F-35 Production Depends on Tests Not Budgets, Carter Says

Increased production of Lockheed Martin Corp.’s (LMT) F-35 depends more on how the fighter fares in testing than how deeply the Pentagon budget is cut, Deputy Defense Secretary Ashton Carter said.

“The principle thing that is determining in the next couple of years” whether to ramp up production of the Joint Strike Fighter “is less our budget situation than it is the maturity of the program,” Carter said in an interview.

The comments by Carter, who’s preparing to leave his post as the Pentagon’s No. 2 civilian official on Dec. 4, reflect the Defense Department’s continuing effort to shelter the costliest U.S. weapons system from $500 billion in defense spending cuts over a decade under the budget process called sequestration.

“Nothing’s going to be completely insulated” from planned budget reductions, “but the Joint Strike Fighter program is in a lot better position that it was four years ago,” Carter, who has overseen efforts since 2009 to reduce spiraling costs of the program, said in the Nov. 19 interview.

The current price tag for 2,443 aircraft is $391.2 billion, a 68 percent increase from the projection in 2001, as measured in current dollars. The number of aircraft the Pentagon plans to buy is 409 fewer than called for originally. This year, lawmakers, the Government Accountability Office and the Pentagon’s test office have said the aircraft is making progress in flight tests and in stabilizing production.

“Our industry partners came to understand that the key to the Joint Strike Fighter was control of cost,” Carter said. “That’s what we’ve been working on these last four years.”

Saving $48.5 Billion

The Congressional Budget Office said last week in its annual menu of options for reducing the federal deficit that the Pentagon could save as much as $48.5 billion in budget authority through 2023 ending the program at the 150 already on order, while continuing to buy Boeing Co. (BA) F-18E/F fighters and Lockheed F-16s. The Pentagon’s current plan has it buying about 2,300 F-35s through 2037 in addition to about 150 on order the agency said.

The F-35 program has political support on Capitol Hill because it includes contractors in 45 states with 1,300 suppliers supporting 133,000 jobs, according to Bethesda, Maryland-based Lockheed. United Technologies Corp. (UTX)’s Pratt & Whitney unit makes the engines in Connecticut.

Eight primary international partners have committed to buying the plane, including the U.K., Canada and Australia.

The Pentagon’s current budget plans call for increasing production to 42 of the fighters in fiscal 2015, which begins Oct. 1, from 29 each this year and the previous year. The rate would increase to 62 in 2016, 76 in 2017 and 100 in 2018, according to internal Pentagon budget documents.

Carter, 59, was the Pentagon’s top weapons buyer before taking over as deputy secretary in late 2011. He has tackled challenges including equipping U.S. troops in Iraq and Afghanistan with fortified vehicles and other equipment, informed by visits with the troops during eight trips to Afghanistan.

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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