Lockheed Martin F-35 Lightning II - Procurement and International Participation

Procurement and International Participation

While the United States is the primary customer and financial backer, the United Kingdom, Italy, the Netherlands, Canada, Turkey, Australia, Norway and Denmark have agreed to contribute US$4.375 billion toward the development costs of the program. Total development costs are estimated at more than US$40 billion (underwritten largely by the United States), while the purchase of an estimated 2,400 aircraft is expected to cost an additional US$200 billion. The initial plan was that the nine major partner nations would acquire over 3,100 F-35s through 2035. Sales to partner nations are made through the Pentagon's Foreign Military Sales program.

There are three levels of international participation. The levels generally reflect the financial stake in the program, the amount of technology transfer and subcontracts open for bid by national companies, and the order in which countries can obtain production aircraft. The United Kingdom is the sole "Level 1" partner, contributing US$2.5 billion, which was about 10% of the planned development costs under the 1995 Memorandum of Understanding that brought the UK into the project. Level 2 partners are Italy, which is contributing US$1 billion; and the Netherlands, US$800 million. Level 3 partners are Turkey, US$195 million; Canada, US$160 million; Australia, US$144 million; Norway, US$122 million and Denmark, US$110 million. Israel and Singapore have joined as Security Cooperative Participants (SCP). Japan announced on 20 December 2011 its intent to purchase 42 F-35s with deliveries beginning in 2016 to replace F-4 Phantom II aircraft. The country wants at least 38 of the F-35s to be assembled in Japan.

By February 2012 many changes had occurred in the F-35 order book. Italy became the first country to announce it was reducing its overall fleet procurement, cutting its buy from 131 to 90 aircraft. Other nations reduced initial purchases or delayed orders, while still intending to purchase the same final numbers. The United States canceled the initial purchase of 13 F-35s and postponed orders for another 179. Britain cut its initial order and delayed a decision on future orders. Australia decided to buy the Boeing F/A-18E/F Super Hornet as an interim measure until the F-35 is ready. Turkey also cut its initial order of four aircraft to two, but confirmed plans to purchase 100 F-35As. Turkey will buy four F-35s to be delivered in 2015 and 2016, while the order may be increased from 100 to 120 aircraft. The Netherlands and Norway were considering their options and may cut or delay their orders. All of these changes in procurement resulted in increased prices for the aircraft and thus increased the likelihood of further procurement cuts. The Auditor General of Canada Michael Ferguson published a report on 3 April 2012 outlining problems with Canada's procurement of the jet, including misinformation about the final cost of the jet. According to comments Ferguson made 5 April, the government knowingly understated the final price for Canada's 65 jets by $10 billion, igniting heated debate over the purchase. Canada's Conservative government had previously been saying it would not reduce its order, claiming an anticipated $75–80 million unit cost per fighter, and budgeting for cost overruns of ~10%. By 6 April the Canadian procurement was being termed a "scandal" and "fiasco" by the media and now faces a full review to determine whether Canada will buy any F-35s.