welcome to "this week in defense news." i'm vago muradian. the u.s. army is increasingly relying on soldierings to shape what it buys and we'll get an update on the latest network integration evaluation. but, first, the joint strike fighter program is under more scrutiny than ever, facing budget pressure and tough questions from nearly all of the program's nine partner nations, conceived nearly two decades ago as a stealthy super sonic jet, available in three versions and packed with unprecedented sensors, jsf was going to feature groundbreaking technology at an affordable price, thanks to vast production quantities spread across many nations. but development has slipped, four years behind schedule, costs have soared and top pentagon officials dialed back on the initial production quantities and have threatened to eliminate the marine corps straight takeoff and vertical landing version unless performance improves over the coming year. despite the criticism, jsf appears to be delivering. the planeperformed admirably in recent flight tests, including three weeks of vertical

takeoffs aboard u.s.s. watts. key systems remain, key electronic systems need more development and as nations cut back on purchase plans, sources could soar further. tom, it's great to have you on the show. >> thanks for having me, vago. great to be here. >> let's start with the first question, it is budget cutting season, everybody, all governments are really focused on trying to reduce their costs somehow or another. there's growing talk about cutting back on total production numbers, the talk is a lot less today about cutting the marine version of the airplane. what, if any of these threats come

proposition associated with f- 35 that was very valid when the contract was sign inside 2001. it's even more valid today which is the ability to fly and fight as a joint service multi- national operation, same basic equipment, get economies to scale and economies of commonality and transfer that across the whole operational base of the airplane. >> operational inoperablity as well. you guys are negotiating the low rate contract lob 5. how much is it going to be, how many aircraft is it going to include and when are we going to be seeing a conclusion to those negotiations. >> congress appropriated the airplanes for l-5 in april of this year. we are in the process of just beginning to z the negotiation for that production lot today. the congress appropriated 35 airplanes which is likely the quantity will be somewhat less than that as airplanes are used for other purposes in terms of building and things like that. somewhere between 30 and 35 airplanes. we'll start that negotiation by the end of this month. >> do we have a cost figure at

this point at all that you'd be comfortable talking about? >> we have submitted a cost per variance. all three varyiants are in the production lot, but it's probably not appropriate to talk about that as we are just starting negotiations. >> jsf critics always talk among other things about the need for the airplane, but also the high unit cost. let's start with the unit cost. what is the unit cost going to be for this aircraft, okay, if we're not talking about lot 5, but further lots downstream, how are you going to be able to buy a production aircraft in the next few years >> the production cost for our business comes down a curve that decreases with time and decreases with -- increases with time and decreases with quality. it's also a function of total quantities bought. you often hear costs quoted around both of those. cost is a complicated subject to discuss on the program because there are three varyiants, they're clearly coming down the cost improvement curve. we've dropped the cost of the airplane about 42% in the first 40 production lots and we're still on a path to aggressively drive that down. if you look at touch labor,

we're on an aggressive learning curve that is as good as we've seen in our industry before. a lot of our costs are in the supply chain, so there's a lot of negotiation that has to take place with our suppliers as we do this. there are a lot of factors that go into this. again, if we can come down the cost quantity curve, we can drive this airplane down to the point where it's very competitive with airplanes that are being bought today? >> what's the ballpark price that we're shooting for? is it going to be an $80 million per unit airplane? >> again, it's somewhat subjective to the quantities that are bought. >> agreed. >> if you look at the program of record today and we come down over the course of the program, we'll be down in the $defendant million -- if you are buying it in today's 52 dollars, in the $70 million category. >> let's talk about the need for the airplane. critics say such a short-range aircraft isn't needed. why is this needed for the future? >> the airplane has a high amount of fuel fraction. all three airplanes are considered long-range fighters. they may be shorter range compared to bombers or things

