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Lockheed’s Next F-35 Tied to Testing Progress, U.S. Says

The next contracts for Lockheed Martin Corp. (LMT)’s F-35 jet, the U.S.’s costliest weapons program, will be tied more closely than previous ones to testing, assembly and software progress, the Pentagon’s program manager for the fighter said today.

Six of the 31 aircraft in the next round won’t be awarded until Lockheed Martin, the world’s biggest defense contractor, meets at least five criteria, including successful review this year of the latest software release, Vice Admiral David Venlet told the Senate Armed Services Committee’s airpower panel, according to a prepared statement.

The steps are the latest efforts to control costs for the $395.7 billion acquisition program. The first four contracts for 63 jets are exceeding their combined target cost by $1 billion, according to congressional auditors.

“The development program is taking longer and costing more to overcome technical issues,” Venlet said in prepared testimony. “The strategy continues the department’s rigorous management control.”

“It is important that Lockheed Martin dependably perform and establish confidence that the F-35 is a stable and capable platform,” Venlet said.

70% Increase

The F-35’s total acquisition cost has increased 70 percent, to $395.7 billion last month from $233 billion in late 2001 when the development phase began. The costs are calculated in comparable, inflation-adjusted “then-year dollars.”

The program’s projected “life cycle cost” -- including development since 1994, production of 2,443 jets and 55 years of support -- increased to $1.51 trillion from $1.38 trillion in 2010, Pentagon officials told reporters March 30.

The new approach “buys quantities based upon development and test progress,” Venlet told the panel in his statement.

“This strategy provides a means to have control -- a dial -- on production that is informed by demonstrated performance against the 2012 plan,” Venlet said.

It also seeks a reduction in the “concurrency,” or overlap between production and testing, that has forced retrofits when problems cropped up, he said.

Venlet said Bethesda, Maryland-based Lockheed Martin has agreed to the plan, which takes effect with the contract signed for this fiscal year’s 31 aircraft and as many as 29 proposed for fiscal 2013.

The House committee that authorizes military spending and the defense appropriations subcommittee this week approved the 29. The Senate hasn’t made final its version of the bill.

Passing Criteria

To receive funding for six of the 31 aircraft, Lockheed Martin will need to meet at least five criteria, Venlet said.

Among them are a successful review for Block 3 software, the most advanced; progress at improving the speed at which retrofits are made to assembled aircraft after testing deficiencies are uncovered; and progress in meeting 2012 flight test and durability test goals.

Lockheed Martin said today the F-35 completed 123 test flights in March totaling 223 flight hours -- a monthly record in the 11-year-old system development phase.

Venlet said the aircraft’s overall basic designs “are sound and will deliver.”

Software development, “coupled with flight-test execution, will remain the major focus,” Venlet said. “I have observed past and current performance by industry on software that gives me concern about the ability to deliver full capability within the current schedule,” he said.

Venlet said the program’s parallel development and production have resulted in aircraft retrofits that “are very real and affect schedule and cost in hardware, software, test and production.”

The overlap will decline as the program approaches the end of development in 2016, he said.

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

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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