President Trump said Monday that Lockheed Martin has cut $600 million from its next lot of 90 F-35 Joint Strike Fighter planes, capping weeks of private meetings with Lockheed Martin chief executive Marillyn Hewson and public criticisms of the program’s cost.
He specified that the cost-savings would apply to the company’s next group of 90 planes but offered few details on how the program or contract would change as a result.
“What’s happening with Lockheed, number one we’re cutting the price of their planes by a lot, but they’re also expanding, and that’s going to be a good thing. Ultimately they’re going to be better off,” Trump told reporters in the Oval Office.
The president’s public back-and-forth with Lockheed began in late December when he took to Twitter to criticize the program for cost overruns. At the time, he asked aerospace company Boeing to “price out a comparable F-18 Super Hornet,” suggesting he would substitute Boeing’s cheaper plane for Lockheed’s.
The F-35 Joint Strike Fighter costs about $100 million per plane, though the company says it already expects the cost of the plane to drop to $85 million as it ramps up its volume of production. It was unclear from the president’s statements how much if any of the $600 million cost-savings are new, or whether the figure contains savings that were already in place before the president intervened.
Hewson said earlier this month while departing a private meeting with the president at Trump Tower that the company was “close to a deal” that would lower the cost of the program. She said the cost of the program would be “significantly lower,” and she also pledged to create 1,800 new jobs at a production center in Fort Worth.
“We appreciate President Trump’s comments this morning on the positive progress we’ve made on the F-35 program. We share his commitment to delivering this critical capability for our men and women in uniform at the lowest possible cost to taxpayers,” Lockheed Martin said in a statement.
The president took credit for the cost reduction.
“I was able to get $600 million approximately off those planes, so I think that was great achievement,” President Trump said.
However, it is difficult to parse Trump’s influence with reductions already planned.
Lt. Gen. Chris Bogdan, who heads the F-35 Joint Program Office at the Department of Defense, told reporters on Dec. 20 — before the president’s private meetings with defense companies — that the F-35’s cost per plane should fall “somewhere on the order of 6 to 7 percent per airplane” for the next batch of planes.
That would translate to a cost reduction of between $6.1 million and $7.1 million per plane for the most common F-35 model — somewhere between $549 million and $630 million for the full lot of 90 planes. The Air Force’s budget already reflects cost reductions of about $10 million per plane between 2016 and 2017.
“The figure which Trump is taking credit for was already baked into the cake,” said Mackenzie Eaglen, a military analyst with the American Enterprise Institute, a conservative think tank. “This is what politicians do.”
Other analysts say the attention the president has placed on the program will make it harder for defense companies to inflate costs in the future.
“The program was already on a path to reducing costs, but this is now the Trump administration and the president saying ‘they better stay on that path if they want this program to be successful,’” said Loren Thompson, an industry analyst with the nonprofit Lexington Institute, which has consulting arrangements with Lockheed Martin.
The F-35 program, a $400 billion project to supply advanced jets for the U.S. military and allied countries, has been criticized by politicians on both sides of the aisle for cost overruns and delays. It is the single largest military program.
“There were great delays, about seven years of delays, tremendous cost overruns,” Trump told reporters. “We’ve ended all that, and we’ve got that program really, really now in good shape.”
The most recent delay to the program came this month when the Defense Department acknowledged a schedule delay that could increase the cost of the program by another $500 million. The delay drew a rebuke from Sen. John McCain (R-Ariz.), chairman of the Senate Armed Services Committee.
In one of his first actions in office, Defense Secretary James Mattis on Friday ordered a review of the program.