The F-35’s negotiated price has dropped by half over the first five production lots due to steady cost cutting and improved learning curve, Lockheed Martin CEO and President Marilyn Hewson told reporters on Tuesday. “From Lot 1 to Lot 5, we’ve already brought the price down 50 percent. As the production ramps, as we get more . . . learning curve, we expect to see the cost come down further,” she said after a May 14 speech at the company’s offices in Crystal City, Va. The government comes into the lot negotiations with its own should-cost number, and “we continue to come in under” that number, said Hewson. She warned, however, that reduced buys would hurt unit costs. “Volume does play in the cost of the program,” she noted. “A decline in volume will . . . affect unit cost. Always does,” she said. However, international sales “will help keep the volume up,” she said. Steve O’Bryan, company vice president for F-35 program integration and business development, said “when you double production, you get a 10 percent savings” on unit cost. Using the government’s own numbers, he asserted, the F-35 in 2020 would have a flyaway cost of $85 million in then-year dollars. “That’s about $75 million in today’s dollars,” he said.
Air Force Secretary Frank Kendall spoke at the Air Force Association's Air, Space & Cyber Conference on Sept. 20, addressing a packed auditorium in National Harbor, Md. Here are a video and a transcript of his prepared remarks.