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F-35 JSF News Roundup

The F-35 Joint Strike Fighter (JSF) is the largest defense acquisition program ever and it continues despite the budget uncertainty in the United States. If sequestration is implemented the program will most likely see across the board reductions in funding. This could lead to reduced production numbers and delays in the test and development program. The JSF while it is in low rate production is still facing concurrency as it moves toward a final design. The program is led by Lockheed Martin (LMT).

Some recent stories about the program include:

The new test plan for the program was reviewed by DoD leadership and did not win approval. There are major concerns with the pace of development for the new helmet the pilot wears that provides data directly to them rather then relying on their instruments.

Lockheed received a contract from the U.S. Navy worth over $200 million to begin implementing Israeli specific modifications to support that country’s buy of the aircraft.

In another move related to the foreign sales of the program Canada has hired KPMG to analyze the cost basis used by the government to award their contract for 65 F-35 to replace existing CF-18 fighters.

Despite all of this news the program continues with training, testing and development as Lockheed steadily delivers aircraft from the first 4 production batches. They also continue to work with the Government on the next buy.

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Despite Concerns About Lockheed’s Future Earnings Company Wins JIEDDO Contract

On the same day that the Standard & Poor’s (S&P) lowered its outlook on U.S. defense contractor Lockheed Martin (LMT) to negative the company also announced a large contract to support the U.S. Defense Department’s anti-Improvised Explosive Device (IED) efforts.

The company was awarded one of five contracts to provide Operations Support to the Joint Improvised Explosive Device Defeat Organization (JIEDDO). The contract is an Indefinite Delivery / Indefinite Quantity (ID/IQ)one that could have a value of up to $900 million depending how the tasks area awarded. The initial contract is for two years with three option years.

The JIEDDO was established by DoD to focus efforts on defeating the mine and IED threat in Iraq and Afghanistan which became the primary method of attack and caused a great deal of casualties. The JIEDDO has focused on technical means to detect and disable IED’s including advanced detection and jamming.

The contract with Lockheed is focused on the operational part of JIEDDO mission with operations, analysis, combat and IT support for JIEDDO’s analytical team.

There has been concern expressed by many in the financial community that the stocks of the large defense contractors will suffer with the proposed reduction in U.S. spending. This will have a negative effect on their revenue and earnings. Of course the cuts may not happen or be as large as discussed. Also major acquisition programs like the F-35 JSF or ship construction will most likely see reductions in quantity rather then outright cancellation. This should cushion the blow to defense contractors.

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Republican House Successfully Cancels JSF Second Engine Where Previous Administrations Failed

As part of their continuing resolution providing funding for the Federal government for the rest of Fiscal Year 2011 the Republican led House of Representatives struck funding for the F136 engine planned for the Joint Strike Fighter (JSF) program. The overall bill includes several billion in cuts to the Defense Department as well as much more for Federal spending overall. The second engine is being developed by General Electric (GE) and Rolls-Royce (RR:LSE) while the primary one by Pratt & Whitney, a United Technology Company (UTC).

The idea of having a second source for this critical hardware as risk reduction is sound but for the last several years the Pentagon and Bush and Obama Administrations had requested no funding as it was felt an unnecessary program. Congress through its power over the budget kept funding in each year.

While the House has cut the funding there is still a chance that the Senate will leave it in and the final decision will be made in Conference. One of the primary arguments that occurs each year with budget deliberations is how many jobs would be lost if programs like this were ended. That of course is not supposed to be a rationale for defense spending but carries a lot of weight in Congress. Already stories such as this one “Cut engine wold have meant 200 new jobs in Terre Haute” will be appearing in newspapers, blogs and on TV stations across the U.S. today.

GE released a statement thanking their supporters but obviously turning their eyes to the Senate in an attempt to keep the program going. They wrote “While we are disappointed at the outcome, the debate to preserve competition will continue.” The company also pointed out that studies show that the competition between the engines would save billions over the life of the program.

The F-35 JSF is the largest defense acquisition program in U.S. history and has suffered from schedule delays and cost growth over the last decade. The aircraft will equip large parts of the U.S. Air Force, Navy and Marine Corps while also being used by U.S. Allies such as Great Britain, Canada, Australia, Norway and Holland among other countries. With the program’s cost increases the second engine has seen as an expensive luxury.

