Business & Lobbying

Air Force: Joint Strike Fighter delayed, will cost much more than once expected

The high-profile F-35 Joint Strike Fighter program will be
delayed by two years and will be significantly over cost, Air Force Secretary
Michael Donley said on Tuesday.

“We think it is probable that there will be a Nunn-McCurdy
breach,” Donley said at a breakfast with defense reporters.

The so-called Nunn-McCurdy law requires the military
services or the Pentagon leadership to tell Congress when the price tag of a
program increases significantly. The Pentagon then must certify to Congress
that the program is still worth pursuing.

{mosads}Under a new weapons acquisition law, Nunn-McCurdy is
triggered when the estimate of the total program cost grows by more than 25
percent or the program schedule for initial operational capability grows by
more than 25 percent.

A breach of the Nunn-McCurdy law usually leads to a
significant restructuring of a program, or could force the Pentagon to find an
alternative to the offending program.

The F-35 is the Pentagon’s most expensive program to date,
and one that Defense Secretary Robert Gates is banking on. The F-35 is designed
to be the next-generation fighter for the Air Force, Navy and Marine Corps.

The program, under contract to Lockheed Martin, has suffered
significant setbacks and has been the subject of continuing reviews by the
Pentagon to tamp down delays and cost growth.

The Pentagon has been acting “in just about every respect as
if the program were in a Nunn-McCurdy breach,” Donley said. “We’ve been taking
all the mitigating and corrective action that we would take as if it were a
Nunn-McCurdy breach.”

Donley said the Air Force remains “fully committed” to the
program, but that the fighter jet will become operational in 2015, about two
years later than initially planned.

Donley indicated that the Pentagon will stick by
the F-35 because there is no other alternative and because it would be more
expensive to stop the production lines and then restart them.

“We have not seen any technical show-stoppers” with the
F-35, Donley said.

Donley’s comments dovetail with a memo issued last week by
the Pentagon’s top weapons buyer, Ashton Carter, and first reported by The
Hill. In the memo, Carter said the Pentagon’s review of the F-35 so far had
discovered no fundamental technology or manufacturing problems.

Carter also said a recent independent Pentagon assessment
done by the so-called Joint Estimating Team found the development phase of the
next-generation fighter jet will slip by 13 months, not 30 as initially
determined by a previous assessment.

Carter also said the cost of the system’s development phase
will increase by $2.8 billion. Carter directed the secretaries of the Air Force
and Navy to budget according to the new estimate. He directed them to extend
the development phase by 13 months and move the start of the full production
phase to November 2015.

Carter also directed the Air Force and Navy acquisition
officials, as well as the program manager for the F-35 program, to withhold
$614 million in award fees to Lockheed Martin and revise the contract structure
for the development and demonstration phase in such a manner that Lockheed is
rewarded for “measurable progress.” Gates already announced earlier this month
that he was planning to withhold the money from Lockheed. 

“I remain convinced that close partnership and clear
accountability are required with the JSF contractors,” Carter said in the
memo. 

Donley said Tuesday that the Pentagon is restructuring its
contract with Lockheed Martin to ensure the company sticks to its earlier
promises on the program and meets the schedule.

Also, Donley pointed out that the new program manager for
the F-35 program would be a three-star officer and therefore would need to be
confirmed by the Senate. But Donley said he was unclear when a new program
manager would be named. Gates decided last month to remove Marine Corps
Maj. Gen. David Heinz, who was running the F-35 program. 

Because of the two-year delay to 2015, Donley said the Air
Force is considering extending the life of the F-16 fighter jets, also made by
Lockheed, but he indicated that no final decisions had been made.

Meanwhile, Donley held his ground on another
controversial issue: the backup engine for the F-35, which the Pentagon does
not want but Congress has consistently funded over the past several years.
Gates said that he would personally recommend that the president veto any
defense bill that contains funds for the alternate engine made by General
Electric and Rolls-Royce. The primary engine is built by Pratt &
Whitney.

Donley said it was a difficult call to decide against a
second engine for the F-35, because “we know Congress wants to support it” and
because, in general, the Pentagon sees “the value of competition.” Donley
said that the Pentagon could not see any “hard savings” later on from having
two competing engines.

“It was too fuzzy in the out-years,” he said.

Rep. Ike Skelton (D-Mo.), the chairman of the House Armed
Services Committee, last week blasted the Pentagon’s business rationale for
deciding to scrap the General Electric-Rolls-Royce alternate engine. The
primary engine is built by Pratt & Whitney.

“It appears that the department’s approach focuses on
near-term costs to the exclusion of what the committee sees as the long-term
benefits of this program,” Skelton said in a statement Thursday. “I remain
unconvinced that terminating the alternate engine program makes sense.”

Skelton said the Pentagon’s analysis does not consider the
risk that a single engine would present to national security because Lockheed
Martin’s F-35 will account for 95 percent of the military’s fighter fleet.

“We cannot use near-sighted vision when long-term security
is at stake,” Skelton said in the statement.

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