Skittish Israel Pares F-35I ExtrasLockheed CEO: More Workshare A Possibility
By barbara opall-rome
Published: 17 November 2008
TEL AVIV - Stunned by projected program costs for their Israel-unique version of the F-35, Israel Air Force (IAF) and MoD officials are struggling to pare a hefty list of customized subsystems and add-ons that threaten to ground the aircraft as unaffordable.
Meanwhile, the CEO of F-35 Joint Strike Fighter (JSF) prime contractor Lockheed Martin dangled the possibility of more workshare for Israeli firms if the government places its orders promptly.
In September, U.S. program officials gave rough price and availability data to their Israeli counterparts, who reacted with sticker shock to the price tag of $200 million per plane. Since then, both sides have been seeking a new configuration that can meet Israel Air Force performance and budget requirements.
The Israel Defense Forces (IDF) General Staff had been expecting to pay about $2 billion - $80 million per plane - for the first 25 aircraft.
"Their budget was not in sync with the rough order of magnitude data they received. To put it mildly, they were overwhelmed," a U.S. government source said. "The customer was drawing from their experiences with the F-15 and F-16, which are third-generation, rather than a fifth-generation fighter with significant international content that is evolving and becoming real."
"It's unbelievable," a member of the IDF General Staff said. "First it was $40 million to $50 million, and then they [the IAF] told us $70 million to $80 million. Now, we're looking at nearly three times that amount, and who's to say it won't continue to climb?"
Pentagon estimates, based on Israel's letter of request (LoR) to the Defense Security and Cooperation Agency, put total program costs for Israel's planned 75-aircraft buy as high as $15.2 billion. That figure includes all 75 aircraft, engines, electronic warfare and C4I systems, training and logistics support and a host of other services, features and capabilities, including "unique systems for sovereign requirements." A fairly detailed summary of Israel's LoR was published in a Pentagon notification to Congress dated Sept. 29.
U.S. and Israeli sources say government liaisons are meeting or speaking almost daily in attempts to finalize a configuration for a program management review scheduled for mid-December. Once the two sides agree on an F-35I configuration, the U.S. government and prime contractor Lockheed Martin will be in a position to come up with a more reliable price.
"The Israelis were very aggressive in their demands, and their LoR was extremely extensive," the U.S. government source said. "The price estimate sent up to Congress was based on an educated guess of the total package. ... Now, they need to pick through the menu of options and separate the nice-to-have from the need-to-have."
Meanwhile, Lockheed executives have been doing their best to ease Israeli concerns while supporting government-to-government talks toward a JSF contract commitment.
In interviews here, company sources insist that Pentagon estimates to Congress unfairly misrepresented actual costs and that the flyaway price tag is not far removed from initial estimates. In a meeting last month with reporters here, Tom Burbage, Lockheed's vice president and general manager of the JSF program, estimated flyaway costs at $47 million in 2002 dollars or about $80 million in projected 2014 dollars.
"Remember, there are three distinct elements to this program," a company representative here said. "There's the baseline aircraft, there's infrastructure, and then you have to factor in all the nonrecurring development and integration costs associated with Israeli-unique systems."
He said of Pentagon cost estimates: "It doesn't mean it will cost that much, but just that it could cost that much."
More Workshare?
In meetings here the week of Nov. 10, Lockheed CEO Robert Stevens encouraged Israeli authorities and industry executives to consider the benefits of early commitment to the program.
He noted that seven Israeli firms already have secured a combined $200 million in contracts for JSF, and indicated that local workshare could grow significantly once the government's role in the program is definite. Burbage, in his visit last month, was more explicit, citing a potential $500 million worth of Israeli content for inclusion in the program.
"The earlier one can participate in the program, the greater the [industrial] participation," Stevens told reporters here Nov. 9.
Stevens wouldn't discuss projected Israeli costs or details regarding local technologies and subsystems to be included in the program.
"Our job right now is to support government-to-government discussions on configuration, scheduling and price."
Nevertheless, the Lockheed chief said Israel's contractual commitment would generate greater returns on the government's overall acquisition investment.
"Capital investment adds to the quality of the product, the sustainability of the product and the satisfaction of the customer," Stevens said. "Israel has an opportunity to become a global partner over time."
He added, "Pound for pound and dollar for dollar, there won't be a more affordable, capable and sustainable aircraft than the JSF." â–
Source
http://www.defensenews.com/story.php?i=3823104&c=FEA&s=CVS
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