If the cancellation holds only as the program plays out will it be seen as a wise or premature move. If P&W supports the program effectively and the engine causes no delays or cost increases then the lack of a second source will not matter. If the opposite occurs then there will be finger pointing and recriminations.

Photo from Dysanovic’s Flickr photostream.

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The SDSR and the American Defense Budget

It is not abnormal for a new government to do a spending review when they take control and readjust expenditures. The new Conservative-Liberal Democrat Coalition in the United Kingdom did this but they were in a tough spot due to the last several years of deficit spending. The Coalition had to reduce total spending greatly and one area they focused was defense.

The normal process for building a defense budget is to define what capabilities are required and then invest the available money into the highest priority. Because the British defense spending had been so affected by operations in Iraq and Afghanistan their investment programs had suffered. In the United States total defense spending increased several hundred billion dollars to pay for the operations while several core investment programs such as Lockheed Martin’s (LMT) Joint Strike Fighter (JSF) were maintained.

To achieve an eight percent reduction in defense spending which has been reported as closer to fifteen due to off budget spending for Iraq and Afghanistan the new U.K. budget takes major cuts at operational units and capabilities.

One aircraft carrier is to be retired. The two under construction will have limited air wings including cuts to the number of F-35 JSF aircraft for the Royal Air Force and Navy. Surface combatants will be reduced and new submarines delayed. All manned ISR assets will be eliminated being replaced by UAV and Allied systems. Ground troops will be cut making it even harder to maintain current operational obligations including total withdrawal from Germany.

If the U.S. defense budget faced a similar situation it would be a reduction of about $80 billion in spending a year. This would lead to major cuts to the quantities of current new systems being purchased such as UH-60 helicopters, DDG-51 destroyers and F-35 aircraft. Active forces would have to be reduced and the Navy may have to eliminate aircraft carriers or major quantities of surface ships. The Army would lose whole divisions of troops from the current ten active ones. The Air Force would have to retire F-15, F-16 and A-10 aircraft faster then currently planned.

Investment in new systems such as the LCS, JSF, KC-X and new Army vehicles would be slowed down delaying their development and entry into production. As in the Seventies and Nineties the lack of funding would reduce training and maintenance of current units reducing operational capability.

There is no doubt the U.S. faces budget challenges. The defense budget will have to be reduced as part of an attempt to control spending since it makes up such a large part of discretionary spending. The question will be how severe and in what areas will they be felt. The U.S. does not want to end up in a situation like the U.K. where their military capability is eroded to the point that they cannot necessarily meet combat requirements and treaty obligations.

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US Navy variant of the Joint Strike Fighter flies though may be too late for the Royal Navy

June 7, 2010 by · Comment
Filed under: Editorial, Syndicated Industry News 
Lockheed Martin today reported the first flight of the naval variant of the JSF (F-35 Lightning II) for the US Navy today.

One can only imagine the Fleet Air Arm of the UK looking on, heavily committed to acquiring the F-35 to fly from the deck of one of the two new aircraft carriers under construction. The RN have played their cards in a manner reminiscent of the 'Through Deck Cruiser' as a means to avoid the loss of naval aviation capability in the 1970s surrendering one deck, though in truth how much cheaper will the second vessel really be, and can the UK in a Falklands type emergency deploy the F-35 on the second deck ?

In any event as ever the real enemy remains the Treasury. The Prime Minister today started laying the ground for the June 22nd 2010 toughest spending budget since the Second World War. The aircraft carrier program served many interests aside from the Royal Navy - Scottish political constituencies, the shipyards, the Unions to name a few - none of which are in hock to the Conservative Party. In addition the new MoD Ministerial team is very much Army leaning in character.

Tough times ahead...

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First F-15C With Boeing’s AESA Radar Declared Operational

Boeing (BA), the U.S. Air Force and Florida Air National Guard displayed the first operational F-15C with a new Active Electronically Scanned Array (AESA) radar. The aircraft was shown at the Jacksonville Air Guard facility.

