Transcript

Department of Defense Press Briefing by Under Secretary of Defense for Acquisition and Sustainment Lord and F-35 Program Executive Officer Lt. Gen. Eric T. Fick on the F-35 Program in the Pentagon Briefing Room

Oct. 29, 2019
Under Secretary of Defense for Acquisition and Sustainment Ellen M. Lord; Air Force Lieutenant General Eric T. Fick, F-35 Program Executive Officer

STAFF:  Good morning, ladies and gentlemen.  Thank you for joining us today.

This morning, Under Secretary of Defense for Acquisition and Sustainment Ellen Lord, and F-35 program executive officer Lt. Gen. Eric Fick will provide an F-35 program update and additional detail on the U.S. Department of Defense and Lockheed Martin agreement regarding the production and delivery of F-35 lots 12 to 14.  Ms. Lord just gave an acquisition update earlier this month, so please keep questions limited to the F-35.

They will both have opening statements, and then we will take your questions.  We do have a hard stop at 9:05, so please be respectful with your questions so everyone will have a chance.

Ma'am, over to you.

UNDER SECRETARY OF DEFENSE ELLEN M. LORD:  Thank you, Mike.

Good morning, ladies and gentlemen.  I appreciate you being here.

As I have consistently said, the F-35 program remains one of my top acquisition and sustainment priorities.  Earlier this month, at our last press briefing, I made a commitment to come back to you when we were ready to announce the next F-35 contract, so here we are.

As the F-35 program milestone authority, alongside Lt. Gen. Eric Fick, the F-35 program executive officer, we're here to announce that the U.S. Department of Defense and Lockheed Martin have made tremendous progress and now have an agreement regarding the lot 12 through 14 production contract.  This is a new, stark milestone for the F-35 enterprise, as the F-35 is our largest TACAIR investment and will form the backbone of the U.S. and allied fifth-generation inventory for the foreseeable future.

A&S and the Joint Program Office are laser-focused on driving cost out, quality up, and achieving timely deliveries of our capability to our warfighters.

With respect to on-time delivery, we have exceeded the total aircraft quantity we delivered to the warfighter last year, and we have a 96% on-time delivery rate, a tremendous improvement from where we were last year, with an average on-time delivery rate of 64%.

On quality, while we have made progress, there are still significant opportunities for improvement, and we continue to communicate specific concerns to Lockheed based on the data we collect.

The $34 billion agreement for F-35 low-rate initial production lots 12 through 14 includes the delivery of 478 F-35 aircraft, 149 for lot 12, 160 for lot 13 and 169 for lot 14, in support of our U.S. military services, our partner nations and our foreign military sales customers.

This agreement represents our continued commitment to reduce F-35 cost aggressively, incentivize industry to meet required performance, and deliver advanced capabilities to our warfighters at the best value to taxpayers.

There are several notable achievements that this contract represents.

First, this is the first time the F-35 Joint Program Office will award a significant F-35 aircraft procurement in the same fiscal year as the congressional appropriation year.

Second, we will reach a unit recurring flyaway, URF, cost per aircraft target of $80 million for a U.S. Air Force F-35A price by lot 13, which is one lot earlier than planned; a significant milestone for the department.

The F-35 enterprise will continue to save in the lot 12 through 14 contract award.  For example, in lot 14, the F-35A unit cost represents an estimated overall 12.8% reduction from LRIP 11 costs for the conventional landing variant; the F-35B unit cost represents an overall 12.3% reduction from lot 11 costs for the short takeoff and landing variant; the F-35C unit cost represents an overall 13.2% reduction from lot 11 costs for the carrier variant in lot 11; with an average of 12.7% savings across all three variants from lot 11 to 14.  These represent some of the largest achieved savings, lot over lot, for the program.

This contract will allow U.S. men and women in uniform, alongside our F-35 partners, to maintain a competitive advantage, with its unique, unmatched fifth-generation capabilities.

Understandably, there will be questions today on the program deviation I told you about earlier this month that is due to delays in integrating the F-35 into the Joint Simulation Environment test infrastructure.  Lt. Gen. Fick will provide more detail on that shortly.

