Lockheed Got the Message on F-35’s Costs, Pentagon Says

Lockheed Martin Corp. (LMT) got the message on curbing costs for its F-35 fighter, according to the Pentagon official who last week said the company was trying to “squeeze every nickel” out of the Defense Department.

Air Force Lieutenant General Christopher Bogdan, the top defense official overseeing the Joint Strike Fighter, said he used an appearance at an Australian air show last week to express frustration over insufficient progress in driving down costs on the Pentagon’s most expensive weapons system.

“What you should have inferred from my comments” was that “I need everybody” connected with the program “to worry about affordability,” Bogdan said today at a defense industry conference in Arlington, Virginia. “That was a shot across the bow because I have been slightly frustrated with real results, real actions that need to happen to reduce costs.”

The estimated cost for a planned fleet of 2,443 F-35s has climbed 70 percent to $395.7 billion since 2001.

Bogdan included United Technologies Corp. (UTX)’s Pratt & Whitney unit, which makes the plane’s engines, in his criticism. He said today he has spoken with senior executives of both companies, and they “assured me that they will concentrate” on improving their relationship with the Pentagon and try to drive down long- term costs.

“I believe they are sincere about that,” Bogdan said. “The question is now, will the action back up the words?”

Bogdan said in his presentation at today’s conference, sponsored by Aviation Week, that he’s seeing progress in reducing costs in the latest contracts for initial production and wants to see the trend continue throughout the remaining 90 percent of production.

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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