Fighter program. As i have consistently said, the f 35 Program Remains one of my top acquisition and sustainment priorities. Earlier this month and our last press briefing i made a commitment to come back to you when we were ready to announce the next f 35 contract. Here we aare. The f 35 Program Milestone authority alongside abwe are here to announce the u. S. Department of defense and Lockheed Martin have made tremendous progress and now have an Agreement Regarding the lot 12 to 14 Production Contract. This is a historic milestone to the f35 enterprise. As the f35 is our largest taxpayer investment and will form the backbone of the u. S. And allied fifthgeneration inventory for the foreseeable future. Anf in the joint Program Office are laser focused on driving cost out, quality up, and achieving timely deliveries of our capability to our war fighters. With respect to ontime delivery weve exceeded the total aircraft quantity we delivered to the war fighter last year. We have a 96 percent ontime delivery rate. A tremendous improvement from where we were last year with an average ontime delivery rate of 64 percent. On quality while weve made progress there is still significant opportunities for improvement and we continue to communicate specific concerns to lockheed based on the data we collect. The 34 billion baagreement for f35 low Rate Initial Production 12 to 14 includes the delivery of 478 f35 aircraft. 149 for lot 12, 160 for lot 13, and 169 for lot 14. In support of our u. S. Military services are partner nations and our Foreign Military sales customers. This agreement represents our stcontinued commitment to reduc f35 cost aggressively. Incentivize industry can meet required performance and deliver advanced capabilities to our war fighters at the best value to taxpayers. There are several notable achievements that this contract represents. First, this is the first time in the f35 joint Program Office will award significant f35 aircraft procurement in the same fiscal year as the congressional appropriation year. Second, we will reach a unit recurring flyaway, you are f, cost per aircraft target of 80 million for sa air force f 35 price by lot 13. Which is one lot earlier than planned. A significant milestone for the department. The f35 enterprise will continue to save in the lot 12 to 14 contract award. For example, in lot 14 the f 35 unit cost represents an estimated overall 12. 8 percent reduction from l ripp 11 cost for the conventional landing variance. The f35 be cost represents a 12. 3 reduction from the short takeoff and landing variance. The f35 c unit cost represents an overall 13. 2 percent reduction from lot 11 cost for the carrier variant in lot 11. With an average of 12. 7 percent savings across all three variants from lot 11 a14. 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 f35 partners to maintain a competitive advantage with its unique unmatched fifthgeneration capabilities. Understandably, there will be questions today on the Program Deviation i told you about earlier this month. Thats due to delay in integrating the f 35 into the joint simulation environment test infrastructure. I want to reiterate that i have full faith and confidence in the f35 program. And our ability to deliver f35 combat capability anywhere in the world. Make no mistake, the f35 is the worlds most advanced lethal and interoperable 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 leappreciated. As the f35 fleet continues to grow we are also growing our sustainment capabilities to ensure these aircraft are ready and capable. Due to the efforts across the f35 enterprise led by Lieutenant General adod combat coded operational unit Mission Capability performance increased from 55 percent in october 2018 to 73 percent in september 2019. While we are making progress we are not where we need to be. We have industries commitment on accelerating improvements and sustainment. Our focus is on improved f35 fleet readiness and driving toward the Service Affordability goals. To that end, we are placing particular focus on accelerating our depot repair recapability accelerating fleet modifications and improving autonomic logistics Information Systems better known as alice functionality and responsiveness. As of last month over 440 aircraft have been delivered at 17 bases worldwide with over 850 pilots and 8200 maintainers. On turkey and f35, theres been no change to return turkey to the f35 program. The f 400 air Defense System which is incompatible with the f35 remains in turkey. As i said previously, turkey makes nearly 1000 parts for the f35 and will continue to do so until turkeys f35 supply chain responsibilities transfer at the end of march 2020. Lockheed martin and Pratt Whitley are responsible for that supply chain so i will defer any questions to them. In closing, i want to reiterate how regrettable it is that we are again under a continuing resolution. Crs 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 the readiness and deter our adversaries. With that, i will let Lieutenant General fit make a statement and then i will be happy to answer questions. Thank you ladies and gentlemen for your interest in the f35 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. 475 aircraft and 34 billion. This total includes aircraft for all three u. S. Services luinternational partners in Foreign Military sales customers totaling 350 1f 3588 86 f35 be, 41 f35 sees. Im proud to be here today to represent the f35 enterprise and share with you some of my thoughts on the state of the program. Our initial Development Efforts are always coming to a close after initial tests. As you are all aware, we have delayed our milestone hello decision until the jewett solution environment is available to support and director of Operational Test and evaluation assessment of the program. We look forward to this thorough assessment and working hard with the Naval Air Systems Command and Lockheed Martin to fully integrate the f35 to this complex synthetic in burma. This integration is not only critical to the completion of a abut will become increasingly to future mothers modernization efforts of the f35. To that end, will the program has reached