I want to reiterate that I have full faith and confidence in the F-35 program and our ability to deliver F-35 combat capability anywhere in the world.  Make no mistake:  The F-35 is the world's most advanced, lethal and inter-operable aircraft ever developed.

I want to thank Congress for their continued support of this vital program.  I regularly meet with members and professional staff to provide updates and answer questions, so their leadership is greatly appreciated.

As the F-35 fleet continues to grow, we're also growing our sustainment capabilities to ensure these aircraft are ready and capable.

Due to the efforts across the F-35 enterprise, led by Lt. Gen. Fick, DOD combat-coded operational unit mission capability performance increased from 55% in October 2018 to 73% in September 2019.

While we are making progress, we are not where we need to be.  We have industry's commitment on accelerating improvements in sustainment.  Our focus is on improved F-35 fleet readiness and driving towards the service affordability goals.

To that end, we are placing particular focus on accelerating our depot repair capability, accelerating fleet modifications, and improving Autonomic Logistics Information System, better known as ALIS, functionality and responsiveness.

As of last month, over 440 aircraft have been delivered at 17 bases worldwide, with over 850 pilots and 8,200 maintainers.

On Turkey and the F-35, there has been no change to return Turkey to the F-35 program.  The S-400 air defense system, which is incompatible with the F-35, remains in Turkey.  As I said previously, Turkey makes nearly one thousand parts for the F-35, and will continue to do so until Turkey's F-35 supply chain responsibilities transfer at the end of March 2020.

Lockheed Martin and Pratt & Whitney are responsible for that supply chain, so I'll defer any questions to them.

In closing, I want to reiterate how regrettable it is that we are again under a continuing resolution.  C.R.s cause great damage to our military readiness and disrupt our ability to modernize our strategic forces, including nuclear, for the future.

I strongly urge Congress to pass a defense appropriations and authorization bill now so that we can forward -- we can move forward with the many important programs needed to ensure our readiness and deter our adversaries.

We at DOD are grateful for our Congress passing a two-year budget agreement that provides the budgetary certainty the department needs to implement the National Defense Strategy.

With that, I'll let Lt. Gen. Fick make his statement, and then I'll be happy to answer questions.

LIEUTENANT GENERAL ERIC T. FICK:  Thank you, Ms. Lord.

And thank you, ladies and gentlemen, for your interest in the F-35 program.

The agreement we announced yesterday is a significant one for the program in a number of ways, not the least of which are its size and overall value, 478 aircraft and $34 billion.  This total includes aircraft for all three U.S. services, our international partners, our foreign military sales customers, totaling 351 F-35As, 86 F-35Bs and 41 F-35Cs.

I am proud to be here today to represent the F-35 enterprise and to share with you some of my thoughts on the state of the program.

Our initial development efforts are coming to a close as initial operational test and evaluation proceeds; but as you are all aware, and as Ms. Lord just mentioned, we have delayed our milestone C and full-rate production decision until such time as the Joint Simulation Environment is available to support the director of operational test and evaluation's assessment of the program.  We look forward to his thorough assessment and are working hard with the Naval Air Systems Command and Lockheed Martin to fully integrate the F-35 into this complex synthetic environment.  This integration is not only critical to the completion of IOT&E, but it will become increasingly important to future modernization efforts on the F-35.

To that end, while the program has reached initial operational capability for all three U.S. services, the United Kingdom, Italy, Japan and Israel, and is about to do so again in Norway, we understand the need to continue its modernization to ensure it stays relevant over time.  Our mandate to deliver the next increment of capabilities to the program, known as Block Four, on a very tight timeline drove us to look at modernizing the air system in a new way. A way strongly influenced by agile developmental methodologies standard in industry today.

