Just in, from Reuters:
Graff
South Korea's Joint Chiefs of Staff were expected to endorse an "all F-35 buy" of 40 Lockheed Martin Corp F-35 fighter jets and an option for 20 more at a meeting on Nov. 22, two sources familiar with the competition said on Friday.If true (and there's no reason to believe it isn't, given all the other reports coming out of ROK recently), that shoots my theory that it would be a mixed buy down. Also, by agreeing to early procurement, a buy that size will help further drive the price of the F-35 down as LM will be able to ramp up production.
The Joint Chiefs' decision must be approved by a committee chaired by the South Korean defense minister at a meeting in early December, according to the sources, who declined to be identified because they were not authorized to speak publicly.
A decision by the Joint Chiefs to purchase only F-35s would be a setback for Boeing Co, which had hoped to sell Seoul at least some F-15 fighters as a hedge against delays in the F-35 fighter program, which is completing development.
One source said South Korea was sticking to its initial plan to buy 60 jets to preserve the terms of an industrial offset package that accompanied the Lockheed offer and included a satellite to be launched and placed in orbit.
Graff
The problem will come, as it did before, with the budget. This plane even with all its problems may be still too expensive for ROK, which has (or had) a budget of $7.4 billion. For sixty planes that comes out to $123 million per plane, which we all know is way below the actual cost of this low performing turkey.
ReplyDeleteThe US budgeted $176 million per unit for the F-35A this fiscal year, and we also know that sustainment costs are much higher than legacy aircraft. So while the ROK Joint Chiefs may want this plane (or may not) there still remains the problem of paying for it. The sale would be under FMS which means ROK can't legally pay less than the US cost of manufacture.
While it is true that the GWS (Gross Weapon System) cost for an FY2014 F-35A is $176 million, Korea would not be buying FY2014 jets.
ReplyDeleteIf you look at the budget docs for the USAF, they (the USAF) will be paying $142 for FY2015, $128 for FY2016, $120 for FY2017, $107 for FY2018, etc.
Add to that the lowered cost due to the increase build rate due to the Korean order and the cost goes down further.
For future reference, THIS LINK is for the USAF budget office and THIS LINK is for the specific budert document involved.
One more thing, South Korea will not be standing up training bases and buying large simulator complexes so it's non-recurring costs will be lower than what the USAF pays.
btw, the latest numbers from the program state that the F-35A is about 10-15% more sustainment, not "much higher".