Pentagon Approves Lockheed F-35 for Continued Development

The Pentagon’s top weapons buyer has officially endorsed continuing development of Lockheed Martin Corp. (LMT)’s F-35 fighter jet and set cost targets for when the program enters full-production.

Acting Undersecretary for Acquisition Frank Kendall today signed an “acquisition decision memo” that approves the current development phase and continuation of low-rate initial production contracts.

Kendall may be asked about the memo and its implications by senators tomorrow at the confirmation hearing on his nomination as undersecretary for acquisition.

The memo discloses that full-rate production, the program’s most profitable phase for Lockheed Martin, has been moved to 2019, a delay of seven years from the original goal that was set in October 2001 and two years later than the current schedule.

Kendall set target costs for the program’s three aircraft versions to meet before the Pentagon decides in 2019 to proceed.

The targets are expressed in a standard measure of aircraft costs -- “unit recurring flyaway,” which represents basic airframe production, in inflation-adjusted “then-year” dollars.

The Navy model’s target is $93.3 million. The latest comparable number is $210.6 million as negotiated in Lockheed Martin’s fourth production contract.

The Air Force’s version has a 2019 target cost goal of $83.4 million, down from $152.2 million.

The Marine Corps short-takeoff and vertical landing version’s 2019 target cost is $108.1 million, down from $172.4 million.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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