Executives from Bethesda-based defense giant Lockheed Martin sought to reassure investors after a top Defense Department official criticized the cost of the F-35 Joint Strike Fighter, a $90 million jet that is the crown jewel of Lockheed’s business, in a news conference Tuesday morning.
Acting secretary of defense Patrick Shanahan, a former Boeing executive, said the F-35 “has room for a lot more performance” in response to questions about whether he is biased toward his former employer, which competes with Lockheed for Pentagon weapons deals. His comments come amid news reports that the Pentagon is considering buying F-15 fighter jets from Boeing.
“I am biased toward performance,” Shanahan said. “I am biased toward giving the taxpayer their money’s worth. And the F-35, unequivocally, I can say, has a lot of opportunity for more performance.”
Lockheed Martin chief executive Marillyn Hewson responded by saying she had been assured by Defense Department officials that any purchase of Boeing F-15 jets would not affect how many F-35s it buys.
“If they chose to have an order on F-15 … it won’t be at the expense of F-35 quantities,” Hewson told investors when an analyst raised the issue in the company’s quarterly earnings conference call. “I’m hearing that directly from the leadership in the Pentagon … not just our suspicion, but I’ve been told that directly. So I’m not concerned about that.”
Almost since its inception, the F-35 has been criticized by acquisition experts and politicians from both parties for its soaring costs. In 2017, then-Chairman of the Senate Armed Services Committee John McCain called it a “poster child for acquisition malpractice” as he took the Pentagon and Lockheed Martin to task for delays and cost overruns.
President Trump drew attention to the plane’s “out-of-control” costs in a tweet early in his presidency, in which he threatened to “price out a comparable F-18 Super Hornet” to save money on the F-35 as the Defense Department was negotiating with Lockheed Martin over the price of its 10th shipment of 90 planes. The Defense Department later announced a deal that was roughly in line with what had already been planned, shaving an estimated $728 million in costs.
The F-35 has continued to be a major driver of business for Lockheed Martin. Earlier this year, the company announced that it had added more than 250 aircraft to its order backlog at an estimated value of $19 billion, bringing the company’s overall order backlog to over 400 aircraft.
In a Tuesday call with investors, Hewson seemed to push back on criticism of the plane’s costs, pointing to her company’s progress toward getting the plane’s unit cost down to $80 million. The plane’s sticker price dropped below $90 million for the first time last year as the company has been producing the planes at a faster rate.
“We’re going to continue to drive the price down … and we won’t stop there,” Hewson said. “We will always be looking at ways that we can take cost down in the program as it continues to mature and grow.”
This article has been updated to reflect the fact that Marillyn Hewson’s comments came in response to a question from an analyst.
Paul Sonne contributed to this report.