Lockheed's Stevens Says F-35 May Need `More Time, More Dollars'

The development phase of Lockheed Martin Corp.’s F-35 jet fighter, the most expensive U.S. weapon program, will likely take longer and more money than expected to complete, Chief Executive Officer Robert Stevens said.

The U.S. Defense Department and the company are “probably going to examine the need for more time, more people and more dollars,” Stevens said in an interview today in Washington.

The Pentagon is conducting a so-called Technical Baseline Review, led by F-35 program manager Vice Admiral David Venlet, in time for a scheduled Nov. 22 Defense Acquisition Board evaluation. The review may disclose broad ranges of potential cost increases and schedule delays on top of changes unveiled this year by the Pentagon, two government officials with knowledge of the program said this week.

The F-35 Joint Strike Fighter model being designed for the U.S. Marine Corps, with a short-takeoff and vertical-landing capability, is behind schedule, Stevens said.

“We have to improve the performance of that airframe,” he said. “The software has been performing well when it’s on the aircraft, but it’s going to take some more resources.”

The Pentagon has already mandated a 13-month extension to the current development phase to November 2015, shifting $2.8 billion in production funds for continued research and delaying the purchase of 122 jets to beyond 2015. The weapon program is estimated to cost $382 billion.

Lockheed, based in Bethesda, Maryland, advanced $1.03, or 1.5 percent, to $71.96 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have declined 4.5 percent this year.

Marine Corps Model

The Marine Corps model is the most complex of the three versions being developed and has fallen short of flight-test goals. As of Oct. 31, it has flown 168 times compared with a target of 209 tests, John Kent, a Lockheed spokesman, said in a statement today. Including flight tests of the Navy’s carrier- variant and the conventional-takeoff model, the plane has completed 321 flights, 28 more than planned by October, he said.

The model’s basic flying characteristics, propulsion system and structural integrity “are performing well,” Stevens said. By contrast, “supplier-provided components” such as cooling fans “are not demonstrating early reliability,” he said.

As a result, Lockheed is focusing more attention than planned on correcting supplier deficiencies. “That takes time, and that means we’re going to have to re-examine the flight-test schedule and program,” he said.

‘Reallocate Resources’

The Pentagon review led by Venlet is looking at program changes in the past year and asking, “how has performance unfolded, are we doing that which we expected on plan, are we better than planned, are we behind and, importantly, how do we reallocate resources to assure this program is successful,” Stevens said.

The $50 billion development phase may cost as much as $5 billion more, according to preliminary estimates in Venlet’s review, the two government officials said on condition of anonymity because the review hasn’t been made public yet.

Separately, Pentagon cost analysts now estimate the JSF may be as much as 1 1/2 times more expensive to maintain than the warplanes it will replace.

Slippage in the JSF’s timetable may be as much as one year for the Air Force and Navy versions, and two to three years for the Marine Corps model, the officials said.

Leaks Regretted

Pentagon spokesman Geoff Morrell today criticized release of the information, noting “the department regrets that someone chose to provide unauthorized and incomplete information to the press.”

“Admiral Venlet has been doing a soup-to-nuts review of the JSF program,” Morrell said. “It is the most thorough, the most extensive, the deepest dive yet we have done into the F-35 program.”

“But that assessment is not yet complete,” he said. “Therefore, what has been leaked to the press is premature, and I would suggest to you that in some respects it’s inaccurate.”

Stevens and Joseph Dellavedova, a U.S. Air Force F-35 program spokesman, said separately that the first two production aircraft, which were supposed to be delivered this month to Edwards Air Force Base, California, are undergoing modifications and will be delivered in April.

To contact the reporters on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net Gopal Ratnam in Washington at gratnam1@bloomberg.net.

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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