Japan looks to enhance F-X industrial efficiencies through incentives

The Japanese Ministry of Defense (MoD) aims to implement its new “incentivised” contracting system in the country’s F-X programme to develop a next-generation fighter aircraft.

The MoD told Janes that its Acquisition, Technology & Logistics Agency (ATLA) will collaborate with F-X prime contractor Mitsubishi Heavy Industries (MHI) in managing the programme’s anticipated expansive subcontracting engagements.

A conceptual image of Japan’s future F-X fighter released by the MoD in Tokyo in December 2019. (Japanese MoD)

It added that incentives will be integrated into the subcontracting system in line with wider contracting initiatives being rolled by the MoD and ATLA to achieve greater efficiencies in defence production. The incentive contracting system was introduced in 2020.

A spokesperson from the MoD said, “In the F-X development phase, ATLA will apply an incentive contracting system in which both ATLA and the contractor will jointly manage progress of the contracted work through an ‘earned value management’ method to minimise risks.”

The spokesperson added, “By using this system, if cost reductions are realised a certain percentage is returned to the contractor as an incentive. It is expected that this makes the development of F-X project more efficient.”

Subcontracting deals on the F-X programme will be awarded by MHI after it signed a deal with the MoD in October 2020 to lead the aircraft’s development.

Under this contract award, MHI will act as “integrator of the total F-X system”, said the MoD spokesperson. MHI will also build the F-X’s fuselage, with key subcontractors expected to include IHI Corporation and Mitsubishi Electric Corporation, which will develop and build the aircraft’s engine and avionics.