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When Australia joined the JSF programme it signed a Production
Sustainment and Follow-on Development (PFSD) Memorandum of
Understanding, allowing it access to the JSF Industrial Participation
Plan. This plan is overseen by the JPO and Lockheed Martin as
the prime contractor, and Australian companies had access to
opportunities in the SDD phase of the programme as a result. Every
six months this plan is reviewed in conjunction with the DMO’s New
Air Combat Capability (NACC) office to track progress to date and to
examine emerging opportunities.
According to Bob Price, Lockheed Martin’s F-35 Programme
Manager for Australia and Canada, the SDD phase contracts with
Australian firms will be worth $200 million by mid-year and over 180
projects have been identified as being suited to local industry. The
aim, he says, is to tailor the work available to the strategic desires and
capabilities of Australian industry. Over the 20 year production life
of the JSF, the Australian share of work is currently projected to be
somewhere between $11.5 and $12 billion, with further opportunities
to follow. This is work that has been directly awarded by the major
contractors, Lockheed Martin, Northrop Grumman and BAE Systems,
and does not include work identified by the manufacturers of the two
competing engines, Pratt & Whitney (F135) and Rolls-Royce (F136) or
subcontracted from other component manufacturers.
Indeed, this subcontract work significantly enhances the value of
the programme to local industry and both engine manufacturers have
already awarded contracts to Australian companies. The manufacturer
of harnesses and equipment for Martin Baker, the Original Equipment
Manufacturer of the ejection seat, is an example of subcontract work
flowing down to Australian manufacturers.
Assuming that JSF production proceeds as planned, thought is
now turning to the sustainment phase of the programme and ten
elements have been identified as having potential for Australian
industry involvement, in cluding warehousing of spare parts, the
setting up of a Maintenance and Repair facility and the development
and operation of training systems including a regional training centre.
Price says that a Lockheed Martin team visited Canberra in March to
discuss F-35 sustainment details with the NACC Project Office as part
of the development study. Due to the current low rate of test flying,
quantifying the level of sustainment that will be required, in terms of
such things as spare parts usage, training hours required to convert
squadron pilots etc is difficult. Price says that a clearer picture will
emerge as test flying ramps up and jets begin rolling off the assembly
line for the US Air Force and Marines, the first two customers to
receive ‘line’ aircraft.
The Marines will be the first to achieve Initial Operating Capability
and this is not due until at least 2012, so there are a lot of unknowns
at the present time.
Australia joined the JSF programme as a tier three partner in June
2002 (all inter national partners are tier three participants except the
United Kingdom, which is a tier two member), and was awarded its
first manufacturing contract a year later, in June 2003. The stated
requirement has always been for 100 aircraft, to replace both the F-111
and F/A-18A Hornet, and the first tranche of 14 aircraft was ordered
late last year.
US law requires a military aircraft weapons system to be fully
functional and capable of fulfilling its intended role before it is cleared
for full-rate production, whereby multi-year contracts can be awarded.
Until then, aircraft are built in (relatively) small batches, known as Low
Rate Initial Production (LRIP). The benefits of LRIP is that it ensures
that the aircraft are mature enough to enter ser vice in large numbers,
but this is largely offset by the fact that no large production orders can
be placed (and therefore costs reduced) until such time as it deemed
effective in its intended role.
This is also a problem for suppliers, who are awarded contracts on
a ‘drip-feed’ system, and required to undertake major investments
in facilities, tooling and manpower without the certainty of large
contracts. Lockheed Martin itself is in this position too, and has to
accept some degree of risk when long-lead items that will span several
LRIP batches are required.
Total production is currently planned to be in the order of 3000
units, made up of 1763 for the US Air Force, 680 for the US Navy &
Marines and at least 800 split between the partner nations of Australia,
the United Kingdom, Canada, Denmark, Italy, The Netherl ands,
Norway and Turkey.
There are presently eight LRIP batches, with a ninth under
consideration. These began with two aircraft being built in LRIP 1
in 2006 and will extend to LRIP 8 (211 aircraft), currently due for
completion at the end of 2016. The recently announced delays could
mean that numbers in each batch may vary however. Assuming the
programme achieves its goals, multi-year purchases will begin in 2016
or 2017, so it will be sometime before real economies of scale can be
The Joint Project Office is currently executing LRIP 3 and negotiating
contracts for LRIP 4 and, except for long-lead machined parts, has
not begun contracting for LRIP 5 through 8. What this means is that
present contracts are awarded on an annual basis and depending on
the potential for LRIP 9 the 3-5 year contracts possible in multi-year
production is still some way off. Currently the LRIP contracts are
awarded on an annual basis.
Bob Price is at pains to point out that all the work-share is calculated
around the 3000 aircraft for the partners and any Foreign Military
Sales will be in addition to this. Israel, Japan, Singapore and South
Korea have all been identified by Lockheed Martin as potential FMS
customers and though each sale will be negotiated separately, there
is potential for Australian companies to win work on those aircraft as
Lockheed Martin admits that there are probably no new major
opportunities for Australian industry, other than the work currently
under negotiation, but it says there is significant growth potential in
those contracts already awarded.
On the negative side there are those who point out that other
countries, with similar requirements, seem to have fared much better
in the work-share stakes. Turkey, for example, has a requirement for
116 aircraft and not only will it assemble the vast majority of these
itself (admittedly at its own cost), but is also the second-source
supplier of the centre fuselage structural sections.
In addition, the ‘drip feed’ system of contracting means companies
have to continually rebid for the work. This is a good thing however
says Price, “If you continue building those components and you
remain affordability focussed, you meet our target prices, you are
responsive to schedule and you incorporate tech-refresh roadmaps in
your plan, then you will remain a best-value supplier and you will get
those contracts without having to compete with other companies”. He
says that most opportunities coming up are competitive opportunities,
“Just because you won an LRIP contract doesn’t guarantee the next
one. You will have to compete for later contracts but, being an
incumbent and already coming down the learning cur ve, it puts you
in a front-runner situation”.
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