initial Operational Capability for all same acts as the united kingdom, italy, japan and israel and about to do so again in norway, we understand the need to continue its modernization to ensure it t stays relevant over time. The 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 and industry today. The continuous capability and delivery model was born at this need and to date we have fielded for Software Releases using this methodology. These releases have focused primarily on the correction of minor deficiencies but 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 c2 d2 process will mature and continue to deliver increments of capability over time to ensure our war fighting customers stay ahead of the threat well into the future. ab my joint Program Office in greg omers Lockheed Martin in no sheeting teams look tirelessly on this deal and im proud of the work theyve done under his creating pressure. With this award we see from a production for product perspective the most dramatic rate increases in the production line are now behind us. Lot 12 is 149 aircraft represent only six percent increase over lot 11s 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 higher than lot 10 which was itself 65 percent greater than lot nine. This dramatic production rate increase is proven to be challenging for the supply chain with a comparatively minor quantity change across lot 12 to 14 should give it some breathing room as we move forward. The stabilization will help with the Timely Delivery of parts to the production line and spares and repairs to the field. Speaking of the field, or hybrid Product Support integrated team has reached full Operational Capability and continually sustaining a fleet of within 440 aircraft made nations around the world including the u. S. , norway, israel, italy, the uk, australia, korea and japan and operating around the world both ashore and afloat. Benevolence will join this elite group soon with the first. While we fell short of the secretary of defense 80 Mission Capability mandate we have definitely moved and continue to move the needle. Increasing the Mission Capability rate from our operational fleet from 55 percent in october 2018 to 73 percent in september 2019. Within that same timeframe 70 plugs unit saw sustained mc and fm seen Mission Capable and full Mission Capable levels well above 80 and even into the 90s. We finished . No. Are we making progress . Absolutely. Much but not all of the progress is due to the actions implemented as a result of the publication and the execution of a new lifestyle sustainment plan in early 2019. Unlike many other plans like it that tend to be forgotten as soon as they are sign, this one is actually executable. Driving deliberate and nearterm actions across 10 different lines of effort including accelerating fleet modifications, accelerating Maintenance Plan changes to the field, accelerating supply chain capability enhancing reliability and maintainability improvement plan. All the actions are ongoing today. Much of this progress is also attributable to the significant work of our airmen and marines and sailors operating and sustaining this impressive air system in the field today. As we partner with Lockheed Martin and pratt and whitney to deliver costeffective awardwinning capabilities when changing contractual relationship with these Industry Partners as well. Our Production Contract including this lot 12 to 14 contract features a supplier Incentive Fees and performance Incentive Fees that drive costreduction at the supplier level and improve production line velocity. Our sustainment contracts incentive ive mission abthat ensure our war fighters have the system they need when they need it. We continue to look for ways to improve business relationships including potential multiple year and multiyear contracts for production and performancebased logistics for sustainment. We are working today with Lockheed Martin to define the parameters of the sustained pbl that in closing let me reiterate and proud to be here today to represent the men and women of the f35 enterprise. Im so excited to be your Program Executive officer and looking forward to your questions. A couple weeks ago you and announced they would be delayed. Someone not involved in the f35 program is going to ask why is the pentagon putting out contract for 478 more planes when they are delaying what they call fourway production while the combat testing and tended to approve one its effective and suitable hasnt been finished yet and maybe a year. Yesterday was a 7 billion contract mod. Was that the First Tranche of the 34 billion was it more like last november when he put 6 billion on a long lead. In the simulation environment what is the earliest you think it will be up and running . First of all, the department has full confidence in the planes that are flying today. The air force and the marine corps have both deployed squadrons that are very happy with the capability. The criteria in terms of getting out of iot and eat is to test against threats that we will see 10 years from now and the densities we would see them 10 years from now. We can only do that in a synthetic environment. We have 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. 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. Relative to your question on the 7 million. This is a part of a series of contract awards and over course of a number of years. If we look back to what was previously announced we previously announced 255 aircraft along with about 11 billion obligation for advanced procurement. Hulu the announcement yesterday added 114 to that total and added an obligation of about 7 billion for work to begin almost 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 details. That second 10 billion is really for the completion of the initial work done in those 255 first aircraft. We are still left with roughly 100 aircraft to go in about another 7 billion to go associated with the work to be done with u. S. Services in accordance with the pv 20. We dont have that budget yet we cant make that contract work for the final aircraft until such time we have it new Statutory Authority to do that. 7 billion roughly has been obligated piecemeal over the last couple years. 