F-35: Retrofit cost projections drop by almost half a billion dollars

Something the critics were sure would break the bank as the program used concurrency to both develop and field the F-35 seems to be turning out less expensive than expected:

The Pentagon now expects to pay $480 million less than it had figured on only eight months ago for retrofits to the first 90 F-35 fighters, based on revised cost projections of changes predicted to emerge through the end of development in 2017.

The updated cost figures were sent to Congress last month in its second review of so-called concurrency costs for the Lockheed Martin F-35 program. Because the program was crafted in 2001 to conduct production in parallel with testing activities, officials are tracking the concurrency costs, i.e., the price of retrofits that must be made to bring early production jets to an operational standard based on findings in ongoing testing. One example is a fix to the fuselage station 496 bulkhead, which was found to experience unexpected cracking.

As of last year, Pentagon officials estimated the total concurrency cost for the first 90 aircraft, including all on contract in low-rate, initial production (LRIP) lots 1-5, at $1.71 billion. However, since the first report was issued to Congress on these costs last September, the F-35 Joint Program Office, in concert with experts from Lockheed Martin, have reviewed more closely the “actuals,” or costs already known from work on earlier LRIPs, as well as refined how models of retrofits from past fighter programs (the F-22 and F/A-18E/F, for example) are applied to the F-35 moving forward, according to an official from the F-35 Joint Program Office (JPO). 

Note that last sentence.  If you read the critics you'd think the F-35 was the only program ever that has required retrofits. In fact, retrofits are quite common in all fighter programs.

Additionally, not all the retrofits identified may be necessary:

The retrofit estimates include non-recurring engineering for the fixes. Though foreign F-35 buyers will not have to pay for these non-recurring costs (those are included in the U.S.-specific development contract), they will have to pick up the tab for the actual retrofits if they decide to install them on their aircraft, according to the JPO official. Additionally, the U.S. services have the discretion of which retrofits to install. The program office is categorizing them by those that are essential to operate the aircraft (such as safety or durability issues) versus those that are “nice to have,” the JPO official says. 

Each service will have the discretion to decide on which of the retrofits are essential and which aren't.

Graff