The Continuous Capability Development and Delivery model was born of this need, and to date, we have fielded four software releases using this methodology.  These releases have focused primarily on the correction of minor deficiencies, but have also resulted in the delivery of new capabilities, most notably the lifesaving capability inherent in the Automatic Ground Collision Avoidance System.  Through close work with the operational requirements and test communities, the C2D2 process will mature and continue to deliver increments of capability over time to ensure our warfighting customers stay ahead of the threat well into the future.

Ms. Lord captured well the status of yesterday's production award, including the significant savings we've realized for our warfighters and taxpayers.  My Joint Program Office and Greg Ulmer's Lockheed Martin negotiating teams worked tirelessly on this deal, and I'm very proud of the work they've done under excruciating pressure.

With this award, we see from a production perspective the most dramatic rate increases in the production line are now behind us.  Lot 12, as 149 aircraft, represent only a 6 percent increase over Lot 11's quantity of 141, and the deltas for Lot 14 and Lot 13 are similar.  You will recall that the Lot 11 quantity was a full 50 percent higher than Lot 10, which was itself 65 percent greater than Lot Nine.

This dramatic production rate increase has proven to be challenging for the supply chain, but the comparatively minor quantity changes across Lots 12 through 14 should give it some breathing room as we move forward.  This stabilization will help with the timely delivery of parts to the production line and spares and repairs to the field.

Speaking of the field, our Hybrid Product Support Integrator Team has reached full operational capability and is currently sustaining a fleet of more than 440 aircraft in eight nations around the world, including the U.S., Norway, Israel, Italy, the U.K., Australia, Korea and Japan, and operating around the world both ashore and afloat.  The Netherlands will join this elite group soon with their first aircraft arrival ceremony happening here later this week.

From a sustainment/performance perspective, I'll note that while we fell short of the Secretary of Defense's 80% mission capability mandate, we have definitely moved and continue to move the needle, increasing, as Ms. Lord mentioned, the mission capability rate from our operational fleet from 55% in October of 2018 to 73% in -- in September of 2019.

Within that same timeframe, some deployed units saw sustained MC and FMC -- that's mission capable and full mission capable, levels well above 80%, and even into the 90s.  Are we finished?  No.  Are we making progress?  Absolutely.

Much, but not all of that progress is due to the actions implemented as a result of the publication and the execution of a new Lifecycle Sustainment Plan in early 2019.  Unlike many other plans like it that tend to be forgotten as soon as they're signed, this one is actually executable, driving deliberate and near-term actions across 10 different lines of effort, including accelerating fleet modifications; accelerating maintenance plan changes to the field; accelerating supply-chain capability and organic depot repair capacity; and enhancing our reliability and maintainability improvement plan.  All of those actions are ongoing today.

On top of these actions, I need to acknowledge also that much of this progress is also attributable to the significant work of our airmen, Marines and sailors operating and sustaining this impressive air system in the field today.  They are doing what airmen, Marines and sailors do:  They make things work, and for that, we are extremely grateful.  We will continue to work closely with them to realize the full warfighting potential of the F-35.

We are at a strategic inflection point now on the program, moving from initial development and fielding to modernization, high-rate production and global fleet sustainment as we partner with Lockheed Martin and Pratt & Whitney to deliver cost effective, war-winning capabilities.  We're changing our contractual relationships with these industry partners, as well.  Our contracts today are transitioning away from ones that feature purely cost-focused incentives, and now feature incentive structures that, for our development contracts, motivate that transition to agile and able processes I mentioned previously.

Our production contracts, including this lot 12 through 14 contract, feature supplier incentive fees and performance incentive fees that drive cost reduction at the supplier level and improve production line velocity, and our sustainment contracts incentivize mission capability rates and supplier metrics that ensure our warfighters have the system they need when they need it.

We continue to look for ways to improve these business relationships, including potential multiple-year and multi-year contracts for production and performance-based logistics, or PBL, contracts for sustainment.  In fact, we are working today with Lockheed Martin to define the parameters of a sustainment PBL that meet our warfighters' operational demands, our taxpayers best-value demands and our enterprise's demands for greater organic involvement in F-35 sustainment.

In closing, let me reiterate that I'm proud to be with Ms. Lord here today to represent the men and the women of the F-35 enterprise.  I'm excited to be your program executive officer, and I'm looking forward to your questions.

