Defense officials now talk about what this means for the program. As i have consistently said, the f35 Program Remains one of my top acquisition and sustainment priorities. Earlier this month at our last press briefing, i made a commitment to come back to you when we were ready to announce the next f35 contract. So here we are. As the f35 Program Milestone authority, alongside Lieutenant General eric, the f35 Program Executive officer, were 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 through 14 production contract. This is an historic milestone for the f35 enterprise as the f35 is our largest tack air investment and will form the backbone of the u. S. And allied fifth generation inventory for the foreseeable future. Ans and 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, we have exceeded the total aircraft quantity we delivered to the war fighter last year, and we have a 96 ontime delivery rate, a tremendous improvement from where we were last year with an average ontime delivery rate of 64 . On quality, while we have made progress, theres still significant opportunities for improvement, and we continue to communicate specific concerns to lockheed based on the data we collect. The 34 billion agreement for f35 lowrate initial production lots 12 through 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, our partner nations, and our foreign mill staitary s customers. This agreement represents our continued commitment to reduce f35 cost aggressively, incentivize industry to 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 the f35 joint Program Office will award a significant f35 aircraft procurement in the same fiscal year as the congressional appropriation year. Second, we will reach a unit recurring flyaway, urf, cost per aircraft target of 80 million for a u. S. Air force f35a 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 through 14 contract award. For example, in lot 14, the f35a unit cost represents an estimated overall 12. 8 reduction from costs for the conventional landing variant. The f35b unit cost represents an overall 12. 3 reduction from lot 11 costs for the short takeoff and landing variant. The f35c unit cost represents an overall 13. 2 reduction from lot 11 costs for the carrier variant in lot 11. With an average of 12. 7 savings across all three variants from lot 11 to 14. 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 fifth generation capabilities. Understandably, there will be questions today on the Program Deviation i told you about earlier this month that is due to delays in integrating the f35 into the joint simulation environment test infrastructure. The Lieutenant General will provide more detail on that shortly. 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 appreciated. As the f35 fleet continues to grow, were 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 fick, unit Mission Capability performance increased from 55 in october 2018 to 73 in september 2019. While we are making progress, we are not where we need to be. We have industrys commitment on accelerating improvements in sustainment. Our focus is on improved f35 fleet readiness and driving towards the Service Affordability goals. To that end, we are placing particular focus on accelerating our depot repair capability, accelerating fleet repair modification, and improving autonomic logistics system, 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 the f35, there has been no change to return turkey to the f35 program. The s400 air defense system, which is incompatible with the f35, remains in turkey. As i said previously, turkey makes nearly 1,000 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 and whitney are responsible for that supply chain, so ill 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 the defense appropriations and authorization bill now so that we can move forward with the many important programs needed to ensure our readiness and deter our adversaries. We at dod are grateful for our Congress Passing a twoyear budget agreement that provides the budgetary certainty the Department Needs to implement the National Defense strategy. With that, ill let the Lieutenant General make his statement, and then ill be happy to answer questions. Thank you, ms. Lord, and 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. 478 aircraft and 34 billion. This total includes aircraft for all three u. S. Services, our international partners, and our Foreign Military sales customers, totaling 351 f35as, 86 f35bs. I am proud to be here today to represent the f35 enterprise and to share with you some of my thoughts on the state of the program. Our initial Development Efforts are coming to a close as initial operational tests and evaluation proceeds, but as you are all aware, we are delayed our milestone c and full rate production decision until such time as the joint simulation environment is available to support the director of operational tests and evaluations assessment of the program. We look forward to his thorough assessment and are working hard with the naval air systems demand and Lockheed Martin to fully integrate the f35 into this complex synthetic environment. This integration is not only critical to the completion of iot e, but it will be important for future modernization efforts. To that end, while the program has reached initial operational ca capability for all three u. S. Services, the united kingdom, italy, japan, and draisrael, an about to do so again in norway, we understand the need to continue its modernization to ensure it stays relevant over time. Our 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 in industry today. The Continuous Capability Development and delivery model was born of this need and to date we have fielded four Software Releases using this methodology. These releases have focused primarily on the correction of minor deficiencies but have 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 c2d2 process will mature and continue to deliver increments of capability over time to ensure our warfighting customers stay ahead of the threat well into the future. Ms. Lord captured well the status of yesterdays production award, including the significant savings weve realized for our fighters and taxpayers. Our negotiating teams worked tirelessly on this deal, and im proud of the work theyve done under excruciating pressure. With this award, we see the most dramatic rate increases in the production line now behind us. Lot 12 is 149 aircraft, representing only a 6 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 greater than lot nine. This dramatic production rate increase has proven to be challenging for the supply chain, but the comparatively minor quantity changes across lots 12 through 14 should give it some breathing room as we move forward. This stabilization will help with the Timely Delivery of parts to the production line and spares and repairs to the field. Speaking of the field, our hybrid Product Support s Integrator Team has reached full cape nlt and is kurnly sustaining a fleet of more than 440 aircraft in eight 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. The netherlands will join this elite group soon with their first aircraft arrival ceremony happening here later this week. From a sustainment performance perspective, ill note that while we fell short of the secretary of defenses 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 in october of 2018 to 73 in september of 2019. Operational rate from 55 in 2018 to 73 in september of 2019. Within that same timeframe, some deployed units saw sustained mc and mfc levels well above 80 and into the 90s. Are we finished . No, are we making progress . Absolutely. Much but not all of that progress is due to the actions implementsed as a result of the pub li occasion and the execution of a life cycle sustainment plan in early 2019. Unlike other plans that tend to be forgotten, this one is executable. Driving deliberate, including accelerating modifications, plan changes to the field, accelerating supply chain capability and capacity and enhancing our reliability. All of those actions are ongoing. I need to acknowledge also that much of this progress is attributable to the significant work of airmen, marines and sailors operating in the field today. They are doing what they do. They make things work. And for that wore extremely grateful. We will continue to work closely with them to realize the full potential of the f35. We are at a strategic Inflection Point moving from fielding to modernization, highrate production and sustainment. As we partner with look heed martin and pratt and whitney, were changing our relationships with these partners. Our contracts are transitioning away from cost focussed incentives and now feature structures that for development, motivate that to agile and able processes i mentioned previously. Our contract feature supply Incentive Fees and performance Incentive Fees that drive cost reduction. They incentivize and ensure our warphyters have the system they need. We continue to look for ways to multiple year and multiyear contracts for production and performance based logistics for sustainment. We are working today with look heed martin to define the program tersz of a sustainment that meet our operational demands, taxpayer best value, and enterprise demands. In closing let me reiterate that im proud to be here today to represent the men and women of the f35 enterprise, excited to be your officer and looking forward to your questions. For both of you, couple weeks ago you acknowledged that there was going to be a delay of production. Someone not involved in the f35 program is going to ask, why is the pentagon putting out a contract for more when theyre delaying fullrate production while the combat intoechbded to prove whether its effective and suitable hasnt been finished. Laymans question, yesterday was a 7 billion contract mod. Was that the first of the 34 billion or was that more like last november when you put 6 billion on . And in joint simulation environment, whats the earliest you think it will be up and running . So first of all, the department has the full confidence in the planes that are flying today. The air force and the marine corps have both deployed and are happy with the capability. The criteria in terms of getting out of iot e is to test against threats that we will see ten years from now in the densities we would see ten years from now. We can only do that in a synthetic environment. So weve completed over 90 of the testing. We are very confident in the configuration of the aircraft and are just working on the nuances of working against these advanced threats. So 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. Relative to your question on the 7 billion, so this is a part of a series of contract awords and obl gaiks that have been made over the course of a number of years and the execution of this effort. If we look back to what was previously announced, we announce the 255 aircraft along with about 11 billion obligation for procurement, and work done previously on uca associated with partners in lots 12 and 13. The announcement yesterday added 114 aircraft. Added an obligation of 7 billion for work to begin. In addition, we also obl gaipt the an additional 10 billion or so to look heed that was not included in the announcement because it was previously made for the initiation of those. The second 10 billion is for the second. Can you total it up . We are still left then with roughly 100 aircraft to go and another 7 billion to go associated with the work to be done for u. S. Services in accordance with the pb 20. We dont have that budget yet. We cant make that award for the final aircraft until the time we have the authority to do that. 27 billion of the 34 has been obl gaipted piece mooel. Youve got it. 7 billion to go . You got it. Relative to the jse, its a synthetic environment that allows us to fully assess the capabilities of the f35 against a wide range of air and surface threats and threat densities that the director of testing evaluation in his role looks at the current threat as well as into the future. Getting into an environment like the jsc is critical to assess the system against that future threat. The integration of the f35 into the jse as was mentioned previously is taking longer than anticipated. The early validation runs for the jsc will begin this fall, m midnovember. Theyll continue throughout the spring. We believe theyll be ready for march or april and should conclude by june or julie. Thanks for doing this. Could you please explain for the lay person why a brand new aircraft isnt 80 Mission Capable or above that since all the parts are new . When weve had this conversation before its because of the cannibalization of parts with older aircraft . Right. Let me give that a shot and then ill hand it over to erik. Traditionally were trying to get capability fielded and then we are building the sustainment tail behind that. Right now as eric mentioned, we have ramped up significantly throughout the integrated supply chain, and what we found is we did not have the capacity and through part for repairables and spares. We are lagging in some of those repair parts. We are particularly having issues in three areas, one is canopies, two is engine fuel, high dralics and wing tip lens. Those are the areas the particular parts that are holding us back. So we believe we are making very Good Progress and moving forward. You did really good. Ultimately. I would just amplify a little bit by saying as an aircraft is fielded and parts fail and they do fail, you take them off and replace them with another. In my prepared remarks a i talked about the rap many that weve been through that affects look heed and how they process aircraft through their production but all of the lower tier vendors that are producing at increasing rates. They must produce spares even above those rates. And making that ramp not just from a production perspective but porching perspective. One of our initiatives is pushing spare purchases. We can get those reed for the main takeners to install them. But to take action both within the existing supply chain and to stand up organic capacity to repair the parts so theyre available to the field to reinstall them. Thats been a huge part of this effort to drive higher Mission Capability rates, making sure they have the parts when theyre needed. Ive got a couple finky numbers questions. If i heard you right, i think you said lot 12 has 149 aircraft in it. Is that correct . And if so, i think the only lri number was 157 aircraft. Whats the reason for that difference . Were those turkey aircraft . And then secondly, youre saying that theres an average 12. 8 reduction. In the handshake deal it was said there would be a drop of around 15 from lot 11 to lot 14 across all vare yants. So is that just a nonapples to apples comparison . Can you put it in context for me . I cant address the 157 number off the top of my head. Im going to have to go back into time to figure that out and