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F-35 Joint Strike Fighter (JSF) Foreign Intrigues Continue

The F-35 “Lightning II” Joint Strike Fighter (JSF) will be used not only by the U.S. military to replace its aging F-16, A/V-8, F/A-18 and A-10 aircraft but also by many other NATO countries and allies. It is being purchased as a F-16 replacement by many of these and like the successful F-16 program will have manufacturing and parts co-share agreements with different international partners.

The delays and cost increases to the program have been well documented and these have caused some early planned users to question the financial sense of continuing the program. Many of these countries, though, have already contributed through development funds as well as already had their aerospace contractors sign contracts and agreements with Lockheed Martin (LMT) to produce parts for the aircraft which continues in its Low Rate Initial Production (LRIP).

Canada, the Netherlands and Australia have had and continue to have debates about their purchase of the advanced aircraft rather then existing systems like the F/A-18, Eurofighter, Rafael, SAAB Gripens and Russian alternatives. In Canada they are reviewing the whole cost analysis that had led to the decision to continue the purchase which could technically end it and look at other aircraft. That leads to editorials and articles like this one, “The Case for the Super Hornet As The RCAF’s New Fighter” from Canada or analysis in Australia such as this: “Politics first as white paper fails on big issues”.

At the same time the U.S. has been successful in adding Foreign Military Sales (FMS) of the aircraft most notably to Israel and Japan. There has also been interested expressed by other U.S. allies like the U.A.E.

The commitment of the foreign partners is somewhat critical to the whole program as a reduction in buy quantity will have a ripple effect on the whole program. Less purchased in total and annually will cause a cost increase for each aircraft and the whole program. The F-35 PEO, Lt Gen Bogdan, identified this risk in Congressional testimony in April. If somebody drops out the price the others pay will go up putting more pressure on their budgets and perhaps cause them to drop out too. This would then become a spiral causing issues for the U.S. and all of the other nations involved in the program.

Despite the issues with the aircraft over the last decade the U.S. remains committed to the program. Over 100 are on order and there is discussion to award a new 2 year production contract this summer for a further 60-70. Training is underway for both aircrew and maintainers of the U.S.A.F., Navy, Marines and allies. The big questions remain though about completing development, how many will be built, and who ultimately will operate the aircraft.

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UK Decisions on F-35 Aircraft Criticized by Parliament

The F-35 Joint Strike Fighter (JSF) program continues to be controversial. It is the largest defense acquisition program in history and will see the manufacture and deployment of 100′s of the advanced aircraft to the U.S. military and several allies across the world. One of the original and major customers is the U.K. which will replace its Harrier jump jet fleet with Lockheed Martin’s (LMT) aircraft.

Because the F-35 must equip the U.S. Navy, Air Force and Marine Corps there are different versions of the aircraft. Their is the F-35A optimized for the Air Force and use of fixed runways, the F-35B which has Vertical Take-Off-and-Landing (VTOL) capabilities and finally the carrier based F-35C. These will replace the F-16, AV-8 and F/A-18 respectively in the U.S. military.

The British utilize Harriers from ground bases as well as off of their aircraft carriers. They need to replace both missions. The Royal Navy is currently building 2 new aircraft carriers and originally the F-35B was the choice to use from these aircraft. That is also the current choice.

Unfortunately in the 2010 Defence Review the current Conservative government reviewed that decision and changed it to the F-35C carrier based version. It was related to the struggles the program has faced with schedule slips and cost increases. Now, though, that has been reversed again to the F-35B model. The estimated cost of these changes is around $160 million and further delays to receiving the aircraft.

The F-35 has faced problems with development and testing which has led to delays and slower then planned production. This has led some foriegn partners and customers to reevaluate their needs. Canada, for example, has now put their original production buy contract on hold and there are those in Holland who are questioning the whole plan due to cost growth. The U.S. continues to plug on with the program which is in Low Rate Initial Production (LRIP) while at the same time doing more testing.

The U.K. will continue its purchase for the carrier as options for other aircraft are very limited. It just will have to face further potential cost increases and delays associated with the program.

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Canada to Look at Other Aircraft for F-35 Mission

After considering the independent auditor’s report submitted to the Ministry of Public Works earlier this year the Conservative government of Canada announced yesterday that they would now look at other aircraft rather then the F-35 to meet the CF-18 replacement requirement. The major reason cited was the much higher estimate of the lifetime cost to procure and operate the advanced aircraft.

