New F-35 fighter over budget by $1 billion

WASHINGTON -- Lockheed Martin's first 63 F-35 fighter jets are exceeding their combined target cost by $1 billion, showing the Pentagon's costliest program lacks a reliable design and efficient manufacturing, according to congressional auditors.

The Pentagon is absorbing $672 million and Lockheed Martin the remaining
$328 million in added costs for the aircraft in the first four production contracts, the Government Accountability Office said in testimony Tuesday for a House Armed Services Committee hearing on tactical aviation. The committee is conducting the first oversight hearing on the F-35 Joint Strike Fighter for the fiscal 2013 budget.

"The long-stated intent that the Joint Strike Fighter would deliver an affordable, highly common fifth-generation aircraft that could be acquired in large numbers could be in question," Michael Sullivan, the GAO's director of acquisition management, said in the statement.

Any cutbacks in numbers of Joint Strike Fighters or changes in its delivery schedule could affect Nellis Air Force Base, where the first F-35 is expected to arrive for testing in the fall.

The National Defense Authorization Act, which President Barack Obama signed at the end of last year, included $35 million in military construction funds for Nellis to build an F-35 communications network control center, ground equipment facility and engine shop.

A spokesman said Tuesday that Nellis was still on course for F-35 basing. Thirty-six of the versatile fighter jets are slated for what is called "beddown" at Nellis through 2020 for a presence that will be more than twice the size of the stealthy F-22 Raptor deployed at Nellis.

"Though some plans are still being finalized, we anticipate arrival of the first test-and-evaulation F-35 Joint Strike Fighter in fall of 2012," Nellis spokesman Benjamin Newell wrote in an email.

"Nellis is proud to be the home of the war fighter, and at the cutting edge of testing and evaluation for Air Force assets. The F-35 is a welcome addition," Newell said.

F-35 Joint Strike Fighters, also known as the Lightning II, are supposed to replace the aging fleets of F-16 Fighting Falcon and A-10 Thunderbolt attack jets.

An Air Force review in July found that Nellis and the 2.9 million acre range north of Las Vegas Valley offers the best location for F-35 testing and training.

At a time of reduced defense spending driven by budget-cutting measures, the F-35's "projected annual funding needs are unprecedented, averaging more than $13 billion a year through 2035," the GAO said. The Pentagon "is still investing billions of dollars on hundreds of aircraft while testing has years to go," according to the GAO.

The Air Force needs to budget $8 billion to $11 billion year from fiscal 2016 to 2035 as it also buys new aerial-refueling tankers and bombers, the GAO said.

The Pentagon's plan calls for spending $69 billion by the time F-35 flight-testing ends in 2017, buying 365 aircraft, or about 15 percent of the planned U.S. total of 2,443. The report gives Lockheed Martin and the program credit for some testing and manufacturing process improvements in 2011.

"Even with the progress, most development flight-testing, including the most challenging, still lie ahead," with only 21 percent of the almost 60,000 planned flight tests points accomplished through 2011, the agency said.

The $1 billion in cost increases for the first 63 aircraft is on top of $373 million the Pentagon already has incurred for corrections of deficiencies discovered in development testing.

This week's testimony previews the GAO's annual report on the Defense Department's most costly weapons program, to be published next month.

The GAO's findings and the Pentagon's annual test report, issued in January, are the two primary sources that lawmakers and the public have for assessing the military's and Lockheed Martin claims for the F-35.

The reports are closely watched by the program's eight international partners, including Canada, Britain, Italy, Australia and Norway.

"Engineering changes have been persisting at relatively high rates and additional changes will be needed as testing continues," the GAO said Tuesday. "Manufacturing processes and performance indicators show some progress, but performance on the first low-initial production contracts has not been good."

Review-Journal writer Keith Rogers contributed to this report.