7 billion to go. Relative to the goc, the j oc is a synthetic, for those of you arent familiar with the program its a synthetic environment abthe director of Operational Testing 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 j oc is critical to our ability to assess the system against that future threat. The integration of the 35 into the j of c as was mentioned previously is taking longer than anticipated. The validation verification early validation verification runs for the j of c will begin this fall i believe midnovember im expecting that to begin. Then it will continue throughout the spring. They believe they will be ready for test in the march april timeframe. Should conclude by june or july. Can you explain for the layperson why a brandnew ex aircraft 80 abor above that . Because all the parts are new. Weve had this conversation before its because of the cannibalization of parts of older aircrafts. Let me give that a shot and then i will hand it over to eric. Traditionally we are trying to get capability fielded and then we are building the sustainment tail behind that. Right now as eric mentioned, we ramped up significantly throughout the integrated supply chain and what we found is we do not have the capacity and the throughput for repair of her parables and spares. We are lagging in some of those repair parts. We believe we are making very Good Progress in moving forward. You did really good, i would amplify by saying as an aircraft is fielded and parts fail and parts ultimately do fail you take them off and replace them with another. In my prepared remarks at talk a little bit about the rate of acceleration the ramp that weve been through from production next perspective that affects not just lockheed and how the process aircraft through the production line but all the lower tier vendors as well that are producing the parts that dramatically increasing rates. And then i met they must also produce spares even above those rates. In making that ramp just not from production perspective. One of our initiatives is to push additional spares to field putting additional spared purchases on contract so we can get them ready for the maintainers to install them. Also to take action but with the existing supply chain and stand in organic the boat capacity to repair the parts as they come off so they are available to the field to reinstall on the aircraft its been a huge part of this effort to drive higher Mission Capability rates making sure maintainers have the parts on the shelf when they are needed. Ive got a couple of finicky numbers questions. If i heard you right, i think you said lot 12 has 149 aircraft. Is that correct . If so, i think the original number that was given when you did the handshake deal was 157 aircraft. Whats the reason for the difference . Were those turkey aircraft . And then you are saying theres an average 12. 8 percent reduction per lot 12 to 14 for all variance. And again in the handshake deal it was said there would be a drop of around 15 percent from lot 11 to lot 14 across all variance. Is that just and nonapples to apples comparison . Can you put it in context for me . I cant address the 157 number of the top my head so i have to go back into time to figure out where that number came from and we will circle back to you on it. When i looked into the discrepancy between the 12. 8 percent in the roughly 15 percent reduction you may have heard the air vehicle reduction from lot 11 to 14 for the a models was 14 point four percent. When we added the engine the reductions for the fraction of the overall unit flyaway cost thats attributable to the engine reduced at a much lower rate. The engine rates are only down on the order of three percent between lot 11, lot 15, when you sum them together it brings the overall reduction and cost of the unit recurring across in abhe. Could you explain for us how at least for the air force and maybe the other services the f 35 might be modified to accommodate digital century civic airplanes and how that will also be squared against the f15 ex. We are staying course with the f 35. I would say will roper and the air force team are doing some 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, f15 and new century series. We continue to fight with what we have today and focus on the future and optimize what we will have for a fleet in the future. But we are taking all of this in aggregate with the Mission Engineering approach using all the assets we have. At this point there is no revision or rethinking of the 1763 for the air force . No. I wondered if you could provide some more details on the technical issues that you are onworking through with the joint simulation environment. And then you mentioned the pdl for sustainment. Lockheed has said that having some sort of pbl in place is crucial to achieving the 25 million abby 2025. Is that your position as well . Do you now think that that goal is achievable . Weve heard some mixed things from that. First relative to the j fc. I wouldnt characterize that we have any specific technically challenging hurdles to overcome but there are a lot of smaller hurdles to overcome. Ultimately what we are doing is taking a digital representation of the aircraft and integrating into a synthetic representation of the threat space. To include ground threats, error threats, both blue and red weapons. Environmental facts. All of those things. We are integrating them together so the systems talk to one another digitally. Thats a very large task to get done. We got off to a slow start due to disagreements with Lockheed Martin how to proceed. Back in the early days of the program it was not jsc it was a aproprietary environment in which we were going to do that work. We elected about two peos ago to paul that work out of that proprietary environment and put it into a u. S. Government owned facility in the j fc that will allow us to integrate other aircraft from other manufacturers into the system of systems work later. There simply a lot of work to be done and as we do that integration and as we make progress the system stays rules more of those pieces into the flights get more