The new estimate is almost $46 billion over a projected 42 years. The estimate used to justify the sole source contract for the F-35 was $25 billion for 20 years of operations. The auditor also estimated that due to the cost increases in the F-35 that with the current available funding only 55 aircraft could be bought and not 65.

Canada will now establish a new group to look at aircraft. These could include Boeing (BA) F/A-18 fighters, Eurofighter Typhoons and Dassault Rafale aircraft. The loss of the Canadian buy while a small part of the total planned quantity of over 2,000 F-35 would be a blow to the program and Lockheed Martin (LMT).

The increases in unit cost of the aircraft along with the delays in schedule have caused other partners to reconsider. The Netherlands has also looked at the program’s cost growth over the years as a reason to reconsider. It would allow less aircraft to be purchased to replace their aging F-16 fighters. There is also a requirement to continue using the older aircraft longer then originally planned with associated costs.

Canada could in the end still choose the F-35 but the fact that they are conducting the review is a negative for the overall program.

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Netherlands Looks At Leaving F-35 Program

The Joint Strike Fighter (JSF) program led by prime contractor Lockheed Martin (LMT) was designed similar to the successful earlier F-16 aircraft. Different NATO and other allied nations would contribute towards the development and also the production to spread the costs and benefits of the advanced fighter. The Netherlands was one of those countries that did this with a commitment of R&D funding and ultimately having a plant that would support their and Italian aircraft deliveries.

Now driven by austerity and cuts to the budget the Netherlands’ Parliament voted on leaving the program. New elections will be held later this fall and by then the plan is to report on the costs to the country of abandoning participation.

For several years some representatives have expressed concerns with the growth of the unit cost of the aircraft and the delays to the schedule making it hard for the Dutch to buy the necessary amount of aircraft with the funding available. This vote just formalizes those concerns.

Even with the vote the program continues to move along. The Japanese military has gone ahead with their order. The U.S. has placed orders related to Lot VI and VII of the production while continuing to negotiate Lot V.

At the same time the cost growth experienced by the overall program is making all purchasers re-evaluate how many they may buy. Cuts to production orders will only further increase unit costs as there will be less aircraft to spread development funds over as well as reduce economies of scale. The situation where a program is stretched out and annual buys reduced is a common one in defense acquisition leading to higher unit and overall costs.

While the JSF has shown a great deal of improvement over the last four years it still has a long way to go and its final numbers will most likely be much lower then originally planned.

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Canadian F-35 Controversy Continues

The fall out from the controversial decision by the Canadian government to commit to the F-35 Joint Strike Fighter without conducting a competition continues. The execution of the contract with Lockheed Martin (LMT) and the U.S. has been placed on hold as a new group outside the traditional defense procurement organization re-examines the contracting process.

The latest fall out from the Auditor report released earlier this year is that the Government underestimated the total cost of the program by $10 billion. Rather then then fixed costs being in the $15 billion range they are actually close to $25 billion. This is because ten years of operational costs (training, personnel, fuel, etc) were not included in the original estimate.

With the current issues it is not inconceivable that Canada could re-start their procurement process. This may lead to a new competition for the contract to replace the current CF-18 fighters that could include multiple competitors like the Eurofighter Typhoon, the Dassault Rafale and American aircraft like Boeing’s (BA) F/A-18.

The loss of 65 aircraft to the F-35 program is a small part of its over 2,000 planned deliveries but the loss of Canada’s participation would be a blow to the whole concept of the program with its shared development, production and operational cost. If Canada reconsiders then other nations who have hinted they could might follow. This could include Japan and the Netherlands both of whom have questions about the cost increases and schedule delays facing the program as a whole.

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Canada Reconsidering F-35 Buy?

Canada like many of the U.S. allied nations that purchased U.S. fighter aircraft in the 80′s is facing the need to upgrade their forces. They have used the CF-18 now for several years. They like others joined the Joint Strike Fighter (JSF) program early on providing R&D funds for the new aircraft. In 2010 the Conservative government decided to go ahead and commit to the production part of the contract with plans to buy 65 of the advanced fighters from Lockheed Martin (LMT). The move was controversial with the opposition ending up forcing a vote of no confidence in the government over the decision.

The Conservatives did well in the following election and actually increased their hold in Parliament.

