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GAO analyst says cost overruns, delays continue to plague F-35 program

By Dana Hedgpeth
Friday, March 12, 2010; A13

A congressional auditor said Thursday that the Joint Strike Fighter, the Pentagon's most expensive weapons program, "continues to struggle with increased costs and slowed progress," leading to "substantial risk" that the defense contractor will not be able to build the jet on time or deliver as many aircraft as expected.

Michael Sullivan, the U.S. Government Accountability Office's top analyst on Lockheed Martin's jet fighter, also known as the F-35 Lightning II, told the Senate Armed Services Committee in a hearing that the cost of the program has increased substantially and that development is 2 1/2 years behind schedule.

The United States plans to buy about 2,400 of the fighter jets for the Air Force, the Marine Corps and the Navy. The projected cost for the program appears to have increased to $323 billion from $231 billion in 2001, when Bethesda-based Lockheed won the deal, according to Sullivan. Eight other countries -- Britain, Italy, the Netherlands, Turkey, Canada, Australia, Denmark and Norway -- also plan to buy the jets.

The cost to build the plane is now expected to be $112 million per aircraft, according to a GAO auditor.

Sullivan said the program's "negative outcomes" were "foreseeable as events have unfolded over several years." He said that the cost increases have occurred largely because Lockheed and the Pentagon are "trying to invent things and build them at the same time," leading to costly changes in how the plane is being developed, built and tested. That continues to take "more time, money and effort than budgeted."

Sullivan criticized the Defense Department, saying it "does not have a full, comprehensive cost estimate for completing the program," and noted that it has "fallen short" of its expectations year after year. He said, "Constant program changes and turbulence have made it difficult to accurately and confidently measure progress and maturity of the aircraft system."

Lockheed officials said that the cost increases in the program since its inception are in part the result of changes the Pentagon has made to the program and that they are working to keep the program on time.

Defense Department officials tried to defend the program before congressional leaders, saying that they are in the process of restructuring it.

Ashton Carter, the Pentagon's top weapons buyer, said the cost increases will breach limits placed under the Nunn-McCurdy law, which requires additional scrutiny from Congress when a program is over-budget.

Carter said the additional costs were attributable to increases in labor and overhead rates, in prices of titanium and in subcontractor costs.

"We're asking you to pay more than we said it would cost, and that's unacceptable," Carter said. "We need to wrestle this back into some sort of realistic box."

Sen. Carl M. Levin (D-Mich.), chairman of the Armed Services Committee, and Sen. John McCain (R-Ariz.) questioned the cost increases in the program. "This raises great concern," Levin said. "People should not conclude that we will be willing to continue that strong support without regard to increased costs coming from poor program management, or from a lack of focus on affordability.

"We cannot sacrifice other important acquisitions in the DOD investment portfolio to pay for this capability."

Thursday's hearing comes about a month after Defense Secretary Robert M. Gates said he would fire Marine Maj. Gen. David R. Heinz, the executive officer in charge of the F-35's development, and withhold $600 million in fees from Lockheed.

The recent troubles in the fighter jet program show that there may be more severe issues than Pentagon officials had anticipated, industry analysts said.

If other countries become nervous about troubles with the F-35 and back out of buying some of the planes, that could drive up the price of the aircraft, analysts said.

The concerns about the F-35 come as the Obama administration is asking Congress to provide $11.4 billion overall for the Joint Strike Fighter program next year, including $8.4 billion to buy 43 planes.

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