that have lots of fuel, but the fuel quantity does drive the size of the airplane and we're somewhat constrained by that fighter airplane. >> it's beyond the aircraft it's going to replace, the f-16 and 18. >> considerably beyond, yes. and we carry in the stealthy mode we carry the weapons internally which yees increases the drag which leads to the increases we are seeing. we're meeting requirements today on all three varyiants. >> the program also has been criticized by some for the cost per flying hour. and, you know, you and i have spent a lot of time over the years talking about this issue. and there's some folks who point to it and say, well, you know, twice the cost per flying hour of legacy aircraft that it will replace. what is the cost per flying hour and what is going into that cost per flying hour? are you calculating it the same as the aircraft that it's replacing or is it something that's actually going to cost more, but you get a greater benefit for the money you're spend sng >> cost per flying hour is a projection at this point. we don't have any operational airplanes out there flying, we have test airplanes out there. we'll soon start the testing in

which we'll be building up the operational fleet and we'll be measure it. we're looking for projections. we tried to drive down the maintenance man hours per maintenance task and put the kinds of things in the airplanes that if you are a maintainer you make sure you design into the airplanes. we're talking about economies to scale designed with a global fleet that we'll be managing across the airplanes. we're talking about hmfñfeatur that should drive the overall cost of ownership down. in addition, if you look at these long-term peacekeeping or combat-type operations that involve all three services and our allies, the cost of conducting those operations should go down by just the fact that there's common equipment being used. so i think that the focus has been in all the right areas to drive down the cost of ownership. our current cost models that we use to project forward many, many years, our estimates go out 50 some years now, those cost models are primarily based on the way facts have been gathered on legacy operations. so we haven't incorporated the real changes that we're going to see in f-35, for good

reason, we haven't seen those changes yet, they're not operational. >> and that you guys try to give a more fullup calculation of what those costs are going to be over the lifetime of the airplane the. >> that's a very important point, vago. we try to collect every cost that goes into owning and operating the airplane. that's not the case with the legacy costs are collected for airplanes that are flying today. >> does that hurt you, though, in some respects because it gives you a higher number? >> it's a more realistic number. i think if you look backwards and say if i put the same set of ground rules against today's airplanes, i could get a good sense of what those airplanes really cost to operate and then i can do a real comparison. i think there's values to it. it does tend to get taken out of context. >> up naryx, more on the

we're back with tomorrow burgess, executive vice president and manager of the joint stryker with lockheed martin. there are nine partner nations involved on it. yet virtually each and every single of those partner nations are having misgivings, budgetary or otherwise, you know, canada, britain, australia are relooking their plans, italy is in financial turmoil right now. if you look at denmark, norway, netherlands, they too are looking at how much they buy. what are you going to say and how do you keep all of these countries on this program given that they have an industrial component on it as well that is

tied to whatever they acquire in some respects? >> the international dimension of this program is really critical to the project for a number of reasons. number one, it's envisioned that we're going to fly and fight as coalitions going forward and our front line allies fly and fight with u.s. airplanes, the u.s. fighter. this is a chance for them to recapitalize and take advantage of the bigger recapitalization that's going on with the u.s. services. it's very important from that perspective. from an industrial perspective, part of the agreement between the governments when they created this program was that there would be economic ties that came along with it. if you think about it, the defense industries in small currents that are buying the f- 35 will not be fed directly by their government. they'll have to participate -- >> fight for work on the program. >> very important. we do use the best value model as opposed to the old traditional offset model which is very important. both dimensions of the project are really key to the program. i also work all the international aspects of it, and i can tell you that all the partners are on a track to

procure the airplane pretty much to their original plan and pretty much in their original quantities right now. there's been some movement, but really no, sir at much movement as we've seen inside the united states services. but it's all a big operation and an integration of all those requirements. now, all those orders will come to us as one contract. so we'll get a single contract with international and domestic orders in it and then you get to leverage buys. >> but costs go up if quantities 2 down. >> as people move around. one of the biggest programs with lots of participants is you can have a big effect on the program. >> who do you get back into the program? japan is interested, so is south korea. what other currents >> >> go beyond the partners, there's a few countries that would qualify for foreign military sales category. >> israel, for example? >> israel and singapore are both part of the program in a different category, not partners, but monitoring the program, and japan is probably the most active one right now after israel. japan is in the middle of an active competition, we're

competing there with the f- 18ef. perhaps further out, you might see south korea or one of the other countries. but those are the near term. >> if i look at the flight test program now, over the past few weeks -- i mean, months, it's been progressing faster than some people expected, many first, including the maidency trials. what have you been learning through the flight tests which you didn't know already and is it validating a computer model that you've been using to develop and engineer the aircraft? >> our models today are very good in the large part of the flight envelope. there are still parts of the flight envelope that are nonlinear and the development of the airplane is not completely predictable. we basically are seeing things that are pretty much in line with our forward-looking project and in the bulk of the envelope, they're pretty much right on. we've completed a good bit of our ground testing, structural strength testing on the airplane and all three variance have had a good year flying.

they were about 10% ahead on flights and flight test points on all three models. we had a great at-sea period on the u.s.s. watts. we've showed that the airplane can perform on the ship and also the ship itself doesn't need any modifications to handle the aircraft. >> we're talking about burning holes in decks and stuff like that? >> yeah. >> jets will gend on the new helmet site that gains all the infrom ared, optical features into the adviser, but that's -- advicor, but that's been jittering a little bit. will you have to replace the system at some point? >> it's an integral part of the missions system on the aircraft and as such it's being developed along with the airplane. all those little what i call small technical issues like jitter and those kind of things are pretty much behind us right now. the helmet has been flying on the first flight and the first seven. we've got about 1200 flights on it now. the pilots seem to like it. we have not flown at night and one of the questions is close tracking at night using the

optical sensors on the airplane and not using night vision goggles. that test is yet ahead of us. there are some projections we might be marginal in terms of some of the aspects of that and so there is an alternate path being looked at right now if it doesn't come through as planned. the helmet itself is proceeding quite well right now. >> the aircraft has half a million lines of code in it. some say the quarter is not fully stable at this point, that it's immature. how would you respond to that? >> i would say the software on the airplane has been nothing short of tremendous. we have about 80%, 85% of that code flying on the airplane today, another 10% will come on at the end of this year in what we call block two aid goes into test. much of the remaining development is in the area of centrifuge and weapons. so i think we're very satisfied with the way this software has been performing on the airplane to date. >> we've got less than two minutes less and i've got three questions. let me start with the first

one. the program really was supposed to benefit from past experience and lessons learned in order to avoid some of the past mistakes. how do we end up where we did in terms of the delays and some of the cost increases that we ended up seeing? >> we had a major reset in the 2004, 2005 time frame. we were designing the airplane sort of in series, not in parallel and we were doing the air force airplane first when our weight models started predicting the potential of a problem on the marine corps solo jet which is much more sensitive to weight. at that point in time the program stopped and we were given some direction to change the order and go attack the marine corps, the most challenging of the three designs first, and we did that. that was about another 18 months of engineering that we hadn't planned in the original schedule. and most of the follow-on since then has been related to that and in 2010 we also extended a flight test program, added quite a bit of additional testing in, mostly driven by the fact that the flight sciences testing on the snowmobile jet was lacking behind at the time.

since it's caught up, we've made up for that behind- schedule situation and as i said, we're running ahead of schedule right now. >> we have 30 seconds left. i wanted to ask you about whether you guys are really selling this aircraft the wrong way. it's seen as an airplane, but if you talk to anybody who's involved in it, they talk about the intelligence, surveillance and reconnisance capabilities, the fact that there are various types of aircraft you're not going to need because you have the aircraft. is it a misnomer to keep talking about it as an airplane as opposed to really being a system or a first true system of systems? >> i think that is an excellent point, vago. and if we're misselling it, it's not intentional. the airplane is a fighter, it looks like a fighter, it's stealthy, it has all that pi ghaz that goes with being a fighter, but it's much, much more than that. it's a holistic solution to the future battle space requirement for sensor, node and a stealthy fighter. it also brings in the ability to network and connect airplanes from multiple services and multiple

countries. i mean, it is a transformational leap forward in military capability to be shared by all three services and our allies. it's also a leap forward in terms of our ability to maintain and operate the airplane going forward. so i think it's much more than just an airplane. >> sir, thanks very much for joining us. coming up next, the changing role u.s. soldie

for decades army officials set programs under way, only to wait many years before testing technical performance. now the army the gathering prototypes and putting that gear into the hands of battle- tested soldiers who battled under :c now multi-billion dollar programs are being canceled from field trips in the field. kate branon, joined sop army leaders at white sands missile operation last week for the start of the integration evaluation. kate, welcome back. >> thanks for having me. >> so how different was this