Boeing is operating under a contract to upgrade twenty-four F-15C aircraft for both the U.S.A.F. and the ANG with the new radar. AESA provides better performance and reliability due in part to the elimination of the mechanical scanning parts. Boeing also provides support and sustainment to the F-15 fleet in use with the American military.

The Air Defense of the United States has assumed a greater role since 9/11 and the ANG provides the primary capability. It operates F-15 and F-16 fighters but these aging aircarft will begin to be retired soon. The long term plan is to replace a significant number of them with F-35 JSF now that F-22 production is being ended at 180 odd by the Obama Administration.

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US Navy Flag Officer Announcement

March 16, 2010 by · Comment
Filed under: Syndicated Industry News 
US Navy Flag Officer Announcement
March 16, 2010

Secretary of Defense Robert M. Gates announced today that the President has made the following nomination:

Navy Vice Adm. David J. Venlet has been nominated for reappointment to the rank of vice admiral and assignment as director, Joint Strike Fighter program, Office of the Secretary of Defense, Arlington, Va. Venlet is currently serving as commander, Naval Air Systems Command, Patuxent River, Md.

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Long Term Aircraft Plan Includes 109 KC-X Tankers

The Air Force, Navy and Marine Corps released to Congress their “Aircraft Investment Plan”. This lays out how many fixed wing aircraft they intend to buy and maintain through 2020. The U.S.A.F. intends to buy 109 tankers by that year at an estimated cost of over $30 billion.

The Air Force also plans to maintain a force of 223 C-17 and 91 C-5 heavy lift aircraft. The core of the services aircraft though will be the F-35 JSF with about 600 planned for purchase at the current schedule.

More Foreign Sales Of The F-16

Fresh off of a recent sale of F-16 fighters to Morocco Lockheed Martin announced a further deal with a North African country. Egypt through the U.S. Air Force will go ahead and purchase up to twenty-four of the aircraft. These two deals will help keep the production line open for several more months. The U.S. and many of its allies are moving out with the F-35 JSF as a replacement for the F-16 Falcon which has been in use for thirty years.

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Morocco Completes F-16 Order

Two years ago the North African nation of Morocco selected the F-16 Fighting Falcon to be the basis of their new fighter force. They awarded an initial contract in 2008 for the twenty-four aircraft to Lockheed Martin. Now they announced the rest of the money will be paid. The total contract is worth over a billion dollars with the bulk, $840 million, executed this week.

The F-16 serves with many NATO and other U.S. allies as well as Egypt and Israel. Lockheed Martin continues to sell and build the aircraft for overseas sales despite the plans of the U.S. and many other countries to replace or at least supplement it with the F-35 JSF.

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Joint Strike Fighter Now Focus Of Budget

September 2, 2009 by · Comment
Filed under: BNET, Syndicated Industry News 

The Obama Administration is relying on the F-35 JSF to meet its schedule and needs. The aircraft has become the key component of their…

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GE Bets On House To Keep F-35 Second Engine Alive

Following up on its decision to strip the F-22 funding from the 2010 budget as requested by the Obama Administration the Senate also de-funded the second source for the F-35 JSF engine. This program too had its funding removed in the President’s budget submission but the House and the Senate Committees had restored some money to continue the program.

GE and Rolls-Royce are making this engine, the F136 with Pratt & Whitney responsible for the main F135 engine. The idea of having a second engine was due to the large amount of F-35 aircraft required and the three different versions there might be a need for such capability. GE is claiming that the competition that their engine provides will help control costs and schedule. The company feels that the funding will remain in the final bill as the House will support it in Conference. There is still a chance that the conference bill will also retain some money for the F-22 if the House is hard over on it.

It is interesting that Secretary of Defense Gates‘ wants to end this competitive program to save money when one of the new changes to defense acquisition that he has pushed this year is increased competition in the early stages of a program. Historically when there have been multiple sources trying to win a program there have been cost savings to the Government. In this case the feeling must be that the program is too mature to justify the two sources for the engines.

With the support of the Senate for Obama it may be a contentious conference, or the House may end up ending the programs. It will be an interesting August from the defense budget point of view.

