On Wednesday, Feb 29, 2012 Japan’s Minister of Defense announced that Japan may be compelled to cancel its $4.7 billion order for 42 Lockheed Martin F-35 fifth-generation Joint Strike Fighters unless the manufacturer and the United States government can guarantee that the proposed deadlines will be met and deliver assurances that proposed costs are confirmed. A formal contract is scheduled to be signed this summer or earlier.
In an address to the Japanese Diet, Defense Minister Naoki Tanaka expressed concerns that the United States may not be able to finalize specific contract details as scheduled and any significant delays would jeopardize Japan’s defense capabilities. Should the proposed cost factors or the delivery schedule be compromised, Tanaka indicated that the contract might be cancelled and Japan would need to consider selecting an alternate aircraft model. Japan is struggling with a national debt equal to double its GDP, a factor that weighs heavily on the selection of the nation’s next generation fighter.
The F-35, a fifth-generation stealth fighter, is being manufactured by Lockheed Martin in a joint project with BAE Systems and Northrop Grumman. The United States previously announced it remains committed to its initial plan to acquire 2,443 F-35s. Technical difficulties, development delays, and production challenges have raised the initial program cost from $233 billion to over $385 billion. Some experts believe the actual cost may exceed $1 trillion over the projected lifespan of the fighter.
Japan decided to purchase the F-35 in December as a replacement for its aging fleet of operational fighters despite reports of technical problems, production delays, and cost overruns that have plagued the program. At approximately $113 million per aircraft, the F-35 has proven to be the most costly weapon’s system undertaken in DoD history.
Japan plans to pay $122.96 million per aircraft for four F-35s scheduled for delivery in March 2017. Tanaka indicated in his comments that Japan might be required to initiate a new round of competitive review to select an alternative aircraft should Lockheed Martin be unable to confirm their initial proposal by the time the formal contract is scheduled to be signed.
Earlier this year, Japan’s Defense Ministry sent the US Department of Defense a letter requesting confirmation of the proposed cost projections and asked for assurances that the proposed delivery schedule would be met.
Minister Tanaka’s public address places the purchase in some doubt and is the first public pronouncement mentioning the possibility that the order might be cancelled.
The Department of Defense previously announced that the US contract with Lockheed Martin for the acquisition of 179 F-35s would be stretched out over a five-year cycle as a cost-saving measure that could save the US government some $15.1 billion. As a result of this DoD announcement, Lockheed Martin stated that this delay could increase the single-unit cost of the aircraft and might cause delays in deliveries to foreign buyers.
Lockheed Martin has publicly committed itself to meeting the needs of the Japanese government in statements declaring that the company would make every possible effort to meet the cost estimates, manufacturing expectations, and proposed delivery schedule. However, the company also pointed out that cost factors would be determined primarily through government negotiations between Japan and the United States.
Japanese cancellation of its F-35 order would deal a serious blow to future prospects for additional foreign sales and would cloak the entire program in a cloud of uncertainty.