Lockheed F-35 Cost Seen Rising by $1 Billion on More Testing

(Bloomberg) -- Flight testing of Lockheed Martin Corp.’s F-35, the Pentagon’s costliest program, will take about a year to complete and require at least $1 billion more than planned, Congress’s watchdog agency said.

Citing “cascading testing delays,” the Government Accountability Office said in a report issued Monday that the remaining 10 percent of the development phase should be completed before the Defense Department makes “significant new investments” in the fighter jet.

The Pentagon’s F-35 program office said the flight testing will be completed by January or February and cost an additional $532 million that can be absorbed in funding for the F-35 program and not from the military services. The projected completion date originally was next month.

But that timeline “is optimistic as it does not reflect historical F-35 test data,” the GAO said in its annual report on the fighter, which cited continuing flaws in the software required to the give the advanced plane its full capabilities.

“Program officials estimate that a delay of five months will contribute to a total increase of $532 million to complete development,” the GAO said. But “the longer delay estimated by GAO will likely contribute to an increase of more than $1.7 billion, approximately $1.3 billion of which will be needed in fiscal year 2018.”

The “significant new investments” that the GAO said should be delayed involve more than $1.2 billion in the next fiscal year to start the upgrade to “Block 4” software and capabilities and a down payment on spare parts.

Pentagon’s Response

Joe DellaVedova, spokesman for the Defense Department’s F-35 program office, said in a statement that the GAO report is “factually accurate,” but the program office “does not fully agree with all of their conclusions and, in a few instances, statements are made without context or qualifying information.”

For example, he said, “we do not agree with the GAO’s assessment that an additional billion dollars will be needed.” He said the “the remaining cost to complete the F-35’s $55 billion development program is estimated to be $2.3 billion –- money which was already budgeted for the program.”

The Pentagon’s acting weapons buyer, James MacStravic, said in written comments in the report that the program has undergone a comprehensive assessment and “so far, the testing remains on track to complete in February 2018.”

The GAO report comes as the Defense Department is mulling an increase in its fiscal 2018 request for F-35s to a planned 70 from the 63 requested this year. The number would rise to 80 in fiscal 2019. There’s also a pending “block buy” of 440 aircraft in the coming years as the Pentagon seeks a total fleet of 2,443, including 1,763 for the Air Force.

The F-35 program is projected to reach peak production rates for U.S. aircraft in 2022, the GAO said, at which point the Department of Defense expects to spend more than $14 billion a year on average for a decade.

“Given these significant acquisition costs, we found that DOD would likely face affordability challenges as the F-35 program competes with other large acquisition programs, including the B-21 bomber, KC-46A tanker, and Ohio Class submarine replacement,” the agency said.

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

To contact the editors responsible for this story: Bill Faries at wfaries@bloomberg.net, Larry Liebert, C. Thompson