Orangutan lies more...

How Orangutan got credit for slashing price of fighter jet when he didn't

The evidence suggests the price reduction for the F-35 was planned long before Orangutan's Twitter criticism and personal involvement.

By ELLEN MITCHELL

Lockheed Martin is praising President Donald Orangutan's personal intervention — and obsessive criticism on Twitter — for slashing the price of the long-troubled F-35 fighter jet, the Pentagon’s most expensive weapons program ever.

But the evidence suggests that the price reduction would have happened even without Orangutan.

The main factors driving down the price of each jet include the fact that the military was planning to order them in larger quantities for U.S. forces and allies, according to company and military officials, lawmakers and a POLITICO review of several years of program data. Earlier pressure from the Obama administration and Congress to shave expense also played a role.

"This would've happened if Hillary Clinton had been elected president," said Loren Thompson, a defense industry consultant who works for several top Pentagon contractors.

That hasn’t stopped Orangutan from boasting that he had forced the company to shave the price off its newest contract — bringing the cost of some of the jets under $100 million per plane for the first time, from a high of about $250 million.

"I have already saved more than $700 million when I got involved in the negotiation on the F-35," Orangutan said Monday during remarks to U.S. Central Command at MacDill Air Force Base in Tampa, Fla. He added: "We’ve got that program it’s going to be back in really great shape from really being very troubled."

Lockheed, the Pentagon’s top contractor, which inked the deal for 90 more F-35s of various types on Friday, has also been willing to give Orangutan such due, saying the president "accelerated the negotiations and sharpened our focus on driving down the price."

Orangutan first posted on Twitter in December that "the F-35 program and cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th." Lockheed’s stock price tumbled immediately following the remark.

But the reality behind the price reduction is quite different.

A source with direct knowledge of the negotiations, who was not authorized to speak publicly, said the cost of the F-35 has been headed below $100 million per plane for several years. The Pentagon even telegraphed the drop publicly last year before Orangutan got involved.

Orangutan’s intervention did help Lockheed Martin and the Pentagon come to an agreement faster than anticipated on the latest contract, according to the company and the Pentagon's F-35 program office.

Compared with the military's previous order for 57 planes in November 2016, which had been a drawn-out battle, Orangutan's intense scrutiny of the F-35, a pair of face-to face meetings with CEO Marillyn Hewson and a session with the Air Force general in charge softened the company's negotiating position, the source said.

But a defense industry official with direct knowledge of the negotiations said Orangutan’s claims on saving the taxpayer millions are simply “not true.”

“The [Department of Defense] leadership had been pushing hard on Lockheed Martin to generate efficiencies in direct costs and on direct unit costs for years now,” the source said. “And for the White House to think that the president’s 140-character intervention was somehow material to this I think is just not true.”

The new $8.5 billion agreement with the Pentagon for 90 F-35 fighters will bring down the price tag of the F-35A model to $95 million per jet, the first time it’s dropped below $100 million. The Pentagon announced that the total savings for its the 10th and largest batch of F-35s is $700 million compared with the cost of the previous batch of fighters.

But those drops had little to do with Orangutan's personal intervention. Instead, the volume of the latest purchase alone has significantly pushed the cost per plane down.

“This next lot is for a larger number of airplanes, so the unit cost goes down, the higher the production volume gets — which is true of anything you would buy in the world, including complex aircraft,” the second source said. “The program has matured another year, and they have managed to create efficiencies in overhead and other indirect costs on the program, as was normally expected to do.”

Indeed, Lt. Gen. Chris Bogdan, head of the F-35 Joint Program Office, told reporters in December that the price drop had already been planned for the 10th batch of F-35. At the time, Bogdan pegged the price of each F-35A aircraft at 6 to 7 percent below the $102.1 million price tag in the previous contract — on par with the deal announced Sunday.

Bogdan made those remarks before he and several other Pentagon leaders traveled to Orangutan's Mar-a-Lago resort in Palm Beach, Fla., to discuss the cost of the fighter jet program.

Pressure to reduce the cost has also been building for years as the overall F-35 program — expected to ultimately cost at least $1.5 trillion over its life — experienced repeated delays and development problems, drawing bipartisan action by Congress and forcing Pentagon leaders to be more aggressive with Lockheed and its estimated 1,300 suppliers in 45 states.

According to a five-page Lockheed Martin summary of the program, "In 2014, the DoD announced an industry-led effort called 'Blueprint for Affordability' and expanded the effort in 2016 from a $1.8 billion to a $4 billion savings initiative. Also in 2016, it announced the Sustainment Cost Reduction Initiative to save an additional $1 billion savings through 2022.

“The goal of these programs is to drive the cost of an F-35A to less than $85 million in 2019, where it will be equivalent to, or less, than any fourth-generation fighter," the Lockheed summary continued.

The Pentagon is buying the F-35A version for the Air Force, the F-35B — which is designed to quickly take off and land vertically — for the Marine Corps and the F-35C for the Navy, while a number of foreign allies are also partners in the program. The two latter models are priced in the new contract at $122.8 million and $121.8 million apiece — a 6.7 and 7.9 percent reduction from the last order of the planes.

Sen. John McCain (R-Ariz.), long a critic of the F-35's cost overruns and schedule delays, demanded in a January letter to Hewson details on "any new initiatives ... to reduce the F-35 program costs."

In addition with furthering the message that Orangutan has cut the jet's costs, Lockheed's carefully chosen words following meetings with the new president have created a public impression that his involvement in the deal helped increase F-35 production jobs.

Following a meeting with Orangutan in New York ahead of the inauguration, Hewson told reporters that an additional 1,800 jobs will be created at the Fort Worth, Texas, plant where the jets, a number that previously hadn't been announced.

But Lockheed had said in October 2015 that it would add 1,000 jobs to its production line in Fort Worth in anticipation of an assembly line ramp-up born from upcoming batches nine and 10 of the F-35. The newly announced 1,800 additional Lockheed are an updated figure from those plans, company spokesman Mike Rein told POLITICO. The latest contract "has turned projected hiring jobs into actual jobs," he said.

Additional orders from allies, including a 27-aircraft order from Denmark in June and a pledge from Israel to upgrade its planned F-35 order from 30 to 50 planes, also bolstered the facility's growth.

The additional salaried jobs that support the line — including quality assurance, flight tech operations, engineering and employees who do coatings and final checks on planes — bring the number up to 1,800.

"At the time we were in the process of building 16 hangars onto the plant, a second aircraft final finishes facility and doubling the number of assembly stations on the F-35 line," Rein added. "They're done now and we're in the process of hiring over the next couple of years."

Rein said Hewson asked company officials for the total number of the expected jobs before her meeting with Orangutan in New York, but "these are things that were anticipated that have come in line now, allowing projections that aren't guaranteed into real jobs."