complex and you find more things relative to the interactions between those systems. To the program underestimate how much work needed to be done . I dont know that we underestimated how much work could be done but we struggle getting out of the gates in particular with our relationship with lockheed and actually doing the work. Their relationship is very much better now we are working sidebyside with the vetted engineers sitting sidebyside with the naba air folks doing the integration. I think they are making decent progress. We are going to go marcus next. Both of your predecessors talked about the strange relationship with lockheed hmartin and pratt and whitney over the year ago we are hoping you can get your thoughts on how you characterize relationship now and where there might be areas for improvement. I think between myself and greg ulmer and i guess i would characterize between mr. Gertz and Michelle Evans and likely between ms. Ford and Marilyn Hewson that the relationship is much improved. I have daily conversations and email exchanges at my level i know that mr. Gertz and ms. Evans talk regularly. I have 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 the everyday working to find the balance between a taxpayer and were fighter friendly solution that meets luckys business objectives. We need them to stay in business to continue building these aircraft foot youre not doing it at any cost. To follow up on canopies are they just breaking for the canopies on the planes just cracking . Or are they breaking at a higher rate than other aircraft. The issue with his have to do with the loss of the coating thats applied to the outside of the canopy. We are working to mitigate that. The as 400 what is the status of that deployment has been moved around has it been turned on . Has turkey slow rolled or delayed the party talked about but it still working on through march and then you talked about the cost increase because of turkeys removal from the program in the past is that cost increase stay the same . First of all, we enjoy very good mill to build relationships with turkey and turkey is an excellent supplier. At this point im getting lost in some of your questions. You were asking 400 we anticipate that being fully operational toward the end of the year. You said excellent suppliers no delay in tricky supplying. No, turkey has been very forthcoming and we are on the e path to march 2020 two transition all of those parts out. We the u. S. We took responsibility for moving the product out absorbed about 600 million bill for that. We are still working through any unit price adjustments we think will be relatively modest but any adjustments that might take place due to the 900 parts moving. When will the delay in the for a production decision actually start to affect production. Is it inevitable that that delay will delay production down the line . I will issue documents before the christmas holder on our path forward with an reapb. We do not see this constraining production whatsoever. Can i ask for clarification. Hold on one second. What role is osb in the jo playing in the development of the air forces . Because Brando Walden made it seem like the air force isnt doing a whole lot of talking with the navy about lessons to learn from their jsc and we all know how messed up the navies jsc is. Oh my. One of the functions of osd is to act as the corporate entity across all the services. Thats the reason i have a technical staff working under kevin fahey as asda. What we do is bring the surfaces together to make sure we pass along critical information. The main way i do that is i need biweekly with all three Service Acquisition executives and the off week and meet with them individually. 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 gertz team as well as wilbur ropers team are very involved in that, 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 ospf exists is to make sure we have that crosspollination. Can it is get an update from you guys on this new pricing and how he expected to drive International Demand and if he tcould run through the list of folks that are solid in the International New interest bucket and maybe a little bit further feel in terms of competition you might be eyeing. Let me just say there is no significant change in pricing that i think would drive any decisions one way or the other. We have quite a few active discussions on fms cases. We have active discussions on going with the number of fms customers we talked to the overall list is about 10 different countries. I think you can look to anyone flying u. S. Mds today and think of them as potential customers for the f 35 in the future. We will go ahead and stop bear do you have any Closing Remarks . I just want to thank you all for coming today. You will see a renewed focus one sustainment over the next 12 months out of my Office Working with the j poe. We are taking a very datadriven approach toward a potential pbl with Lockheed Martin. We are working hard at understanding where the operational availability of the Mission Capability and where the cost per flight hour are being driven and making sure that we come up with a winwin situation for both the war fighter as well as the taxpayer. Can i get clarification on ax the abare those individual parts or thousand parts types. Individual parts. Thank you ladies and gentlemen. [inaudible question] [inaudible question] cspan washington journal live every day with news and policy issues that impact you. Coming up friday morning the Ballston Center duncan blood discusses efforts by the u. S. And it abthen working families partying National DirectorMaurice Mitchell talk about Political Parties roots and priorities and its recent endorsement of Elizabeth Warren in the democratic president ial primary contest. And abdavid mcintosh on his Organization Strategy for campaign 2020. In his defense of President Trump in the impeachment inquiry. I dont think the chinese have any great planning in the next 20 or 25 years to take us on militarily in a traditional sense but i do think they are trying to build Cyber Capabilities and this is part of where huawei is a National Asset for them and they are trying