The JSF program has seen major schedule slips as well as cost increases. This is why it is controversial in Canada, the U.S. and other potential buying nations. The U.S. has recently announced in their upcoming budget plans to reduce the annual buys of the aircraft in order to save money. This will stretch out the delivery times and further increase the price of the aircraft. Their also continue to be nagging technical problems common in any development program that has restricted testing and training.

Now there are reports coming out of Canada that it may be reconsidering their plans to buy the JSF. In testimony to Parliament defense officials stressed that they are still intending to buy the aircraft but there is no contract and they could leave the program if they wanted to. Canada has already stated that they will not spend more then they currently plan on the JSF which could lead to reduced numbers if the prices continue to increase.

If Canada does not buy the F-35 they will be faced with deciding between a variety of current aircraft. These include the Boeing (BA) F/A-18, Eurofighter Typhoon and France’s Rafale. The U.S. remains committed to the program and it will replace the F-16, F/A-18, and other aircraft.

If Canada does leave it would be a blow to the program and might encourage other purchasers like Holland and Japan to reconsider their choice.

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FY12 Defense Contracts Flow and Lockheed Martin Benefits

The Pentagon may be planning to reduce or hold spending flat in the upcoming years but with the final passage of the 2012 defense budget major contracts are now flowing to different contractors as Project and Program Offices place production orders. Lockheed Martin (LMT) benefited from this yesterday as they received the latest production contract for the PATRIOT PAC-3 missile.

The PATRIOT air and missile defense system is made up of two major parts: the radar and the interceptor. Currently Raytheon (RTN) is the prime contractor for the radar and command and control systems while Lockheed manufactures the current standard missile, the PAC-3. The PAC-3 version of the system in use since the late Eighties incorporates modifications to maximize missile defense capabilities while the missile is smaller, relies on hit-to-kill technology and is a significant upgrade to the earlier PAC-2 missile as it allows more rounds to be used by each launch unit.

The FY12 order is for both U.S. Army use as well as a follow on delivery for Taiwan. It has a value of just over $900 million and represents a rather significant contract. The work includes not only the missiles but also kits, spares, support equipment and engineering services.

The PATRIOT represents the shorter ranged part of the Army’s missile defense capability with the Theater High Altitude Area Defense (THAAD) system made by Lockheed providing longer range and larger area defense.

The PATRIOT has seen significant foreign military sales to countries like Germany, the Netherlands, Israel, Saudi Arabia, U.A.E. and Taiwan. It is especially valuable to those countries facing a ballistic missile threat like Israel, Taiwan and the Gulf States.

The PAC-3 missile has been in production for several years from Lockheed’s facility in Camden, AR.

Photo from Tumbleweed:-)’s flickr photostream.

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Boeing Sees Two Major Helicopter Deals on the Horizon

Boeing (BA) along with its industry partner Bell Helicopter, part of United Technologies (UTX), produces two major helicopters for the U.S. military as well as export and the only tiltrotor in use today. These are the AH-64D Apache attack helicopter and the CH-47 Chinook heavy lift cargo helicopter as well as the unique V-22 Osprey used by the U.S. Navy, Marines and Air Force.

Boeing is looking forward to two major contracts involving the helicopters that will continue their production for the next several years.

First there is word that the AH-64 easily won a contest with the Indian Army to serve in limited numbers in attack and reconnaissance missions. The U.S. Army had earlier this year informed Congress of their intent to sell over twenty of the aircraft along with engines, Hellfire and Stinger missiles and other support. The estimated value of that contract was about $1.4 billion.

India, it turns out, conducted a “Fly Off” between the Apache and a similar Russian Mil-28 Havoc helicopter. Based on reports the AH-64 bested the Russian in most major areas including performance, armor, electronics and overall capabilities.

The AH-64 has seen a great deal of use in Iraq and Afghanistan providing fire support to ground troops using its Hellfire missiles and 30mm chain gun. The U.S. Army, Great Britain, and the Netherlands have all had successful deployments of the aircraft to Afghanistan. It has also been sold to countries like Israel, Egypt and Singapore.

Boeing has also submitted its proposal to the U.S. Army for the next multi-year production contract for the CH-47. The CH-47 like many major U.S. aircraft is able to negotiate five year contracts for deliveries rather then just one year as most programs as it is felt this saves money by allowing smoother production lines and the ability to order more parts and components at a time. The CH-47F is the current model in production under a 5 year contract signed in 2008.

