May 10, 2009 / 8:32 PM / 11 years ago

Last 4 F-22 fighters to cost nearly $200 million each

WASHINGTON (Reuters) - Defense Secretary Robert Gates’ decision to halt production of the premiere F-22 fighter jet will add about $50 million to the cost of each of the last four planes to be built by Lockheed Martin Corp (LMT.N), according to Air Force estimates obtained by Reuters.

Gates announced in April that production of the stealth fighter would end at 187, far short of the 243 the Air Force had identified as its requirement, sparking criticism from lawmakers keen to preserve F-22-linked jobs in 40-plus states.

The Air Force estimates that each of the last four F-22 fighter jets to be built by Lockheed will cost $196.3 million, including $147 million in end-of-production expenses to be rolled into the procurement price, spokeswoman Lt. Col Karen Platt said, confirming a document obtained by Reuters.

The document held out hope that those “tail-up” costs might still “be reduced through negotiation” with Lockheed.

Lockheed spokesman Sam Grizzle told Reuters he could not comment on any costs since contract negotiations with the Air Force for the last four planes had yet not started.

Excluding end-of-production costs, the average unit flyaway cost of the four radar-evading aircraft would be $153.2 million, up $10.6 million from $142.3 million for the last 60 fighters bought under a three-year agreement ending this year, Platt said.

Platt said the cost of the aircraft went up due to inflation, higher material costs for a much smaller buy and the loss of savings on parts and labor achieved in the multiyear deal.

Product improvements, including the ability to drop Small Diameter Bombs, re-target GPS-guided bombs, and map ground targets with a synthetic aperture radar, had also added costs, but would save upgrades later, she added.

Congressional aides are tracking the cost of the last four F-22s, which will be funded as part of a supplemental war spending budget working its way through Congress.

The U.S. House Appropriations Committee approved a war spending measure on Thursday that added $12.3 billion to the request submitted by the Obama administration. The Senate is due to start work on its version of the bill this week.

The decision to end the F-22 program drew fire from lawmakers.

They argued that Air Force studies have shown the military needs more of the high-end fighters to prepare for large-scale threats. Even Air Force Chief of Staff Norton Schwartz, who has endorsed Gates’ decision as necessary, told lawmakers on April 16 that the military requirement remains at 243.

Some critics of the F-22 argue that the true cost of the fighter is actually around $350 million per plane, if research and development costs are included.

A bipartisan group of senators sent Gates a letter last week calling the decision “a strategic error” comparable to the neglect of counterinsurgency threats after the Vietnam War.

For its part, Lockheed, the Pentagon’s No. 1 supplier, has said it will not fight to revive the program. Lockheed builds two-thirds of the F-22, while Boeing Co. (BA.N) has the remaining third.

Analyst Loren Thompson of the Lexington Institute said Lockheed’s move was unsurprising, given how much other business the company has received in the Pentagon’s 2010 budget plan with its F-35 plane.

“When the government says they’re going to buy 2,443 of your other fighters, you really can’t complain too much,” he said.

The F-22 program still accounts for about $1 billion in the fiscal 2010 budget, down from $4.95 billion in fiscal 2009, budget documents show.

The money will pay for modernization of the air superiority fighter, including “incremental capability upgrades and key reliability and maintainability efforts,” the documents said.

Reporting by Andrea Shalal-Esa, editing by Leslie Gevirtz

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