Development Costs of F135 Rise, Marginal Unit Cost Falls

The Pentagon and Pratt & Whitney have negotiated a cost reduction for the next 37 engines that they deliver, but the non-recurring R&D Costs go up:

Pratt & Whitney has reached an informal agreement with government officials to slash 16% off the total price of the next batch of 37 engines to be ordered for the Lockheed Martin F-35 Joint Strike Fighter.

At the same time, the company acknowledges the cost of the overall F135 engine development programme will grow by about $1 billion to support a three-year extension of flight tests and to improve the engine's performance and durability.

If you assume $15 million per engine, it means that this cost, assuming that this continues across the production run (it won't, particularly with the GE/Rolls F136 out of the picture) would end up saving money after the delivery of about 450 engines.

This is taking money out of one pot, and add it to another in the best case, and more likely it's a stealth price increase.