(Signing of the Memorandum of Understanding (MOU) between the United States and Turkey regarding participation in the Joint Strike Fighter (JSF) System Development and Demonstration (SDD) phase. Also participating was Turkey's Under Secretary for Defense Industries Ali Ercan of the Turkish Ministry of Defense and program director for the Joint Strike Fighter General Jack Hudson.)
Hudson: Good afternoon ladies and gentlemen. I am Brigadier General Jack Hudson, Program Executive Officer and Program Leader for the Joint Strike Fighter.
I have the great honor and privilege today to introduce two gentlemen who have had and continue to have a very profound impact on the JSF program. These two gentlemen completed the negations for the Turkish-American Memorandum of Understanding for the Joint Strike Fighter Development Program. The MOU signing is the event that brings us here today.
First, Professor Doctor Dersan Ali Ercan. He is the Turkish Under Secretary for Defense Industries, Ministry of Defense. He has been a tremendous advocate for the JSF program in Turkey. His keen energy and vision have been instrumental for the completion of the negotiations for the Turkish-American Joint Strike Fighter Development MOU.
Secondly, Mr. Pete Aldridge from the United States. He is the American Under Secretary of Defense for Acquisition, Technology and Logistics. He also has been a tremendous advocate for the JSF program. His keen energy and vision have also been instrumental to the completion of negotiations for the Turkish-American Joint Strike Fighter Development MOU, and to the very successful conduct of the overall Joint Strike Fighter program.
It is fitting that these two gentlemen are here today for the signing of the Joint Strike Fighter Turkish-American Development MOU that continues the close ties in the Turkish-American partnering relationship established in the previous phase of the program.
Mr. Aldridge, sir, the floor is yours.
Aldridge: Thank you Jack. Good afternoon everyone. This is a great day for Turkish and U.S. relationships and certainly for the Joint Strike Fighter program and our relationships with our various industry partners.
You've already been introduced to Professor Doctor Ercan, the Under Secretary for Defense Industries, and I'd also like to introduce a couple of other people who are accompanying him.
Mr. Saribas is Deputy Ambassador, the Embassy of Turkey. Brigadier General Ugurluoglu -- It's a very interesting spelling of the name. He's the Defense and Air Attache of the Embassy of Turkey here in Washington. And Dr. Faraq Oslu, the Deputy Under Secretary for Defense Industries is also with us today.
I am very honored that Dr. Ercan has come to Washington to join me in signing the U.S.-Turkey Memorandum of Understanding documents for a Level 3 partnership in the Systems Development and Demonstration phase of the Joint Strike Fighter program. Today Turkey joins the United Kingdom, the Netherlands, Canada, Denmark, Norway and Italy as our seventh SDD partner. Turkey joined the Joint Strike Fighter concept demonstration phase as a foreign military sales participant in 1999. Today Turkey's CDP participation has led to the Department of Defense invitation to join the program as a cooperative partner in the SDD phase.
Turkey's SDD participation will allow their air force to take full advantage of the Joint Strike Fighter opportunities and advanced technology, logistics and training. In addition, Turkish industry will be engaged over the life of the program in various endeavors that will afford a broad range of industrial relationships with the U.S. and other global partners. We anticipate that these relationships will continue into cooperative production.
Our significant political and military relationships with Turkey over many years has given the United States added protection in the current war on terrorism. Turkey, like the U.S., has experienced the horrors of terrorist acts and knows as we do that we must continue and combat the menace at every opportunity.
Turkey and our other JSF SDD partners have joined forces with us to bring 21st Century technology into their forces and industries in the coming years. Our collective vision and common efforts will keep this program lethal, survivable, supportable, and most importantly affordable.
Thank you very much.
I'd like to introduce Dr. Ercan for comments. Thank you.
Ercan: Mr. Aldridge, distinguished guests and most valuable members of the press. Being part of the JSF program ever since 1999 is a solid intention of Turkey's commitment to international security and industrialization. Through this project allied and friendly countries have gathered around one of the most important defense industry programs of the 21st Century. The Joint Strike Fighter program will provide Turkish companies with the leading edge technologies being developed for this class [inaudible] system to carry us into the next level of industrial infrastructure.
Therefore, I would like to state that it is a great pleasure to announce for me today Turkey's participation in the system development and demonstration phase of the JSF project by signing the Memorandum of Understanding.
It shouldn't be forgotten that our current relations have no doubt gained the momentum following the September 11th tragedy and the signing of the MOU shall no doubt render our relationship a new dimension.
Cooperation efforts on this project will also bolster our relationship and will serve to strengthen the interoperability of our armed forces.
In addition to the industrialists' intensive efforts, national governments' decisive stance shall be a determinant factor in the success of the JSF program. We strongly believe and trust that this program will become a success. In this context I can stress that the Turkish companies are ready and willing and be able to fulfill every task under this multinational cooperation.
Therefore I would like to extend my thanks beforehand to the government representatives and industrial representatives for their common and effective efforts.
[Pause for signing]
Aldridge: Great. Congratulations.
Aldridge: That was fun. A great day. I'd like to open it up for any questions you might have.