Thank you.

STAFF:  We're going to start here with Tony.

Q:  Ms. Lord, for -- for both of you, a couple weeks ago you acknowledged that there was going to be delay of full-rate production decision.  So someone not involved in the F-35 program is going to ask, why is the Pentagon putting out contract for 478 more planes when they're delaying what they call full-rate production, while the combat testing intended to improve whether it's effective and suitable, hasn't been finished yet, and won't for -- for, you know, for maybe a year?  So a layman's question.

And then for Gen. Fick, just some figures here.  Yesterday it was a $7 billion contract mod.  Was that the first tranche of the $34 billion, or was that more like last November, when you put $6 billion on in long lead?  And then joints at the simulation environment, what's the earliest you think it'll be up and running?

(UNKNOWN):  Ma'am?

MS. LORD:  So first of all, the department has the full confidence in the planes that are flying today.  The Air Force and the Marine Corps have both deployed squadrons and are very, very happy with the capability.  The criteria in terms of getting out of IOT&E is to test against threats that we will see 10 years from now in the densities we would see 10 years from now.

We can only do that in a synthetic environment.  So we've completed over 90% of the testing.  We are very confident in the configuration of the aircraft and we are just working on the nuances of working against these advanced threats.

So the public should be extremely comfortable with the aircraft that is out there today.  The full rate production decision basically codifies the final capability of the aircraft when we get through the testing versus advanced threats.

STAFF:  Okay.

Sir?

GEN. FICK:  So relative to your -- your question on the $7 billion, so this is part of a series of contract awards and obligations that have been made over the course of a number of years in the execution of this effort.

So if we look back to what was previously announced, we previously announced 255 aircraft along with about $11 billion obligation for advanced procurement, economic order quantities, and worked on previously.  And then on the undefinitized contract action, or UCA, associated with the ongoing work for the U.S. and partners in lots 12 and 13.

The announcement yesterday added 114 aircraft to that total, and added an obligation of about $7 billion for work to begin on those aircraft.

In addition to that obligation, we also obligated an additional $10 billion or so to Lockheed that was not included in the announcement because the announcement was already made -- previously made for the initiation of those deals.  So that second $10 billion really is for the completion of the initial work done on those 255 first aircraft.

We are --

Q:  Can you total it up?

GEN. FICK:  We are -- right.  We are still left, then, with roughly 100 aircraft to go and about another $7 billion to go, associated with the work to be done for U.S. services in accordance with the P.B. '20.  So we don't have that budget yet, we can't make that contract award for the final aircraft until such time as we have the statutory authority to do that.

Q:  $27 billion, roughly, of the $34 had been obligated piecemeal over the last couple of years?

GEN. FICK:  You got it.

Q:  And $7 billion to go?

GEN. FICK:  You got it.

Q:  Okay.  The JSE?

GEN. FICK:  So relative to the JSE [Joint Simulation Environment], so -- so the JSE is a synthetic -- for those of you who aren't familiar with the program, the JSE is a synthetic environment that allows us to fully assess the capabilities of the F-35 against a wide range of air and surface threats in operationally representative threat densities.

That the director of Operational Testing and Evaluation, in his role in assessing the program, looks at the current threat as well as the threat 10 years into the future.  And getting into an environment like the JSE is critical to our ability to assess the system against that future threat.

The integration of the F-35 into the JSE, as was mentioned previously, is taking longer than anticipated.  The validation and verification -- early validation and verification rounds for the JSE will begin this fall, I believe mid-November.  I'm expecting those to begin.  And then they'll continue throughout the spring.

We believe they'll be ready for test in the March-April timeframe, should conclude by June or July.

Q:  Thank you.

STAFF:  Lee

Q:  Hi, thanks for doing this.  Could you please explain for the layperson why a brand-new aircraft isn't 80% mission-capable, right or above that?  Since all the parts are new.  Just because when we've had this conversation before, it's because of the cannibalization of parts with older aircraft.

