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GAO Says Joint Strike Fighter Cost Is Rising

By Tony Capaccio
Bloomberg News
Wednesday, March 12, 2008

The cost of Lockheed Martin's Joint Strike Fighter, already the most expensive weapons program ever, is projected to increase as much as $38 billion, congressional auditors said yesterday.

That would bring the price of 2,458 F-35s to $337 billion, 45 percent more than estimated when the program began in October 2001.

"Midway through development, the program is over cost and behind schedule," Michael J. Sullivan, director of acquisition and sourcing management for the Government Accountability Office, told two panels of the House Armed Services Committee that oversee military spending.

The 12-year development of the fighter jet is entering its most challenging phase, including test flights, completing the software, finishing design of the three F-35 models and refining manufacturing processes at Lockheed and its subcontractors.

Sullivan said the Pentagon has identified billions of dollars in unfunded requirements, continued delays and "substantial" production inefficiency by Lockheed and engine-maker Pratt & Whitney that will increase costs.

At $337 billion, the Joint Strike Fighter's price would be more than twice that of the Pentagon's second-most expensive weapons program, the $160 billion Future Combat System.

The projected cost has been revised before. Sullivan said three new assessments, including one by the Pentagon's Cost Analysis Improvement Group, found that the current estimate of $299 billion "is not comprehensive, is not accurate, is not well-documented and is not credible."

Lockheed Martin and the Defense Department's program office are preparing a new estimate that is "expected to be much larger than what is now budgeted," Sullivan said.

The Joint Strike Fighter is designed to be almost undetectable by radar and capable of supporting ground troops. The production phase calls for at least 2,458 fighters for the Air Force, Navy and Marine Corps. Three versions of the plane are to be built, including a short-takeoff and vertical-landing model for use on amphibious warfare vessels and aircraft carriers.

John J. Young Jr., the undersecretary of defense for acquisition, said he disagreed with the GAO assessment. He said the Pentagon would require a "modest" amount of extra money for the development phase, which is now projected to cost $44.2 billion. He did not say how much extra.

"I don't agree with those numbers," Young said in an interview after the hearing, referring to the GAO's figures. "We have some cost issues" that were caused by Lockheed Martin missing schedules for blueprints and aircraft. "We are talking to them right now" about a new schedule.

"Some of our cost issues are a good company not doing its work on time and aggressively trying to recover on the factory floor," he said. "I've asked them to refocus some attention on the program."

Even with the cost overruns, "this has been a well-planned and reasonably well-executed program," Young said.

Lockheed Martin had no comment.

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