Q: Mr. Secretary, what does this memorandum commit Turkey to in terms of the amount of investment, over what period of time, and does it commit Turkey to purchasing any particular number of planes?
Aldridge: It doesn't commit Turkey to purchase any aircraft. It does commit Turkey to participate in the SDD system development and demonstration phase as a ten-year commitment and it's for $175 million equivalent dollars.
Q: My question is first for Dr. Ercan if I may.
What plans if any do you know of for Turkey to acquire the JSF? And what do you expect Turkish industry to do in terms of cooperation with Lockheed Martin? And how much might it be worth to Turkey?
Ercan: The answer to this question is of course diversified. To begin with, not only is Turkey in this project economically, but it's also in this project with regard to better its relationship with the United States in terms of its armed forces.
I can see here some of the representatives of the Turkish defense industry companies, and by that I can strongly say that there are some real tasks that hold upon them with regard to this project and I am sure they will fulfill every mission or task given to them by the Turkish government.
Q: Can the Minister cite any specific industries that he thinks Turkey is particularly well placed to -- Any particular projects that he thinks the country is particularly well placed to participate in?
Ercan: This is a very large-scale question of course, but in this question there is, of course, we can start off by saying the software aspect of it and the economic aspect of it and the equipment related to it, the material aspect. We consider this project to be a very comprehensive and important project of the 21st Century and we think and hope that the Turkish defense industrialists will be able to take part in most aspects of the project and that they will be able to work side by side with Lockheed Martin.
Q: And does the Under Secretary have a figure in mind for the ultimate value to Turkey of such cooperation?
Ercan: It's very difficult to say beforehand.
Q: Now that Turkey has signed on you're about to enlist Singapore and Israel. Could you update us on the status of negotiations with those two countries and whether you've established a deadline, formal, informal, for their joining on?
Aldridge: Let me address one other country that you missed and that's Australia. Australia has indicated its Parliament's approval to also enter the program as they have informed me, and we are now in the process of negotiating an equivalent Memorandum of Understanding with Australia.
We're still in discussions with both Singapore and Israel regarding their participation. It will not be in the same type of partnership that exists with the other SDD partners that have already signed on board. But I don't have an outcome of that as yet. That does not require the same type of deadline that existed for the partners who will participate in an industrial way. We had to form our teams together in a more rapid pace to get the development underway with the teams and that deadline is different than deadlines for say like Singapore and Israel.
Q: I just wanted to address Dr. Ercan again.
If you could, just how many JSFs do you think you may need for the Turkish air force and when will you make a decision about buying the aircraft? What year?
Ercan: It would be wrong for me to make any such statements for the time being because that's going to be all taken into consideration at the [inaudible] of the program. But surely enough there is a need for Turkish air force's inventory that is going to be made up of the F-4s, the F-5s, and the F-16s. And that needs to be strengthened up and boosted up.
Q: Mr. Secretary, what's your current estimate of the number of JSFs that will be purchased by the United States? With the Navy possibly reducing its buy by 400 or more.
Aldridge: The plans are still highly fluid at this point. The estimate in the beginning to establish a unit price for the airplane was 3,000 airplanes. That included only the U.S. and U.K. purchase. We had not anticipated, not used for the calculation of unit price an of the foreign or non-U.S. partnership purchasers of that.
As you know the Navy's done a study, the Navy/Marine Corps, looking at a total number of about 400 reduction from the 3,000 which would bring us down to 2,600. That's still being worked. It will be part of the FY04 budget submission, exactly how those allocations will be done, but there is no impact to the program to the year 2012 because we would just be building up production. That's at the end point, at the end of the production run, which will be in the year 2020. And totally honestly, I have no idea how many airplanes we're going to buy in the year 2020, nor do we have any idea of how many non-U.S. partners will buy, but we anticipate that's going to be in the range of 1,000 to 2,000 which would be on top of the 3,000 which was our original estimate.
If you look around the world and say that many of the people who have U.S. aircraft like Turkey with F-4s, F-5s, F-16s, and you just replace those with Joint Strike Fighters, the number could be in the several thousands.
Q: You just said that you anticipate that's going to be in the neighborhood of 1,000 to 2,000, the number bought by --
Aldridge: I'm being conservative here.
Q: The number that had been previously used by you and by General Howell was as much as 3,000.
Aldridge: It could be as much as 3,000 if you take the high end of the expectation. I just don't know how many that's going to be because nobody's committed to it, and we're talking about the year 2020. I just don't know in the year 2020. For cost estimating purposes, for affordability purposes, we're using around 3,000 airplanes and that's where our unit cost is derived from.
Q: When you say we're using around 3,000 airplanes that are the part for the U.S. purchase?
Aldridge: U.S. and U.K.
Q: What's that estimate? The per unit price.
Aldridge: The estimate right now, in 2002 dollars for the conventional airplane is $37 million. For the STOVL [short take-off and vertical landing] version it's a little more expensive and it will be something around $47 million.
Q: Just to clarify, is Australia now the only other potential candidate for this kind of Memorandum of Understanding? And are there any other discussions? Do you anticipate any other discussions beyond Singapore and Israel of other types of agreements in this program?
