Lockheed Says It’s Self-Funding Prototypes. Could a ‘Ferrari’ F-35 Be One?

Lockheed Martin is taking a “home run” approach to self-funded research and development by going ahead and building full prototypes to show to the U.S. government, CEO Jim Taiclet said Oct. 20—a plan he hinted could apply to technology the company is hoping to shift to the F-35 from its rejected Next-Generation Air Dominance fighter.

Over the past five years, Taiclet told reporters on an earnings call, Lockheed has shifted its approach on so-called independent R&D to focus more on “big-bet home-run heavy allocation … where we are actually building prototype vehicles to demonstrate to the government, perhaps alongside the new entrants, where we can show them a working vehicle that we can produce at scale, that they can rely on.”

As examples, he cited space-based interceptors—the firm is planning a demonstration in 2028—and a new autonomous Black Hawk helicopter—unveiled last week.

Of particular note for the Air Force, he also indicated Lockheed and its advanced projects Skunk Works division plans to invest in “this notion of sixth-generation technology insertion into the F-35 and F-22.“

“How do we take the Skunk Works activities that were designed to go into NGAD and other potential opportunities, some of which are classified, but we developed these sixth-generation capabilities, whether it’s stealth, propulsion, inlet designs, coatings, those kinds of things in … Skunk Works, which we can actually backward integrate into F-35 and F-22 and are doing so,” Taiclet said.

Taiclet has raised the idea before, saying in April that Lockheed could add new NGAD-derived capabilities to the F-35 that would create a fighter with 80 percent of the NGAD’s capability at 50 percent of its cost. He referred to the concept at the time as a “Ferrari F-35.”

A Lockheed spokesperson declined to say specifically whether Taiclet meant to say that the company is working on its own tricked-out F-35. Instead, they said he was referencing technologies “broadly.”

In addition to the projects Taiclet mentioned, Lockheed has also introduced its concept for a fighter escort drone called Vectis—similar to the Air Force’s Collaborative Combat Aircraft program, but not specifically targeted for it, officials said.

“We’re going to keep answering [requests for proposals and requests for information] in the traditional way,” Taiclet said. “But we are now in the business of self-funding prototypes at the corporate level, with which we can actually demonstrate real capability leapfrogs to our customers.”

Lockheed CFO Evan Scott said the company ended the quarter with a backlog of 265 F-35s, “and that’s before adding the extra 151 that came in the first week” of the quarter, when the company and the Joint Program Office finalized the Lot 18 and 19 contracts. He said the company has confidence, given steady production and strong support from both Congress and the White House that Lockheed’s goal of an average rate of 156 jets per year is sustainable.

“As we really hit a good groove on production …that will continue to translate into operational results,” Scott said. But the biggest growth driver in F-35 will be from sustainment, as the number of aircraft in the field continues to grow, he said. This year, production of F-35s will fall between 175 and 190 airplanes, and there will be “a big focus on completing Block 4 development,” he said.

Taiclet said earlier this year that he believes testing for the Technology Refresh 3 upgrade—on which the Block 4 improvements depend—is largely complete.

“We have the best collaboration we’ve ever had and openness with the government,” Taiclet said. Collaboration with RTX, which provides the F-35 distributed aperture system; BAE Systems, the electronic warfare subcontractor; and Northrop Grumman, which makes the F-35 center fuselage and its radar, is at peak levels, and government is working to “remove barriers and delays … which heretofore hadn’t been addressed that aggressively.”

“We’re in a positive conversation with all the parties that are involved in this Block 4 modernization program, which is really, really important to keep everything on time, to keep the production line going. So I’m confident that we will have a successful Block 4 rollout,” Taiclet said.

He added that the upgrade is “super challenging, by the way; some of the technologies that are coming on to the jet and having to be integrated are complex, but I do think that it’s just going to make the aircraft even more dominant than ever before. And you know, any ex-pilot or current pilot can tell you, if you’ve got the best EW, the best sensor suite and the best weapons and the best radar, you’re going to win, and that’s what we’re out for.”

Taiclet said 46 F-35s were delivered in the third quarter, and that the rate of deliveries is now “essentially one aircraft delivery every working day of the year.” Some 1,200 F-35s have been delivered to all users since the program’s inception, he said, and they have amassed more than 1 million flight hours.

“Over the years to come, the U.S. and 19 international allies will continue to progress toward a planned global fleet of over 3,500 aircraft” Taiclet said.

Scott said that Belgium has signaled it wants to buy a further 11 F-35s and Denmark an additional 16 aircraft to bolster their fleets.

Taiclet and Scott also said that there are no further charges on a classified aeronautics program on which the company took a $950 million loss in the second quarter, and Taiclet said those actions were made to clear the decks and ensure the fixed-price program is healthy going forward.  

In the second quarter call, Taiclet called the effort “a highly classified program that can only be described as a game-changing capability for our joint U.S. and international customers, and therefore it is critical that it be successfully fielded.”  With the “rapid incorporation of lessons learned,” Taiclet said Lockheed will reduce risk on the effort “as we move through the key milestones of this very advanced system.” He has also described the project as a future “franchise” for Lockheed.

On the third quarter call, Taiclet said the company has explored “every single assumption in that bid from 2018” to find improvement “and we think we’ve covered most of the bases. … But there’s still technical risk in this, and what will come out the other side is something really amazing that will have lots more demand, we think, beyond the fixed price production lots that we are taking the charges for.”

He added that “I do see a much more robust future for that program now that we’ve taken those charges. Again, put that all behind us. But it’s not 100 percent risk free, let’s say. But I think, in the end, all in all, and I’ve been on top of all these programs myself too, at a detailed level, this will be very good for the company and very good for the country.”