The new contract is for a further 155 helicopters and could be worth several billion. The U.S. Army has invested heavily in CH-47 as their heavy lift capabilities are at a premium in Afghanistan’s high and hot conditions. Canada and the U.K. have also invested in the Chinook. Because this is a sole source contract the Army will be negotiation with Boeing on pretty much on price and schedule and not with multiple companies to provide the aircraft.

The U.S. has spent a great deal of money the last decade on Army aviation. With the coming decline in defense spending and the ending of the fighting in Iraq and Afghanistan that level of funding will not continue. Cuts to annual buy quantities will most most likely occur reducing Boeing’s sales to the U.S. military. This will be true for the AH-64 and V-22 as well. Foreign sales like the Indian Apache deal will make up some of the cuts to help Boeing keep its revenue and earnings up.

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Japan Reportedly Considering JSF for New Fighter

Currently there are two major fighter contests on-going as Brazil and India work to consider a new advanced fighter for their defense needs. Now it has been reported that Japan is interested in also starting a competition to add a later generation aircraft to its fleet of F-15J fighters. Sometime this month the country will want bids for 40 new aircraft.

In Brazil the discussion seems to be between the United States’ F/A-18 made by Boeing (BA) and the French company Dassault Rafael fighter. That contest continues to be delayed as Brazil faces some economic issues and re-thinks its commitment to spending so much money on defense items. One component of the contest that is key is the construction of manufacturing facilities in Brazil and the transfer of technology to help the South American country improve its aerospace industry.

In India the contest has reached a point where they downselected to only two bidders both European. After looking at proposals from Boeing, Lockheed Martin (LMT), MiG, Eurofighter and Dassault only the last two were chosen to proceed in the contest. The decision was a blow to the the American bidders as they had hoped this contract would offset potential reductions in U.S. defense spending.

Now the reports are that Japan will receive bids from Boeing, Lockheed and Eurofighter for their requirements. The Lockheed F-35 Joint Strike Fighter (JSF) is considered the front runner despite its cost and the current schedule issues the program is facing. This is primarily due to its more stealthy qualities over the earlier generation fighters.

The F-35 is in development and low rate production for the U.S. military, the U.K., Netherlands, Canada and Australia. Other foreign partners include Norway and Israel. The addition of Japan to the program would not be a big leap although they expect that the jet they order in the next few months would be in service by 2016. JSF production should be ramping up to higher quantities by then but any major cuts to the U.S. defense budget may affect production rates and quantities. If the JSF cannot meet the Japanese schedule they may end up considering one of the other options.

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EADS is Realizing that Bigger is not Better

The European aerospace giant, EADS (EADS:P), was formed by combining Airbus and parts of the French and German defense industry. It has joint management and has significant ownership by the governments of those two companies and right now has three main headquarters: two for EADS in the different countries and one for Airbus in the south of France. The company has made impressive growth in the defense sector establishing a U.S. subsidiary and winning some contracts there but still remains primarily European market based.

Because of current European stock ownership rules EADS, a Dutch incorporated company, is looking a making some changes. There are concerns by the two governments and their companies which between them hold almost 45% of EADS stock that they are tying up too much of their capital in the company. European law forbids companies from using their “golden shares” to control non-defense companies. This means that technically EADS, despite its size and valuation, is still vulnerable to a hostile takeover.

One way that all of this could be fixed as well as reducing overhead would be to move Airbus to a separate company, again, and establish the defense arm, Cassadian, as one as well. Airbus remains 80% of the current company’s revenue and earnings. Headquarters could be reduced by at least one as most of EADS would move to Airbus’ reducing overhead and costs. It also would mean that France and Germany could reduce their stock holdings of Airbus and reduce their total capital investment in what would now be two companies.

Splitting Cassadian off might also help EADS North America, the U.S. subsidy, in growing through acquisitions. EADS has tried several of these over the last few years with some failing due to the requirements levied on a foreign owned company. EADS while it has some success has not been able to grow as well as it had hoped in the U.S. EADS also would be able to perhaps adjust for the fact that most of its customers pay it in Dollars while it uses Euros to pay its suppliers. The current exchange rate does affect its profits.