Aldridge: Australia is the only one which would enter into the level type of partnership that we currently have established and it will probably be the level three which is in the same range as Turkey and Canada and so forth. That's the only partner that will be in that area.
Others, the only one we have any active discussions with are Israel and Singapore. Others could come on board as they look at the airplane later in time as a normal foreign military sales type activity, but that could be later in time. It does not require the same urgency of partnership that we currently have to develop the airplane.
Q: Could you detail as a level three partner what Turkey gets out of the program, both in terms of personnel in the U.S. office here and also the level of technology they get access to as opposed to a level one or two partner. If you could be somewhat specific just as an example.
Aldridge: I'm going to turn it over to Brigadier General Jack Hudson who has to deal with these issues every day and I'll have him answer the question.
Hudson: Eventually Turkey will have one person in our program office as a level three partner. That person will be what we call a National Deputy for Turkey. Each country has that person. They will also be involved in the day-to-day activities in the program office as our other partner countries are so we have them fully integrated in the office in that sense. So they'll see a great deal of information on the program.
Then on the industry side what happens is, as you know, industrial participation is worked on a best value or a best athlete process. It's a competitive process amongst industries across the board, principally through our partner countries. That's done by Lockheed, Pratt, GE [General Electric] and their principal partners, subs [subcontractors] and suppliers. That's done on a basis that's controlled through processes that are governed by the State Department and DoD as to what technologies are used in the industrial processes.
So they'll be able to work that on a competitive process on the industry side, and then within the government side they'll have that one person in the office that will work with us on a day-to-day basis within the program.
Q: The technology access is more a commercial question than a governmental question?
Aldridge: Industrial technology would be on an industry-to-industry basis, and then there are certain things within the program office that they would have access to, certain kinds of information that they along with all the other partner countries would have access to. So it kind of works on both sides.
Q: How does it work in terms of early opportunities to acquire the aircraft?
Aldridge: When you become a partner you get into a priority for the acquisition of the airplane. Whenever they want it. They give us the requirement and we can in fact establish the production rate for the future and when they fit into the production lines. That's one thing.
The other piece of being a partner is that if there are other foreign military sales of the airplane so that the unit cost starts to drop, our partners share in that savings. So that's another benefit of coming on board the program early in time.
Q: They don't pay the normal foreign military sales add-ons that --
Aldridge: That's correct. They are part of the program, they're participating, their monies are used in the program for the purpose of development and for tailoring the aircraft if they have any unique requirements of their country.
Q: Can you estimate maybe on a percentage basis how much cheaper it is for a country to be a member at this level than it is to --
Aldridge: It is a really good deal. [Laughter] A lot of it depends upon the value that goes to their industry based upon what their industry can provide to the program. There's no guarantees by their industry they can participate at all, but we have done enough homework and Lockheed Martin has been to Turkey, talking to their industry, knowing that there can be a substantial amount of industrial participation in this program. And being a partner, we are showing a certain degree of favoritism to their industry versus some other industry somewhere else.
Q: So the Turkish --
Ercan: First of all, I would like to clarify and make it known that in the past history of our relationship between the United States and Turkey we are moving ahead and we're moving forward from a buyer/seller position to a full partner position in the defense industry projects that we intend to be involved in.
Even though our participation might be small concerning the project in question, whether it be 5 percent or 95 percent but nevertheless, I would like to stress the fact that whatever the phase we participate in we would like to be and we shall be a partner amongst equals.
Q: So the $175 million they have pledged to invest as a country doesn't necessarily guarantee their industry participation in this but they have a chance at it.
Aldridge: They have a chance at it on a competitive basis, and of course by being a part of the thing --
Q: So countries that don't invest in it, is their industry blocked from participation?
Aldridge: Not blocked, but we are showing favoritism to the countries who are in fact participating in the program. They get first choice, but there's no blockage. We are -- The concept of this airplane is called affordability and of course we have some very high performance in terms of jet performance and technology, but we are going after the best value, not necessarily showing favoritism to one country over the other, but it's the best value to keep the cost down and we're going after those industries that can provide that best value.
Q: Mr. Secretary, now that you're coming up to your self-imposed deadline for level one, two and three partners --
Aldridge: That deadline was imposed by the program. The program is continuing. We're coming up on a PDR, preliminary design review and a critical design review, which will be next year. The participants have to be in place to make those kinds of things happen so the deadline is established by when we want to fly the airplane. We're 40 months away from first fight. The partners and the industry all have to be on board and that's what's driving the schedule, not me.
Q: My question is, it's two-part. Which countries of those you invited to join as level one, two or three partners declined?
Aldridge: Belgium. I don't remember any declining, but --
Q: Do you remember why they declined?
Aldridge: Unaffordable, I guess. We had a list of what we call pre-approved countries that we invited and all the people on board minus Belgium is the only one that has declined.
Q: What sort of reflections do you have now on the prospects for competition from the EuroFighter for foreign military sales?
Aldridge: No contest. [Laughter] Anybody who looks at the EuroFighter versus the Joint Strike Fighter will know the answer.
Thank you very much.