Lockheed Needs Another Half Billion Dollars to Complete F-35 Development

(Source: Bloomberg News; published Nov. 02, 2016)

The Pentagon will need as much as $500 million extra to finish the development phase for Lockheed Martin Corp.’s F-35, the most expensive U.S. weapons system ever, defense officials said.

The F-35 program office made the request for more money to complete development, which is supposed to be in its last stretch after 15 years, during a closed-door review last month by the Defense Acquisition Board, according to the officials, who asked not to be identified discussing internal budget discussions.

The Defense Department and the military services that are counting on the three versions of the F-35 are assessing how to pay for a request that would go into the department’s fiscal 2018 budget proposal. Approving the added funds would probably be the first F-35 decision to reach the desk of the next defense secretary.

The call for more money comes as the Pentagon’s chief weapons tester has issued a fresh warning that the aircraft, projected to cost $379 billion for a fleet of 2,443 U.S. planes, is far from showing it has full combat capability.

In an eight-page memo dated Oct. 14 and obtained by Bloomberg News, Michael Gilmore, the director of operational testing, recommended “very strongly that the program be restructured now and provided the additional resources it clearly requires to deliver its long-planned and sorely needed full” capability.

Kendall Disappointed

While the added $500 million would be a fraction of what’s already a $55 billion development phase, Frank Kendall, the undersecretary of defense for acquisition, said in an e-mail that he was “disappointed to hear that additional funds would be needed” and “we are working to minimize the size of the shortfall and to deliver options to address it.”

Pentagon Comptroller Mike McCord said he “wasn’t totally shocked” by the funding request. While it’s not a big increase considering the size of the program, McCord said in an interview, “I was hopeful, maybe, that we wouldn’t have a problem like this because” the program “has been moving in a fairly decent direction.”

The F-35 is being developed even as the plane is in low-rate production, an overlap that Kendall once called “acquisition malpractice.” The request for more funding is at odds with past assurances that the program would absorb any cost increases in development. (end of excerpt)

Click here for the full story, on the Bloomberg News website.

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