EADS is also facing a changing market. It is clear that the U.S. and European defense budgets will not be growing as fast as they have these last ten years. Price is also becoming a major concern for the Pentagon and major defense contractors in the United States are reacting by reducing their overhead and workforce. EADS will have to follow suit if it wants to remain competitive. A major way to reduce the price of a contract proposal is to remove overhead. Eliminating a portion of their current corporate structure would be part of that. So far EADS has not announced similar moves with its workforce as General Dynamics (GD), Boeing (BA) and Lockheed Martin (LMT) have.

EADS has had to confront the issues of being a major commercial aircraft manufacturer as well as a defense contractor several times in the past. Like Boeing it has been able to balance off poor commercial performance with defense work but right now the major market is for commercial airliners as Boeing introduces the 787 and EADS their proposed A320 update and eventual replacement. The obvious decline in defense spending also means that defense work will become more competitive, especially in the U.S., and new contracts will be harder to find. The discussion of major changes with EADS structure shows that the company is planning some perhaps radical moves in reaction to the current economic situation. These potential moves ultimately may prove the right ones in the long term.

Article first published as EADS is Realizing that Bigger is not Better and is Discussing Some Radical Moves on Technorati.

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Potential Cuts by Foreign Partners Puts More Pressure on JSF

One of the primary roles of the new F-35 JSF made by Lockheed Martin (LMT) is to replace the F-16 in service with the U.S. air Force and many Allied nations. Normally when the United States develops a new system it is not always with foreign sales in mind but with the JSF its sale to other countries has been a core consideration.

This does not only entail Allies such as Great Britain, the Netherlands, Canada and Australia contributing R&D funds but also their commitment to buy a certain amount of the advanced multiple-role aircraft. The price the U.S. will pay is adjusted for the larger annual and total quantity of aircraft purchased as part of the program.

This means ultimately that if current customers buy less then established with the current program the cost to the U.S. May go up. It also may affect the amount that may be bought with current planned funding. One option would be to increase the funding for the U.S. but at this time of planned reductions in the total Federal budget that may be hard to do. A more realistic scenario would see the amount of aircraft purchased for the Air Force, Navy and Marine Corps cut.

Right now there are serious debates ongoing over the JSF and it’s costs in two of the planned users. In Canada the Conservative government of Prime Minister Harper fell with a vote of no-confidence in Parliament partly due to distrust over the total price estimate for their F-35 buy. A new government formed aft elections could easily use this to walk away from the program and consider a different aircraft to replace aging CF-18 fighters.

In the Netherlands there have been serious debates over the program for three years which led to a vote to leave the program in their lower house. The Dutch like so many countries across the globe also announced cuts to their government spending including a potential reduction in the number of F-35 aircraft they would acquire.

Slight changes in annual and total quantities could easily cause bigger changes to the program with a negative effect on the U.S. plans. One option is to expand the potential customers with sales to Japan or Singapore or perhaps sell more to Israel to make up for these losses.

The JSF program is finally getting on track after years of delays and cost increases and does not need potential issues like this to cause more problems down the road.

Photo from Scootie’s flickr photostream.

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More Reports of Bad News for the Joint Strike Fighter (JSF)

There are now reports that yet another review of the F-35 Joint Strike Fighter (JSF) schedule and cost is going to show more bad news for the advanced fighter and strike aircraft. The briefing to the Secretary of Defense Robert Gates is based on data gather from the current test program.

The program is facing further schedule delays and cost increases as their have arisen issues with the software and some of the aircraft’s engineering. This is not surprising as the whole point of the test and development phase is to find these kind of things and allow them to be fixed before sustained production of the aircraft begins.

Unfortunately these issues may add another five billion dollars and two to three years of development to the program. This will be on top of the restructuring of the program that has already happened over the last two years which increased the development time and increased the total program cost by billions. Criticism of the JSF has increased over that time as well as it becomes more expensive and is taking longer to complete and go into production. Congress threatened to not fund the 2011 production buy in total but ended up reducing it by half.

The United Kingdom as part of its Strategic Defense and Security Review (SDSR) is looking at reducing their commitment to the F-35 and perhaps abandoning the Vertical Take Off and Landing (VTOL) version that is also being procured for the U.S. Marine Corps. Norway and Holland have also discussed delaying the introduction of the aircraft — a delay they may have no choice but to accept now.

The JSF is a very complicated program. These further delays and cost growth will put pressure on the current Defense Department struggling to control spending and make it more efficient. If quantities are reduced or the VTOL version abandoned it will have a significant effect on the remaining parts. The delays in service also increases the length of the “fighter gap” meaning more money will be needed to keep the older aircraft flying or cause customers to look for other solutions.

