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Pentagon Won't Pay More for Lockheed's $92 Million JSF, Weapons Buyer Says

The Pentagon won’t pay more for Lockheed Martin Corp.’s Joint Strike Fighter, which has almost doubled in cost to $92 million a jet, the defense acquisitions chief said today.

“We’ve got to get the cost growth under control,” Ashton Carter said today at a conference in New York. “Those who work on the Joint Strike Fighter know full well that is the expectation. I believe it is something that can be done, but I am not happy with the situation we find ourselves in.”

The original estimate of the F-35’s cost, in 2002, was $50 million a plane. The higher expense “may drive away customers,” Carter said.

The Pentagon now projects the program, which includes models for use by the U.S. Navy, Air Force and Marines, will have a combined cost of $382 billion.

Carter is leading a review of development delays and the program manager, Vice Admiral David Venlet, is conducting a so- called technical baseline assessment, which a Pentagon spokesman called a “deeper dive so as to avoid future surprises about this program.”

Neither the U.S. House nor the Senate has completed action on the fiscal 2011 defense budget that requested about $6.8 billion in production funds for 43 aircraft. The full House passed a policy bill in May that restricts funding for 13 of the 43 requested jets until the Pentagon certifies that flight-test goals are met.

The fiscal 2011 defense budget calls for about $6.8 billion in production funds for 43 F-35 aircraft. Photograph: Brendan Smialowski/Getty Images Close

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The fiscal 2011 defense budget calls for about $6.8 billion in production funds for 43 F-35 aircraft. Photograph: Brendan Smialowski/Getty Images

‘Difficult Stage’

The F-35, already about four years behind schedule, “is at that stage that is always difficult, the transition from development to production,” Carter said. It’s particularly challenging since there’s substantial overlap between construction and testing, he said.

“The inevitable consequence is that we discover things in test that have to be fixed,” Carter said. “You try to manage that.”

The Pentagon has maintained an option to purchase more F- 18s, built by Boeing Co., if development of the F-35 falters. The number of F-18s was reduced in 1997 during the F-35’s early development, and Boeing eventually lost the competition to build that aircraft to Lockheed.

Chicago-based Boeing monitors the F-35’s progress and can supply more F-18 Super Hornets or F-15 Strike Eagles to the military if needed, Dennis Muilenburg, head of Boeing’s defense unit, said in a New York interview. The Super Hornet has a per- unit cost of less than $50 million and cutting-edge technology, he said.

“We know our customers have significant challenges right now on how they fit the capability they need into a limited budget,” Muilenburg said. “If there’s a desire to increase the size of the Super Hornet fleet, we are well prepared and equipped to do that.”

Lockheed Martin climbed $1.36, or 2 percent, to $69.40 at 4:15 p.m. in New York Stock Exchange composite trading. Boeing gained $1.95, or 3.1 percent, to $65.72.

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

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

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