MS. LORD:  Right.  So let me give that a shot, and then I'll hand it over to Eric.

Traditionally, we're trying to get capability fielded and then we are building the sustainment tail behind that.  Right now, as Eric mentioned, we have ramped up significantly throughout the integrated supply chain.  And what we have found is we did not have the capacity and the throughput for repair of repairables and spares.

So we are lagging in some of those repair parts.  We are particularly having issues in three areas.  One is canopies, two is engine fuel hydraulic tubes.  And then wing tip lenses.  So those are the areas, the particular parts, that are holding us back.

So we believe we are making very good progress and moving forward.

(CROSSTALK)

GEN. FICK:  You did really good.  Ultimately, I would just -- I'd amplify a little bit by saying, you know, as an aircraft is fielded and you -- and parts fail -- and parts ultimately do fail -- you take them off and you replace them with another.

In my prepared remarks, I talked a little bit about the rate of acceleration, the ramp that we've been through from production perspective that affects not just Lockheed and how they process aircraft through their production line, but all of the lower-tier vendors as well that are now producing the parts at dramatically increasing rates.

And then they must also produce spares, even above those rates, right?  And making that ramp not just from a production perspective, but from a purchase of spares perspective, has been challenging.  So one of our initiatives is to push additional spares to the field, putting additional spare purchases on contract so we can get those ready for the maintainers to install them.

But then also, to take action, both within the existing supply chain and to stand up organic depot capacity to repair the parts as they come off so that they're available to the field to reinstall them on the aircraft.  That's been a huge part of this effort to drive higher mission capability ratios, making sure the maintainers have the parts on the shelf when they're ready -- when they're needed.

STAFF:  Valerie?

Q:  I've got a couple kind of finicky numbers questions.  So if I -- if I heard you right, I think you said lot 12 has 149 aircraft in it, is that correct?  And if so, I think the original number that was given when you were -- when you guys did a handshake deal, was 157 aircraft.  So what's the reason for that difference?  Were those the Turkey aircraft?

And then, secondly, you're saying that there's an average 12.8% reduction for lots 12 through 14 for all variants.  And again, in the handshake deal, it was said that there would be a drop of around 15% from lot -- sorry, lot 11 to lot 14 across all variants.  So is that just a non-apples to apples comparison?  Can you kind of put it in context for me?

GEN. FICK:  Sure.  I can't address the 157 number right off the top of my head, so I'm going to have to go back into – in time to figure out where that number came from, and we'll come -- we'll circle back to you on it.

Relative to the discrepancy between the 12.8% and the roughly 15% reduction that you may have heard, the air vehicle reduction from lot 11 through lot 14, for the A models, was 14.4%; for the B models, 15.3%; and for the C models, 14.6%.

When we add in the engine, the reductions for the fraction of the -- of the overall unit recurring flyway cost that is attributable to the engine, reduced at a much lower rate.  So the engine rates are only down on the order of 3% between lot 11 and lot 15.  So when you sum those together, it brings the overall reduction in cost, at the unit recurring flyway level across the airframe and engine, down to roughly 12% to 13%.  That's the difference.

Q:  Thank you.

STAFF:  John?

Q:  This is for Ms. Lord.

Dr. Roper at the Air Force is pursuing something called Digital Century Series, which he thinks that in five years, they could get an airplane of the next technological generation to outfit the Air Force.

Could you explain for us how, at least for the Air Force and maybe for the other services, the F-35 buy might be modified to accommodate Digital Century Series airplanes and -- and how that will also be squared against the F-15EX?

MS. LORD:  We're staying the course with the F-35.  I will say that Will Roper and the Air Force team are doing some very innovative and interesting things in terms of developing new fighter aircraft.  We look at the total capability here versus the adversary, and we find a place for the F-35, the F-15 and the new Century Series.

So we continue to fight with what we have today and focus on the future and optimize what we will have for our fleet in the future.  But we are taking all of this in aggregate with a mission engineering approach using all the assets we have.

Q:  So at this point there's no revision or -- or rethinking of the -- the 1,763 for the Air Force?