Lockheed Martin (LMT) the company leading the program will see its bottom line affected even more. They have already lost fee due to the schedule problems and the new fixed price contract structure will mean that delays and cost growth may also impact revenues and earnings.

Further slips to the program are not what the Defense Department and Lockheed need.

Photo from WestendRaider’s flickr photostream.

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Boeing to Begin LRIP of AH-64 Apache D Block III

The U.S. Army awarded Boeing (BA) a contract to begin the Low Rate Initial Production (LRIP) of the AH-64 Apache D Block III. The value of the contract is about $247 million.

LRIP is the part of the acquisition cycle after completion of the Engineering and Manufacturing Development (EMD) phase. LRIP is normally ten percent of a program’s planned quantity and allows the contractor and the service the ability to demonstrate a proper production line and that the system is able to meet the requirements of the user. LRIP also allows gathering of information to support the full production of the aircraft and also begin the process of maintenance and support.

The decision to proceed to LRIP was given on 7 October at a Milestone C Defense Acquisition Board (DAB) meeting.

The AH-64D Block III is an incremental upgrade of the Apache which has seen heavy use in Iraq and Afghanistan providing direct support of U.S. and Allied troops. The AH-64 is not only flown by the U.S. Army but also the United Kingdom and the Netherlands in Afghanistan. With its 30 mm cannon and Hellfire missiles as well as unguided rockets it provides precision strike missions.

The U.S. Army is hoping to acquire almost 700 of the advanced attack helicopter. The Block III adds new rotor blades and transmission but its biggest upgrade is in the area of communications and data links. One requirement of the Block III is to be able to control Unmanned Aerial Vehicles (UAV) to improve ISR capabilities.

The Block III represents a significant upgrade and the decision to enter LRIP rewards the hard work of the Project Office and Army aviation.

Boeing will manufacture the new aircraft at their facility in Mesa, AZ.

Photo from SoloXis’ flickr photostream.

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Some Rough Sledding Ahead for JSF Program (Updated 17 September)

UPDATE – The Senate Appropriations Committee (SAC) used their move to cut production by ten aircraft as a way to criticize the whole JSF program overall. They said that the cut was the second option they considered with the first being elimination of all funding in 2011 for the program. The committee while it did not fund the second engine for the aircraft supported it in their language. The House has funded this as they did last year and the money will have to be decided upon in Committee.

The F-35 Joint Strike Fighter (JSF) has become the major acquisition program underway by the United States. Lockeed Martin’s (LMT) team of contractors along with the joint Air Force and Navy program office is building an advanced aircraft that will be used by the U.S. and many allies to replace the F-16, F/A-18 and AV-8 and Harrier vertical take off aircraft. In order to do this three separate versions will be developed.

Over the last few years the program has suffered schedule problems which have led to cost growth. This has reached a point where the Pentagon under Robert Gates has put a great deal of pressure on Lockheed to control costs. The increases in price have caused some countries like Canada and The Netherlands to rethink their commitment to the program.

In the United States the Congress has also weighed in on the program. The Senate Appropriation Committee marked up the 2011 budget and reduced the planned buy of aircraft from 42 to 32 for next year. They are arguing that Lockheed has not even begun building the aircraft ordered with last buy and that it seems sensible to reduce risk by cutting back.

At the same time the House continues to fund the alternate engine in development for the aircraft. This program has been funded by Congress for several years despite the Air Force’s and Defense Department’s wishes as a potential risk reduction for the system. It also keeps General Electric (GE) and Rolls-Royce (RR:LSE) involved in the program as the primary engine is made by Pratt & Whitney, part of United Technologies (UTC). Gates and the Obama Administration have threatened to veto the budget if the money was kept although they relented in 2010 as the funding did not come out of the core program budget.

Finally the negotiations for the current production buy have taken longer then planned as Lockheed and the Air Force struggle to find a way to reach the cost goals for the program. Part of the problem is that the Pentagon wants to move to a fixed price contract with fee tied to specific events. Most development contracts which this still really is are cost plus some fee based on schedule. The change caused Lockheed to have to submit a new proposal and contract structure which is taking time for the government to review and accept.

Delays in awarding the next phase of the program may only cause further problems down the line. Schedule slip and decreases in quantities will only cause more cost in the years ahead. This may force Allies to wait longer then they have planned as well as the U.S. military to keep older aircraft in service longer. This then leads to higher maintenance costs putting pressure on the overall budget as a whole.

