* Pentagon report shows $4.5 bln drop in F-35 cost
* Costs up $40 mln or 2.4 pct at 78 major arms programs
By Andrea Shalal-Esa
WASHINGTON, May 23 The Pentagon on Thursday told
Congress it expected a 1 percent drop in the cost of its biggest
weapons program, the Lockheed Martin Corp. F-35 fighter
jet, while averting the huge cost increases seen on other
weapons programs in recent years.
The Defense Department's annual report to lawmakers showed a
$40 billion, or 2.4 percent, cost increase in 78 major arms
programs, mainly due to accounting changes and higher order
quantities. But none of the cost increases were big enough to
trigger the congressionally mandated live-or-die reviews that
have been commonplace in recent years.
The cost of the developing and building the F-35, a new
radar-evading fighter jet, is now projected at $391.2 billion,
down from last year's estimate of $395.7 billion, according to
the Pentagon's "selected acquisition report."
The report did not revise the projected $1.1 trillion cost
of operating and maintaining the fleet of 2,443 new fighter jets
over the next five decades, or the projected cost per flying
hour, despite ongoing work by the F-35 program office and the
main contractors to reduce those costs.
Lockheed is developing three models of the supersonic,
single-seat F-35 fighter for the U.S. Air Force, Navy and Marine
Corps, as well as eight countries that are helping fund its
development: Britain, Australia, Canada, Norway, Denmark, Italy,
the Netherlands and Turkey. Israel and Japan have also placed
orders for the new plane.
Current plans call for the U.S. military to buy a total of
2,443 F-35 jets in coming years, with its allies slated to buy
721 additional fighters, although many analysts believe mounting
budget pressures could ultimately reduce the total purchase.
Lockheed, the Pentagon's largest supplier, said it would
continue to work with defense officials to drive the cost of the
F-35 program down even further.
"This is the first year a cost reduction was noted. We will
work with the F-35 Joint Program Office to implement further
cost saving measures which will result in additional significant
decreases to the total program cost," said Lockheed spokesman
The Pentagon report projected the total cost to develop, buy
and operate the new fleet of F-35 fighter jets would be just
over $1.50 trillion over the 50-year life of the program. That
is down slightly from last year's estimate of $1.51 billion,
reflecting the lower projected acquisition cost.
It said the average cost of the conventional F-35A model,
excluding R&D costs, had dropped to $76.8 million per plane in
2012 dollars, compared with $78.7 million a year earlier.
Projected operating and maintenance costs, which include the
cost of fuel, will be updated at a high-level meeting of U.S.
defense officials this fall, according to an information guide
released by the Pentagon's F-35 program.
The office noted that expected inflation in fuel costs,
which account for 14 percent of the total operating cost
estimate, would have a big impact. It assumes that fuel costs
will rise to $8.04 per gallon, compared with $4.24 in 2012.
Measured in 2012 dollars, or excluding inflation, the
program's total projected cost dropped $11.1 billion to $936.4
billion from $947.5 billion a year earlier.
The Pentagon report included updates on 77 other big weapons
programs, including the Air Force's Evolved Expendable Launch
Vehicle (EELV) program, which buys launch services to lift U.S.
military and intelligence satellites into orbit.
The report said the cost of the EELV program was expected to
more than double, to $70.7 billion, because of a new plan to buy
60 additional launches and extend the schedule for launches
through fiscal 2028.
United Launch Alliance, a joint venture run by Lockheed
Martin and Boeing Co., currently provides the launch
services to the Air Force. But the service is trying to open the
launch program to competition from other companies, including
privately owned Space Exploration Technologies.