Obama Administration Backs Lockheed Sale of F-35 Fighter Jets in Violation of Contract with Partner Nations

Monday, April 18, 2016
Lockheed Martin's F-35 Strike Fighter Jet (photo: Wikipedia)

By Donald Bacon

 

Greedy for Lockheed corporate support, the Pentagon offers outside countries special sales deals on pre-production jets.

 

WHAT'S THE PENTAGON DOING?

 

The Pentagon has reported US foreign military sales (FMS) agreements with three countries which are not F-35 partners. Israel, Japan and Korea have agreed to purchase F-35 pre-production aircraft at a total value of over $15 billion. These contracts will include offset agreements which financially reward the countries for their purchase. The current low rate F-35 production lot (LRIP-8) plane count is 29 US, 8 Partner , and 6 FMS.

 

--See the recent F-35 Selected Acquisition Report (SAR), p. 56 here: https://app.box.com/s/z3hibrvjcro1rff2i2ezm2vbwm3umtpe

 

--and the latest principal F-35 contract award here:

http://www.defense.gov/News/Contracts/Contract-View/Article/606733

 

WHY IS THIS WRONG?

The Joint Strike Fighter (F-35) Memorandum of Understanding (pdf) (MOU) does not include any provisions  for participation in the program by non-Partner countries. It certainly never envisions greater benefits going to non-Participants than to Participants, which is currently happening. While Participants compete for sub-contracts on a cost basis, FMS beneficiaries selected by the US receive generous sales offset guarantees with manufacturing opportunities both for the F-35 components and in other areas.  It's no wonder that JSF Partners have cold feet on F-35 procurement. The US Partners who trusted the US should be especially upset considering that they have contributed hundreds of millions of dollars to F-35 development only to now see the best deals going to buyers who arrived fifteen years after the Partners thought they had an agreement, and while the US profits from FMS other Partner countries don't.

 

WHAT DOES THE PARTNERSHIP CONTRACT SAY?

 

The JSF MOU is a treaty between the U.S. and eight other governments concerning the production, sustainment and follow-on development (PSFD) of the Joint Strike Fighter. Partner (Participant) countries are:   Australia, Canada, Denmark, Italy, Netherlands, Norway, Turkey, UK and U.S.

 

The overall objective of the JSF program specified in the MOU is the cooperative production, sustainment, and follow-on development of the JSF Air System to meet the requirements of the Participants.  The MOU establishes the framework that will enable the Participants to cooperate effectively to accomplish this objective and that will detail their responsibilities and benefits under the MOU. This includes the promotion of involvement of the industries of the nations of the Participants in the production, sustainment and follow-on development of the JSF Air System.

 

The emphasis is on the benefits of international Participant cooperation. Quote:

--Desiring to cooperate in the production, sustainment, and follow-on development of the Joint Strike Fighter (JSF) to satisfy similar operational requirements;

--Seeking to establish a model for international cooperative acquisition programs;

--Affirming their intent to use their best efforts to ensure that international cooperation under this PSFD MOU will maximize benefits (including financial) that will accrue to each of them;

--Seeking to establish a robust vehicle of cooperation that will span the life cycle of the JSF Air System; etc.

--See the MOU here:

http://www.jsf.mil/downloads/documents/JSF_PSFD_MOU_-_Update_4_2010.PDF

 

WHAT IS HAPPENING IN PARTNER COUNTRIES?

 

Partner countries are allowed to compete for F-35 production contracts with the goal of keeping the F-35 production cost as low as possible. No partner country has a guaranteed work-share on the program. Being an F-35 partner only gives the right to compete for contracts, with no guarantees of winning, and there is no entitlement to any work at all, however much a country has invested, except for major partners Italy and the United Kingdom. Prospective subcontractors are expected to make all the necessary investments needed to compete for production orders, again with no guarantee of actually winning any work. Finally, companies bidding for work are expected to assume all foreign exchange risk.

 

--Quoted from an article by Giovanni de Briganti  here:

http://www.defense-aerospace.com/articles-view/feature/5/135384/f_35-reality-check-part-2%3A-the-jobs-mirage-and-other-stories.html

 

WHAT'S UP IN THE THREE FOREIGN MILITARY SALES COUNTRIES?

 

--The Israeli Air Force will be the first outside of the US to operate an operational F-35 squadron, and a second squadron will be equipped.  Israeli firms have received 3 billion shekels ($770 million) worth of work from Lockheed Martin Corp. as part of an industrial cooperation package associated with Israel's purchase of F-35I stealth fighter. Israel will also conduct its own sustainment and follow-on development so it is involved with the US in violating all three facets of the MOU agreement.

