Buying aircraft, ships and vehicles in a block or through multi-year contracts allows the Pentagon to save billions of dollars. Long lead items and expensive components can be purchased in economical quantities. The supply chain can be managed to ensure the optimum flow of materials and parts. Price breaks can be negotiated from suppliers because they see a long-term, steady demand for their products. Lockheed Martin and the Department of Defense are reported to be finalizing a large, multi-year contract for the F-35 Joint Strike Fighter that could see the unit price for the A model drop by as much as 15 percent to $85 million a copy. The Navy has long employed a mix of block buys and multi-year procurements to achieve cost savings on purchases of ships, submarines and aircraft. Acquiring the new Ford Class CVN in a three ship block could save the program upwards of $1.5 billion and cut two years from the production schedule. I have written more about this for RealClearDefense here.
Find Archived Articles: