1. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability F-35A ‘Lightning II’ Australia’s Next Generation Air Combat Aircraft Air Vice-Marshal Kym Osley Program Manager New Air Combat Capability February 2013 Australian Business Defence Industry Unit Lunch

2. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability First Australian F-35As are being produced at this time

3. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability AU-1 is on the production line!

4. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability Short Take-Off Vertical Landing (STOVL) Carrier Variant (CV) Lift Fan Roll Nozzle 3-Bearing Swivel Duct Conventional Take-Off and Landing (CTOL) F-35 Family of Aircraft

5. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability Ground Moving Target Missile Warning Electro-OpticalElectro-OpticalRadarRadar Day Night Multi-Spectral Sensors Situational Awareness

6. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability All 8 non-US partners remain with the ProgramAll 8 non-US partners remain with the Program –US – still after 2443 aircraft –Italians – first three aircraft LRIP 6 (2014), FACO by early 2013. Recently reduced to 90 total. –Dutch – first two aircraft 2012, then rest to start later in decade. –Norwegian Parliament agreed four aircraft – and brought forward buy –Turkey has agreed first two aircraft and confirmed 100 reqd. –UK – has first two and third soon. Back to STOVL –Canadians – 65 aircraft and. Need to extend CF-18 FMSFMS –Israel’s - 19 JSF (media reports of additional SQN) –Japan’s - confirmed order for 42 – first two to be delivered in around 2016 –South Korea - FX-III competition (60) –Singapore – very interested JSF Partner/FMS Update

7. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability Air Force Annual Fighter Buy Fiscal Year F-35A 0 50 100 150 200 250 300 350 400 8083868992959814710 F-15C/D F-15E F-16A/D F-117 FY80-90 average - 227 -90% FY91-10 average - 25 A-10 F-22 USAF Fighter Procurement

8. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability F-35 to be Predominant Aircraft in USAF Combat Air Forces Fiscal Year Fighter Inventory 11131517192123252729313335 F-35 F-22 F-15C F-16 F-15E A-10A

9. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability We are contractually committed to two and they will be delivered in 2014-2015 in the United States for testing and training purposes. We have previously announced a commitment to purchase another 12 and that commitment will occur but it will occur two years after the previously anticipated timetable. We remain committed to the Joint Strike Fighter project Stephen Smith MP, Minister for Defence, 3 rd May 2012

10. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability Will develop three options for consideration in the context of the 2013-14 Budget In the course of 2013, Government will make decisions with respect to those various options. Stephen Smith MP, Minister for Defence, 13 th December 2012

11. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability Production – approx 3-4 months behind (mainly due to recent strike) Flight test – overall slightly ahead of schedule (approx 35% complete for CTOL) – but CTOL slightly behind Development Phase – still adequately funded Software development – better – but some delay, and migration of capability –Block 1 delivered –Block 2A – four months late –Block 3I – through dev flight test April 2015 –Block 3F – through dev flight test August 2017 –A developmental program and there is still risk in the software schedule International JSF Program

12. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability 1 2009 2 2010 3 2011 4 2012 5 2013 6 2014 7 8 2015 9 2016 10 2017 11 2018 12 2019 13 2020 14 2021 Production LOT (LRIP) Number and Delivery Year Affordability

13. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability F-35 Production Outlook LRIP 1 LRIP 2 LRIP 3 LRIP 4 LRIP 5 LRIP 6 LRIP 7 LRIP 8 LRIP 9 LRIP 10 LRIP 11 Buy Year 20072008200920102011201220132014201520162017 Del Year (+2) 20092010201120122013201420152016201720182019 Total2121732 36375485124139 Currently in build

14. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability Industry Participation

15. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM New Air Combat Capability UNCLASSIFIED Centre Fuselage Composites QuickStep Vertical Tails Marand, BAES & Quickstep Actuators (Landing Gear, Bay Doors & Utility) Goodrich Control Systems & Rosebank Engineering Handling Fixtures Varley, Broens Shipping Containers Trimcast Engine Trailer Marand Training Courseware Design Kellogg, Brown & Root Airframe & System Component Machining Lovitt, Ferra, Levett, Aerostaff & Production Parts Radar, TPS & EW Components Cablex, BAES, Micreo, Partech Systems & CSC Flares Chemring JSF Studies Calytrix, BAES & Marand Voice Recognition Software Adacel Airframe Design & Stress Analysis GKN & Vipac Weapon Adapters Ferra Composite Tooling Marand, Broens & Hofmann Metaltec Engine component Production Parts, Broens, Hofmann Metaltec & Levett Ejection seat wiring Cablex CNI Chassis TAE Engineering support - ITC Design Thales Corrosion Sensors BAES Aust F-35 Australian Suppliers as at August 2012

16. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM New Air Combat Capability UNCLASSIFIED Work is only won on ‘international best value’ JSF partners all manoeuvring for a good industry outcome Reduced early production numbers (slip to right) All companies cutting margins due Global Financial Crisis Strong AUS dollar Industry challenges

17. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM New Air Combat Capability UNCLASSIFIED Why Seek JSF Work? Only the JSF Partner nations can bid for JSF work on the 3000 planned Partner aircraft The work is very much high value added L-M and other primes tend to provide access to training and accreditation that allow companies to bid for other high tech work. JSF – once at full production – will be a significant source of business for involved industry JSF sustainment offers some businesses ongoing opportunities for the period out to 2040+

18. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM New Air Combat Capability UNCLASSIFIED JSF Industry – ‘Ferra’ “…The staff within the Defence Industry Innovation Centre were able to provide us with a detailed understanding…subsequently assisted Ferra Engineering to secure F35 Joint Strike Fighter adaptor contracts ….valued at approximately $340m…will ensure Ferra Engineering remains an active member of the Australian Aerospace industry for many years to come.” Queensland-based company Making weapons adapters for F-35 But diversified into other military and commercial aerospace Also renewable energy and medical devices

19. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM New Air Combat Capability UNCLASSIFIED JSF Industry – ‘Quickstep’ Quickstep recently won the 2011 Manufacturer of the Year (Manufacturer’s Monthly Magazine) as well as the Global Integration Award - “…Quickstep highlighted how Australian manufacturers can successfully compete against the best in the world. As part of the F-35 program, Quickstep has successfully overcome the many entry barriers faced by new participants in the defence manufacturing sector, possibly the highest of any industry in the world….” West Australia (soon NSW) based company Making composite panels for F-35 Diversifying into other military aerospace (eg C-130J flaps)

20. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM New Air Combat Capability UNCLASSIFIED JSF Industry – ‘Marand’ On 3rd May 2012, Marand was awarded the prestigious Manufacturer of the Year award (Large Business). Marand is the inaugural winner of the award and was selected by industry experts against a criteria including export performance, enabling technologies utilised, innovation in manufacturing, quality management and sustainable practices amongst others. Melbourne based company Making engine trailers for F-35, and working with BAES and Quickstep on 722 shipsets of F-35 vertical tails. Diversified into rail, automotive, aerospace and general engineering

21. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability FMS vs Partner Bidding for the manufacture of parts for partner aircraft limited to Partner nation industry FMS can make parts for their own aircraft and other FMS customers However, FMS can negotiate with US companies to get some of their ‘strategic’ business Japan: –They will have a FACO for their aircraft, and perhaps other FMS aircraft. Israel: –In media that Israel will make some wing sets on behalf of L-M

22. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM New Air Combat Capability UNCLASSIFIED How can NACC Help Industry? Director JSF Industry Support Team – John Wilshire – Canberra - (02) 6144 1535 –Two staff members in the US Establish contacts Get you through the (right) door Strong ‘customer’ voice to the US primes (L-M/P&W) –Australian JSF Industry Group Two types of work: –Strategic – for Australian companies to lose –Global supply chain competitive NACC Industry Support Program

23. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM New Air Combat Capability UNCLASSIFIED NACC Industry Support Program Aim – provide Australian companies/research with seed funding to develop new or improved capabilities to allow Australian industry to be more competitive. –Have a total of $8.2m in grants available. –Six grants to date What grants are available: –<$1m for improved technologies that offer savings to JSF supply chain. –<$250K to enhance a company’s competitiveness to win work. –<$300k for Australian research centres to do research that leads to improvements in the JSF supply chain.

24. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability Operating maintenance:Operating maintenance: –Canopy – WLM –Battery – WLM –Wheels and Tyres – WLM –Support Equip – probably mainly local industry –Propulsion – WLM and TDL – possible regional repair centre in Australia –Pilot equip fitting facility – WLM –SOAP – WLM –Avionics test – probable at WLM –Gun - WLM Contractor In-Country Support

25. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability Deeper maintenance:Deeper maintenance: –Scheduled and unscheduled DM - WLM –Modification incorporation – WLM –Phased inspection – WLM (TBA but could be 300 hrs) –LO acceptance test – GOCO – contractor and DSTO –LO paintshop – GOCO Supply ChainSupply Chain –Off base regional holdings –Potential on base contractor facility for on-delivery to SQNs TrainingTraining –Turn-key contractor operation – excluding pilot flying instruction and maintenance of training jets. –Maintenance instruction contractor provided Contractor support of ALIS hardware and software supportContractor support of ALIS hardware and software support Contractor In-Country Support

26. PROFESSIONALISE | RE-PRIORITISE | STANDARDISE | BENCHMARK | IMPROVE INDUSTRY RELATIONSHIPS AND INDUSTRY PERFORMANCE | LEAD REFORM UNCLASSIFIEDNew Air Combat Capability