The JSF has had its struggles these last three years and it looks like they will continue in the near term. The program though is necessary and still requires a commitment from the U.S. and the other customers as their options are limited without a decision to accept other aircraft currently in production.

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Reports Canada to Commit to F-35 Joint Strike Fighter

The U.S. led Joint Strike Fighter (JSF) program has seen its struggles over the last few years. It has had test, schedule and cost issues that have increased the total cost of the program and stretched out its planned development and production. Designed to replace the aging fleet of F-16, F/A-18 and AV-8 aircraft used by the U.S. and its Allies its has been developed by Lockheed Martin (LMT) and funded by the U.S., United Kingdom, Australia and other countries that ultimately will receive it.

Due to the cost increases some of the countries in the joint program have been reconsidering their commitment. Holland’s legislature has made noises about delaying their further investment due to the lower quantities that their budgeted money will buy. The problem the Allies face is that they based their budgets on the lower estimated costs and now either have to find more money or face a smaller fleet of the new F-35.

Due to the program’s delays all of the planned users face a “fighter gap” as their current fleet ages and the JSF is not there to replace them. This means that more money must be spent to maintain the older aircraft or capability will be diminished. The U.S. Navy is planning to extend the production of their F/A-18 to help fill the gap.

Canada is expected to announce today that they are keeping their commitment to the program by awarding Lockheed a contract for up to sixty-five of the aircraft at a cost of over $15 billion. This plan has raised objection from the opposition Liberal party who would like to wait and possibly hold a competition to buy a replacement for the countries CF-18 aircraft.

Certainly there is an argument for delaying the contract award and perhaps looking at other aircraft already in production. The counter would be that these would not be as capable or last as long as the F-35 which is expected to be in service well past the mid-point of the current century.

The U.S. Department of Defense despite all of the cost and schedule issues has remained committed to getting the F-35 into production and in the last year the program has seen quite a bit of progress. The problem may be in a few years when the Federal budget and defense spending may have to be cut. The JSF is the largest procurement program in that budget and might seem attractive to cuts.

Even small cuts around the edges may cause long term problems as they would stretch out production increasing the total cost of the program.

Canada may be wise to award their contract now if they structure it correctly to protect against further delays and cost increases. Of course they may have limited options to do that.

The decision by Canada to support the program will aid it in keeping on track and keeping its funding. Canada may help the JSF get done.

Photo from Rob Shenk’s flickr photostream.

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Canada Considering Entering New Fighter Sweepstakes

Right now two of the biggest military aviation contracts out there are new fighters for Brazil and India. Both of these contracts have attracted bids from United States and European defense contractors. In Brazil the contest seems to be between the Boeing (BA) F/A-18 and the French Rafael. In India there have been offers from Boeing, Lockheed Martin (LMT), MiG of Russia, Rafael. Eurofighter and SAAB of Sweden. These contracts are interesting as all of these companies face declining markets at home due to budget difficulties and the decision by the U.S. and many of its Allies to focus on the F-35 Joint Strike Fighter (JSF) headed up by Lockheed.

Canada currently operates a force of older F/A-18 aircraft and is planning a potential buy of more modern aircraft worth about $9 billion (Canadian). Canada has put some money into the development of the JSF as have countries like Great Britain, the Netherlands, Australia and Japan but is not committed to buy the aircraft. They certainly could do that when the aircraft is ready in the 2015 – 2017 time frame or they could conduct a new competition. If they did this they would certainly draw a diverse group of suitors similar to what India has. The market for new fighters was supposed to stagnate as thousands of F-35 replace the F-16 aircraft of numerous U.S. Allies. Now with the delays and cost increases to that program some countries are having second thoughts.

A third major competition would be good for the industry and would allow some production lines like the SAAB Gripen to remain hot as the JSF program tries to get itself sorted out. If countries like Holland do decide to go a different path the market for current in production aircraft will increase greatly.

More fallout as the JSF program struggles with its cost and schedule may be expected as current customers re-think their commitments. This will increase the cost to the U.S. military while reducing Lockheed’s chances of making up some of their losses on the development piece of the contract. Canada if they choose to not buy the JSF may be the start of some bad news for the program and its prime contractor.

Photo from TMWolf flickr photostream.

