Pentagon Cuts $6.9 Billion by Delaying Lockheed F-35s

The Pentagon reduced its five-year budget request by $6.9 billion by delaying the purchase of 124 F-35 fighter jets from Lockheed Martin Corp., the military program office said today.

The delay beyond fiscal 2016 was announced Jan. 6 by Defense Secretary Robert Gates, part of about $178 billion in military-wide savings. The exact dollar impact of slowing down the F-35 program was not disclosed at the time. That answer was provided today by the F-35 military program office.

After increasing the on-going F-35 development phase by $4.6 billion, “approximately $6.9 billion was returned to the services over the 2012-2016 time frame,” the military program office said in an e-mail statement.

The Pentagon plans to request 32 aircraft next year, down from a planned 45; 42 in fiscal 2013 from a planned 71; and 62 in fiscal 2014 from a planned 90, according to the Pentagon.

Earlier last year, 122 of the aircraft were delayed when the Pentagon announced a 13-month slip in the development schedule.

The delays are needed because “the final assembly process” at Lockheed Martin’s Fort Worth, Texas, facility is “still maturing,” the Pentagon said in a fact sheet issued Jan. 6. Second, slowing production reduces the overlap between development and assembly while testing is extended into 2016 from mid-2015, it said.

Lockheed Martin spokesman John Kent had no immediate comment on the program office e-mail.

The F-35 stealth fighter is the Pentagon’s biggest acquisition program at $382 billion for close to 3,000 planes for the U.S. military and international allies.

Delays, Probation

Purchases through 2016 of the Marine Corps’s short-takeoff and vertical-landing version were cut to 50 from 110, reflecting two years of additional development testing Gates directed as he put that aircraft on “probation.”

The version “is experiencing significant testing problems” that “could lead to a redesign of the aircraft’s structure and propulsion -- changes that could add yet more weight and more cost to an aircraft that has little capacity to absorb,” Gates told reporters.

“If we cannot fix this variant during this time and get back on track in terms of performance, cost and schedule, then I believe it should be canceled,” he said.

The program office today said each issue “is readily solvable through engineering adjustments, and then testing to validate the sufficiency of the adjustment.”

Engineers are currently focused on the STOVL propulsion system’s lift-fan, clutch, and drive shaft, the program office said. The door assemblies around the propulsion system “will likely need selective redesign to increase durability,” it said.

The Navy plans to buy 371 Marine Corps versions out of the 680 aircraft in its share of the program. The Marine version is intended to replace the AV-8B Harrier.

More Costly Development

The Pentagon added $4.6 billion to what’s now a $50.8 billion development phase; $37 billion has been spent to date on the cost-plus award fee contract that includes a certain amount of money set aside for potential profit.

Cost-plus contracts also require the Pentagon to pay for any overruns.

Lockheed Martin won’t make any extra profit on the additional $4.6 billion, however, the program office said.

“The program is in the process of assessing the appropriate incentives that will take into consideration the additional funding provided,” it said.

The added funding will address known needed “improvements to the propulsion lift system,” and additional durability and structural testing shortfalls, the program office said.

The additional funding also addresses “unknown items that may be discovered in developmental flight test,” the e-mail said.

To contact the reporter on this story: Tony Capaccio in Washington at +1- acapaccio@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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