 

http://www.globes.co.il/en/article-us-to-publish-massive-tenders-for-f-35-service-centers-1001081573

http://www.defensenews.com/story/defense/policy-budget/industry/2015/12/20/f-35-work-for-israeli-firms-reaches-770m/77663536/

http://www.globes.co.il/en/article-israel-aerospace-begins-producing-f-35-c4-systems-1001115860

http://foxtrotalpha.jalopnik.com/how-israel-wants-to-soup-up-its-fleet-of-f-35s-1769644978

 

--Japan signed a Letter of Offer Acceptance (LOA) for four F-35A variant aircraft in June 2012 to be delivered from the Lockheed Martin assembly line in 2016.  Thirty-eight (38) follow-on aircraft will be produced in a Final Assembly and Check-out Facility (FACO) built in Japan, with deliveries beginning in 2017, for a total of forty-two (42) aircraft.

 

http://www.defensenews.com/story/defense/air-space/strike/2015/06/06/japan-fighter-f35-jasdf-f15-f2-upgrade-situational-awareness-sensors/28379749/

 

--In 2015 Lockheed Martin agreed a deal with South Korea for the sale of 40 F-35 combat jets last year. Some 50 percent of the value of the near $7 billion agreement is covered by offset arrangements. “The things we’ve read about in the press are strictly a matter between the government of Korea and the US government,” says Steve Over, Lockheed's F-35 international business development director. --The JSF Partners can go fish.

 

https://www.flightglobal.com/news/articles/adex-lockheed-affirms-commitment-to-korea-f-35-off-418057/

 

THE PRIME CONTRACTOR LOVES IT

 

Lockheed-Martin has dragged out the F-35 system development program from the original schedule of eight or ten years to. . . .forever. Nevertheless, Lockheed has full US government backing to sell pre-production prototypes on the market to US allies who can be pressured to buy. Not only does Lockheed profit from increased production even before a production decision (2019?), it also gets a piece of the offset sweeteners. The US government sets up the FMS deal itself, but Lockheed arranges the offset contracts, called offset because they balance the foreign government costs with benefits to local manufacturers with increased employment (it may export US jobs but who cares about that). Lockheed has a lot of experience in many countries with offsets as a part of the F-16 program FMS. The local embassies are a big help.  The US ambassador to Poland once bragged in a chamber of commerce speech in Warsaw that he had helped arrange various local manufacturing contracts (aircraft, automotive, etc.) with a total value DOUBLE that of the F-16 sale to Poland.

 

WHY IS THE PENTAGON DOING THIS?

 

Since the F-35 development program is far behind schedule, with a Milestone C production and deployment decision postponed until at least 2019, the Pentagon is substituting useless, faulty pre-production jets in its attempted sales to JSF Partners, who of course are reticent to buy them at $160 million per plane. The Partners have only purchased 24 jets to date, so the Pentagon has shifted attention to other client countries for F-35 sales in order to satisfy Lockheed-Martin with increased production (and profits).

 

THE PENTAGON NEEDS TO GO IN ANOTHER DIRECTION

 

Never mind giving some buyers preference over Partners, there should be NO sales of this system at this time, considering that the F-35 is unreliable (especially the engine), untested (more rigorous development tests and operational tests still scheduled), and currently has some 931 unresolved significant deficiencies of which 158 are serious enough to cause death or severe injury according to the Pentagon. Follow the examples of Canada, Denmark and Turkey, three JSF Partners who have refused to buy any F-35 pre-production prototypes. In any case, stop violating the MOU.

 

IT'S TIME TO END THE PENTAGON'S ILLEGAL TREATY-BUSTING AND STOP SELLING F-35

 

USAF Secretary James:  "People believed we could go faster, cheaper, better" by designing and building the F-35 concurrently, "and that the degree of concurrency would work. Indeed it has not worked as well as we had hoped and that's probably the understatement of the day."

[To be clear, concurrency means producing in quantity during development.]

 

To Learn More:

More Problems for the Trillion-Dollar F-35: It’s not Good at Close Combat (by Noel Brinkerhoff and Steve Straehley, AllGov)

When F-35 Joint Strike Fighter Goes Operational this Summer, it won’t Work any better than 40-Year-Old Thunderbolts (by Steve Straehley, AllGov)

How Much do F-35s Cost? Beware of Answers from Lockheed-Martin (by Noel Brinkerhoff, AllGov)

Trillion-Dollar F-35 Jet Fighter Has 13 Flaws (by Noel Brinkerhoff and David Wallechinsky, AllGov)

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