside track for maintenance work, said Bogdan. "It is hard for anyone else to match that. That's a cost the rest of the enterprise does not have to bear."
But Bogdan cautioned that the work is not guaranteed indefinitely, and other countries will be encouraged to compete in the future. Italy is only being promised a workload equivalent to the number of aircraft it will buy. Beyond that, the program office might seek a new round of competitive bids.
"In 2015 we'll continue this process," Bogdan said. "There is much work still to be had" including components, system repair, warehousing and maintenance equipment support.
Once a country is assigned regional maintenance responsibility, it is up to that nation's government and suppliers to fund the needed infrastructure. The investment would be recouped over time as maintenance work ramps up once F-35 fleets begin operations. "Each nation that sets up regional capability will be guaranteed a minimum amount of work equivalent to how many airplanes will buy," said Bogdan.
The cost of maintenance and logistics support for the entire F-35 fleet is estimated to approach $1 trillion over the projected 50-year life of the program. The joint program office so far has mostly focused on the development, testing and production of the aircraft. Up until four years ago, the program was on the brink of being terminated and was once characterized by Pentagon procurement chief Frank Kendall as the product of “acquisition malpractice.”
Since taking over the program, Bogdan cracked down on excess cost and pressured Lockheed and Pratt to invest more of their own money in the program.
The logistics piece was not an immediate priority but it has commanded more attention recently, particularly as international buyers voiced concern about their ability to keep the sophisticated aircraft ready to fly once they enter service. An industry source who spoke to National Defense on condition of anonymity said some foreign buyers — particularly Australia and the United Kingdom — became alarmed as they began to look at what it would take to keep these new airplanes flying. Most are buying small numbers of airplanes, “so their expectations for operational availability are higher than ours,” the source said. The United States will have a huge fleet, so even if only half the aircraft are operationally available, that is still a large number. For countries that are buying fewer than 100 airplanes, even a 75 percent availability rate would be a problem. “The small fleet size operators want to maximize the number of airplanes that are ready at any given point,” the source said. “Maximizing readiness in a mature fleet is a challenge. In a brand-new airplane, it's almost insurmountable.”