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Australia Reportedly To Buy F-35

Two days after the roll out of their first F/A-18 aircraft necessary to provide an interim air capability until the nation moves out on its fifth generation buy of either the F-35 JSF or the F-22 Raptor the Government announced that they would invest in the F-35. While the F-22 was attractive due to its longer range and greater payload up to seventy F-35 aircraft will be purchased.

Australia plans to now review their defense procurement plans every four years and readjust as necessary. Australia has been a partner in the F-35 development effort but recently had looked at buying the F-22. This would require an act of Congress as current law bans the sale of the modern aircraft. Japan and Israel have also inquired about the availability of the F-22. With the Obama Administration planning on ending procurement of the F-22 foriegn sales are now attractive to Congress as a way to keep production going.

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Australia’s First F/A-18 Delivered

Boeing delivered the first F/A-18 Super Hornet for Australia on July 8. This is the first of twenty-four. The aircraft will provide a stop gap until either the F-35 JSF or the F-22 aircraft Australia has expressed interest in buying. The total value of the contract to Boeing is about $3 billion.

The F-18 for the U.S. Navy and Marine Corps is facing the end of production as the Obama Administration has proposed accelerating deliveries of the F-35 for those services as well as the U.S. Air Force. This is tied in to the ending of F-22 production. Congress has not received these proposals well and have included continued F-22 deliveries in the appropriation and authorization bills working their way through both Houses. The House has also looked at increasing planned F-18 deliveries as well as exploring the award of another multi-year production contract. Multi-year contracts have to be specifically authorized and have been used for large aircraft contracts in a bid to keep overall costs down. If there is a consistent buy profile over several years it makes it easier for the contractors to manage supplies and material ideally reducing costs.

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India Rejects Rafale For New Fighter

Update — Flight International is reporting that India says it has not ruled out any competitor in the program.

The Indian Air Force is looking to purchase an advanced fighter to add to their inventory. Six foreign companies had submitted bids for the 126 aircraft order. Now word comes that the French proposed Dassault Rafale was eliminated from the competition. The Indianexpress.com reports that publicly it was stated the aircraft did not meet certain “qualitative” requirements. It was also said that the proposal submitted showed the aircraft did not meet some of the technical requirements for the program. This means that the contest will continue with Boeing, Lockheed Martin, SAAB, MiG and Eurofighter participation for now.

The deal is one of several that India is proceeding with in an attempt to upgrade the technical capability of their armed forces. In the past the country had tended to buy from Russia or England. India has also spent the last several years developing an indigenous arms industry. Although lately they have turned to outside sources to include Israel and the U.S. for advanced weapons.

Currently there are several nations looking at buying advanced fighters. The Rafale has not been bid for many as most of the competition has been between the F/A-18G, SAAB Gripen, F-35 JSF and the Eurofighter Typhoon. The Indian contract is certainly one of the largest percolating.

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Gripen NG pitched to the Netherlands

SAAB submitted a proposal to the Dutch government for replacement of the F-16 Fighting Falcons in service at this time. The current plan is to buy F-35 JSF aircraft. The SAAB proposal includes the Gripen aircraft, support, training and spares. No price for the 85 aircraft proposal was provided. If it is competitive there may be some desire by the Dutch to buy this aircraft over the F-35. SAAB has also proposed a Gripen to Norway and India.

For more see FlightGlobal.com.

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Concern UK may back out of Eurofighter contract

The UK government is currently planning on buying Eurofighters and F-35 JSF aircraft to modernize their fixed wing aviation force. There are rumors that the Eurofighter buy may be canceled as a cost savings. See an article here. Eurofighter is built by a multi-nation consortium in Europe with BAE being the most important UK participant. If the contract is canceled, with the Government paying termination fees, that means no major aircraft will be built by BAE. They build parts of the JSF but do not assemble the final aircraft. This would be the end of fighter production in England if it happens until a more advanced aircraft then the F-22 or F-35 comes along.

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Norway receives bid for new fighter

Lockheed Martin and SAAB submitted bids for Norway’s new fighter. See the article here. Either the F-35 JSF or the Gripen will replace the existing force of F-16 aircraft. It will be one of the largest contracts Norway has awarded due to the expense of the aircraft. A decision will not be made until the end of the calendar year.

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