MS. LORD:  No.

Q:  Yes, Courtney Albon with Inside Defense.  Gen. Fick, I wondered if you could provide some more details on the technical issues that you're working through with the joint simulation environment?

And then, second, you mentioned the PBL force sustainment.  Lockheed has said that having some sort of PBL is crucial to achieving the $25 million cost per flying hour by 2025.  Is -- is that your position as well?

And do you -- do you now think that that -- that goal is achievable?  We've heard some mixed things from the Pentagon on that.

GEN. FICK:  Sure.  Okay, first, relative to the JSE, I wouldn't characterize that we have any specific technically challenging hurdle to overcome, but there are a lot of -- just a lot of smaller hurdles to overcome.

Ultimately, what we're doing is we're taking a digital representation of the aircraft, right, and we're integrating it into a synthetic representation of the threat space, right, to include ground threats, air threats, both blue and red weapons, environmental effects, all of those things.  And we're integrating them together so that the systems talk to one another digitally.  And that's just a very, very large task to get done.

We got off to a slow start due to some disagreements with Lockheed Martin on how to proceed.  You'll recall that, back in the early days of the program, there was no JSE.  There was VSim, which was a Lockheed Martin proprietary environment, in which we were going to do that work.

We elected about two PEOs ago to pull that work out of that proprietary environment and put it into a U.S. government-owned facility in the JSE that will allow us to then integrate other aircraft, perhaps from other manufacturers, and do that system-of-systems work later, right?

So that's, kind of, the reason we went to the JSE.  Again, there's just simply a lot of work to be done, and as we do that integration, and as we make progress, the system stays -- the system rolls more of those pieces in to the fights; the fights get more complex; and then you find more things relative to the interactions between all of those systems.

Q:  Did the program office underestimate how much work needed to be done?

GEN. FICK:  I don't know that we underestimated how much work to be done, but we -- we struggled getting out of the gates, in particular with our relationship with Lockheed and actually doing that work.

So the relationship is very much better now.  We're working side by side with teams of embedded Lockheed coders and engineers sitting side by side with the NAVAIR folks at Pax River, doing that integration.  And I think they're making decent progress.

STAFF:  So we have a little more time, so we're going to go Marcus, Nick, and Jon.  Go ahead

Q:  General, both of your predecessors have talked about the strained relationship with Lockheed Martin and Pratt & Whitney over the years.  I was hoping you could -- get your thoughts on how you characterize the relationship now and where there might be areas for improvement?

GEN. FICK:  So I think, at -- between myself and Greg Ulmer, and I guess I would characterize between Mr. Guerts and Michele Evans, and likely between Ms. Lord and Marilyn Hewson, that the relationship is much improved.

I get -- I have daily conversations and e-mail exchanges at my level.  I know that Mr. Guerts and Ms. Evans talk regularly, as well as Ms. Lord and Marilyn -- well, I'll let you speak to your own relationship.

But I have a -- I think, a very open and trusting relationship with my counterpart at Lockheed Martin.  It is still a business and they are still driven by business-focused goals, and we work through the balance of that every day, working to find the balance between a taxpayer and warfighter-friendly solution that meets Lockheed's business objectives.

We need them to stay in business to continue building these aircraft, but we're not doing it at any cost.

Q:  Can I ask a quick follow-up on the canopies?  Are they just breaking?  Are the canopies on the planes just cracking or breaking, or are they breaking at a higher rate than other aircraft?

GEN. FICK:  The issue with the canopies has to do with the loss of the coating that's applied to the outside of the canopy, and we're working to mitigate that with the prime contractor, Lockheed and their subs GKN and PPG.

STAFF:  Nick?

Q:  Nick Schifrin, PBS NewsHour.  Thanks for doing this.  Under Secretary Lord, if I could go back to Turkey?  A couple of questions.  The S-400, what is the status of that deployment?  Has it been moved around, has it been turned on?

And has Turkey slow-rolled or delayed the parts that you talked about that it is still working on through March at all?