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AAR SELECTED AS EXCLUSIVE DISTRIBUTOR FOR ROBUSTA B.V. VEHICLE MOBILITY PRODUCTS — Press Release

AAR SELECTED AS EXCLUSIVE DISTRIBUTOR FOR ROBUSTA B.V. VEHICLE MOBILITY PRODUCTS

WOOD DALE, ILLINOIS (July 20, 2009) – AAR announced today that it has entered into an exclusive U.S. commercial and military aftermarket distribution agreement with Robusta B.V. to distribute Robusta’s vehicle mobility products, including Bogstrips. Bogstrips are reinforced mats designed to provide temporary traction to heavy duty vehicles and machinery. Robusta’s Bogstrips product line has been successfully used by the British and Australian Special Forces for almost two decades to recover trucks as large as 24 tons from bogged situations.

“AAR is very proud to represent Robusta B.V. and their high-performance, light-weight Bogstrips,” said David N. Perri, General Manager of AAR Defense Systems & Logistics. “Robusta’s products have an excellent reputation among defense customers and we believe that many more customer types could benefit from improved access to these convenient and functional products.”

“Robusta has specialized in heavy woven textile products for the last 40 years. The Robusta Vehicle Mobility products have proven to be very effective, not only in difficult military operations, but also in commercial recovery operations and terrain accessibility,” said Rob W. Verver, Managing Director of Robusta, B.V. “We are very enthusiastic about the fit we found with AAR and hope to leverage the solid reputation of their mobility products to broaden our distribution network to include new and different customer types.”

About Robusta

Robusta is a Netherlands based company that specializes in woven fabrics. Its Vehicle Mobility products enable drivers around the globe to keep their vehicles moving whenever transport roads are in poor condition or not available at all. They are successfully used by the military, mining companies, 4wd owners and emergency search and rescue services.

About AAR

AAR is a leading provider of products and value-added services to the worldwide aerospace and defense industry. With facilities and sales locations around the world, AAR uses its close-to-the-customer business model to serve aviation, government and defense customers through four operating segments: Aviation Supply Chain; Maintenance, Repair & Overhaul; Structures & Systems and Aircraft Sales & Leasing. More information can be found at www.aarcorp.com.

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Conference Will Provide Hard Hitting Analysis Of Vehicle Survivability – Press Release

Vehicle SurvivabilityAs the impact of IEDs on military operations continues to dominate the headlines, more than 40 high level speakers from around the globe are being brought together in Amsterdam from June 2 – 4 this year in what is set to be a defining conference on vehicle survivability.

Organised by Clarion Events, which also stages DSEi and ITEC, the Vehicle Survivability conference will address both the threats and the solutions associated with keeping armoured vehicles and their crews safe, examining the critically important areas of technical advancements, procurement methods and the lessons learned from operations.

Over 35 global experts at the forefront of vehicle survivability will be speaking. They include Lt Gen A R D Shirreff, Commander, Allied Rapid Reaction Corps, UK: Maj Gen Marcel van den Broek, Deputy Commander Land Forces, Royal Netherlands Army; Dr Vernon Joynt, MRAP and Anti-Mine Technology Expert and Chief Scientist of Force Protection, USA; Col Martin France, Chief Scientist and Technical Adviser to the Director, Joint Improvised Explosive Device Defeat Organisation, USA; and Dr Dennis Nandlall, Head of Weapons Effects and Protection, Defence Research and Development, Canada.

The agenda pulls no punches, posing questions about the future of the main battle tank, whether too many MRAPs been bought, the potential and limitations of defeating IEDs from the air, and what systems are simply too expensive to contemplate. Also under the spotlight is how insurgents have the ability to adjust their weapons to exploit the weaknesses of security forces, and the vexed question of weight versus protection.

The event begins with a pre-event workshop on June 2 at which Cranfield University will make a presentation that examines what fundamental solutions will ensure greater survivability in future operations.

Vehicle Survivability will be an exceptional learning and networking opportunity. For full details visit www.vehicle-survivability.com.

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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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Dutch government comes up with creative way to make money on US weapon buys

February 11, 2008 by · Comment
Filed under: FMS, Holland 

According to this article in NisNews.nl, the Dutch government has come up with a way to make money on the foreign currency they transfer to the US to buy weapons and training. Rather then doing a direct government-to-government transfer of the $350 M or so they spend each year, they utilize a commercial account and pay over time. This allows them to get interest on the money.

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