exercise that's taking place right now out in the american southwest from the exercise that took place earlier this year? >> the first one was this summer, and the big difference that i saw was what's happened in between the exercises, the army has based on the feedback from soldiers this summer canceled the jeeters joint tactical ground mobile radio program after soldiers said it was too heavy, it wasn't what they were looking for in the field. and then they also sort of altered some other programs to fit more in line of what soldiers were saying. >> the net warrior program, for example? >> the net warrior program. they made it lighter, simpler to use, focusing on the hand- held device like a smart phone. so -- >> that's the soldier command and control system wherein individual soldiers can get data? >> right, for dismounts. based on that, soldiers see that senior army leaders are listening to them almost for the first time. they're making decisions based

on what they're saying, and so the feedback i heard from soldiers down at whait sands -- white sands was just really honest, really blunt. and i think they know that they're being heard and therefore they feel sort of more empowered and more motivated to participate in these evaluations. >> how does industry like this change because it's potentially problematic. they don't have a lot of time to gear up. it's been less than six months since the last such major exercise and are all companies best equipped to deal with it, including some smaller companies? >> i think generally industry is thrilled that the barriers to entry that were part of future combat systems, you know, the massive program of record, prime contractor boeing, you couldn't get into it if you weren't part of that program. it was a huge stove pipe. so generally they're thrilled that now everyone can come, everyone can play. it's difficult -- you have to invest a lot of your own resources as a company. so for small businesses, you have to send a lot of field

service representatives down there. they might not be able to afford that, and industries also waiting to see how the army will procure things at the end of the day. with straightforward competitions, you submit your bid, you wait to hear what happens. with this it's way more influx, it's unclear on what kind of awards the army will award at the end of it. >> but some of them are moving very, very quickly when the army just awards stuff. we don't have a lot of time left. i want to shift gears back to washington and ask you about the super committee. what's the status on the deliberations? what are we going to hear, when are we going to hear it? >> the super committee is running out of time. their deadline is november 23rd to approve a plan that will then go to both chambers. that's the first hoop of the super committee process. then the house and senate have to vote on it, then it has to go to the president. he can veto it if he chooses to. so even with the november november 23rd deadline past, there's a couple more hoops to go through.

see questration is the looming threat that the pentagon is worried about. senator mccain says he feels like he has the support, that if the super committee fails, he'll be able to write legislation or revive legislation that protects the defense department from those cuts. but everybody is watching for the success or failure, really for the signal it sends to the market and to the world. >> do we know what's going to happen on defense? is there a consensus view of what we're going to see on defense at this point in the 30 or so seconds we've got left? >> i don't think so. i think the super committee will not -- if they do come up with a plan will not hit defense hard. if they do, they'll probably look toward spending. >> so the operational continues to spend and zero it out and make them all work out at the end of the day. >> right. >> under the budget control act. kate, thanks very much. we appreciate it. coming up in my notebook. a lesson çñ

after high profile program failures, chief among them the future combat systems to modernize its force under one giant $90 billion plus effort, the u.s. army has concluded it needs a new acquisition model. instead of developing requirements in a seeming vacuum, then launching massive acquisition programs, only to find that critical technologies are unavailable, the army is now asking its soldiers, among the most combat tested in generations, to tell leaders what they need, then letting them field test new gear to determine whether it works in the real world. kudos to the outgoing vice chief of staff, general pete coreli who championed this new approach. feedback from the thousands of soldiers who participated in these network integration evaluations in new mexico and texas have led the army to change what it buys, including canceling a major radio program and restructuring the net warrior soldier command and control system to make it lighter and more user friendly. so far the focus of these

evaluations has been network gear. but vehicles and other systems like unmanned aircraft are increasingly being tested as well. as the pentagon tries to get the most out of each acquisition dollar, the other services must take cues from the army which is harnessing its most valuable asset, its soldiers to ensure their successors will be like them, the best equipped in the world. thanks for joining us for "this week in defense news," i'm vago muradian. you can watch this program online at defensenewstv.com or you can e-mail me at vago@defensenewstv.com. i'll be back next week at the same time. until then, have a great week.