U.S. Air Force still evaluating options for F-35 'block buy'

NATIONAL HARBOR, Md. (Reuters) - The U.S. Air Force on Monday said it is still examining a possible “block buy” that the Pentagon hopes to put together to lower the cost of U.S. and foreign military purchases of Lockheed Martin Corp’s F-35 fighter jet in coming years.

A Lockheed Martin F-35B Lightning II joint strike fighter flies toward its new home at Eglin Air Force Base, Florida in this U.S. Air Force picture taken on January 11, 2011. REUTERS/U.S. Air Force/Staff Sgt. Joely Santiago/Handout

Air Force acquisition chief William LaPlante said the U.S. military services and international partners are studying options for such a deal, which would pool planned purchases over a number of years to benefit from larger economies of scale and drive down the price of the new stealth fighter.

“All the services and the partners are just beginning to examine a bock buy. If in fact there is merit to it, we have time to do it,” he said at the annual Air Force Association conference.

Major General Jeffrey Harrigian, director of the Air Force’s F-35 integration office, earlier said that timing issue would make it “very difficult” to align the Air Force’s budget process in time to benefit from a block buy starting in fiscal 2018.

He said the Air Force, the largest U.S. buyer of F-35s, had nearly locked down its fiscal 2017 budget plans for the program and an accompanying five-year plan, but gave no details. But he said officials were still looking at possible “hybrid” options.

Congress generally authorizes U.S. military spending one year at a time unless specific targets are met, and that usually occurs when a program has matured beyond where the F-35 is now.

Air Force and industry officials said that the Pentagon would find a way to enable the Air Force’s participation in a discounted purchase plan, if an agreement was reached.

Harrigian said the issue would be further complicated if the U.S. Congress fails to pass a budget for fiscal 2016, which some fear may result in a full-year continuing resolution.

Production of the $391 billion F-35 fighter jet program is due to ramp up rapidly in coming years, with Lockheed slated to go from building 40 jets a year to 120 jets for the United States and the nine countries that have already placed orders: Britain, Norway, Australia, the Netherlands, Italy, Turkey, Israel, Japan and South Korea.

Pratt & Whitney, the United Technologies Corp unit that makes the jet’s engine, said it had submitted an estimate of additional savings that could result from the block buy but gave no details.

Bennett Croswell, who heads Pratt’s military engines business, told Reuters the company received positive feedback from its suppliers and expected to continue driving down the cost of the engines as production increases.

Air Force Lieutenant General Chris Bogdan, who runs the F-35 program for the Pentagon, last week said the steep ramp-up in production could stress suppliers and that the jet’s automated logistics system still faces problems.

Reporting by Andrea Shalal; Editing by Cynthia Osterman