Japan To Buy 1st F-35s Despite Cost Rise

Japan has agreed to purchase four Lockheed Martin F-35 Joint Strike Fighters despite the cost of each jet jumping nearly $4 million from the price negotiated in December, a consequence of the Pentagon’s decision to trim overall production in the early stages.


Japan’s Ministry of Defense said on June 29 it has agreed to purchase the first four of 42 F-35s for a price of 10.2 billion yen ($127.8 million) each, and two simulators and spare parts, for a total cost of 60 billion yen, representing a premium on the originally agreed price.


The price represents the first preview of what customer countries — such as Israel — might expect to pay when they purchase their jets.

The price of the initial four jets in the letter of offer and acceptance signed by the MoD on June 29 is $3.7 million higher than the 9.9 billion yen ($124.1 million) agreed last December, when, in a contentious decision, the ministry selected the advanced but still developmental Lockheed Martin F-35 to replace its 1960s-era F-4EJs.


After a tough request for proposals review, the MoD opted for 42 of the stealthy F-35s over the flight-proven and less expensive Eurofighter Typhoon and Boeing F/A-18E/F Super Hornet.


The price rise comes in spite of a threat, repeated publicly by then-Defense Minister Naoki Tanaka, that Japan would consider canceling the F-35 purchase if significant troubles and delays emerged. The Pentagon’s January decision to delay orders for 179


F-35s over the next five years as part of defense budget cuts, and an admission by Lockheed that this will boost prices, has caused international concern.

DoD removed 13 aircraft from its 2013 purchasing plans and 179 total jets between 2013 and 2017 so it can fix problems that have come to light during development.


The Pentagon is purchasing aircraft at the same time it is testing them, a process called concurrency. The downside to this method is that early production jets might have to be modified to address flaws discovered during flight testing.


DoD announced revised estimates for the F-35 program that showed the entire program cost jumped $17 billion from a 2011 estimate to $396 billion, when using then-year dollar estimates.


Slowing procurement of the F-35 over the next five years is projected to add nearly $6.2 billion in procurement and development costs, according to Pentagon budget documents.


The F-35 program office projects the cost of the conventional-takeoff and -landing version of the jet — the same model that Japan is purchasing — to be $78.7 million. However, that number does not include development costs and is based in 2,443 DoD purchases and 716 international orders.

Underscoring Japanese alarm that it might have stuck itself with a steadily worsening deal, Tanaka said at a Feb. 24 news conference the MoD had asked the U.S. to “strictly adhere” to the terms of the agreement, including the original 9.9 billion yen price and 2016 delivery date.


That threat appears to have melted away. Despite the retreat, local defense analyst Shinichi Kiyotani said that because the cost did not rise even higher, it might be interpreted as a partial victory for the MoD, which could face an even tougher job suppressing future price rises for the remaining 38 jets if the program suffers further glitches.


“The MoD has got a pretty good price and negotiated well compared to the price rises that might come later,” Kiyotani said.


The planned purchase of the other 38 jets has yet to be formally confirmed.