And then just lastly, you've talked about the cost increase because of Turkey's removal from the program in the past.  Has that cost increase stayed the same?

MS. LORD:  So, first of all, we enjoy very, very good mil-to-mil relationships with Turkey, and Turkey is an excellent supplier.  At this point, I'm getting lost in some of your questions here.  You were asking -- remind me again?

Q:  The S-400 --

(CROSSTALK)

MS. LORD:  Oh.  S-400, we anticipate that being fully operational towards the end of the year.

Q:  And then you said excellent supplier, so no delay in Turkey's supplying --

MS. LORD:  No.  Turkey has been very forthcoming and, again, we're on the path to March 2020, to transition all of those parts out.

Q:  And cost increase?  You've said it before, but has it --

MS. LORD:  Well, we -- we, the U.S., because we took responsibility for moving the parts out, absorbed about a $600 million bill for that.  We are still working through any unit price adjustments.  We think those will be relatively modest, but any adjustments that might take place due to those 900-plus parts moving.

STAFF:  Jon.

Q:  When will the delay in the full rate production decision actually start to affect production?  And is it inevitable that that delay will delay production down the line?  Or could you potentially, you know --

MS. LORD:  I will issue documents before the Christmas holidays on our path forward with an APB and so forth.  And we do not see this constraining production whatsoever.

Q:  Wait, can I ask a clarification question?

STAFF:  Hold on one -- hold on one second.

Go ahead.

Q:  Thanks.

Q:  Hi, Pat Host from Jane's.

What role is OSD and the JPO playing in the development of the Air Force's JSE?  Because Randall Walden made it sound like the Air Force isn't doing a whole lot of talking with the Navy about lessons to learn from their JSE, and we all know how messed-up the Navy's JSE is.

MS. LORD:  Oh my.  So one of the functions of OSD is to act as the corporate entity across all of the services.  So that's the reason I have a technical staff working under Kevin Fahey as ASD(A).

And what we do is bring the services together to make sure we pass along critical information.  The main way I do that is, I meet biweekly with all three service acquisition executives, and in the off week, I meet with them individually.  So whereas Waldo might not be totally up to speed with everything going on in the Navy Joint Simulation Environment, I will tell you that members of Hondo Geurts' team, as well as Will Roper's team, are very involved in that.

As you know, we have both Air Force and Navy billets in the Joint Program Office, and we do cycle people in and out.  We also have integration offices.  So one of the reasons OSD exists is to make sure we have that cross-pollination, if you will.

STAFF:  We're going to go to the last one right here.

Mike?

Q:  Thanks.  Can I just get an update from you guys on this new pricing and how you expect it to drive international demand?  And if you could run through the list of folks that are solid in the international new interest bucket, and then maybe a little bit further afield in terms of competitions that you might be eyeing.

MS. LORD:  So let me just say, there is no significant change in pricing here that I think would drive any decisions one way or the other.  We have quite a few active discussions on FMS cases.

GEN. FICK:  We do.  We have active -- active discussions ongoing with a number of FMS customers.  We've talked to Poland, Singapore, among others, who are interested in pursuing the F-35.  That overall list is about 10 different countries; I won't rattle them all off now, but I think you can look to anyone flying a U.S. MDS today and think of them as potential customers for the F-35, off into the future.

STAFF:  Ma'am, we're going to go ahead and stop there.  Do you have any closing remarks?

MS. LORD:  Just want to thank you all for coming today.  And you will see a renewed focus on sustainment over the next 12 months out of my office, working with the JPO.  We are taking a very data-driven approach towards a potential PBL with Lockheed Martin.  So we are working hard at understanding where the operational availability, the mission capability and where the costs per flight hour are being driven, and making sure we come up with a win-win situation for both the warfighter as well as the taxpayer.  Thank you.

Q:  Clarification on the thousand parts, Ms. Lord?  Are those thousand individual parts or a thousand part types?

MS. LORD:  Individual parts.

Q:  Thank you.

STAFF:  Okay.  Thank you, ladies and gentlemen.