Senators Levin and McCain Send Questions on F-35 Reprogramming

by: Matthew Potter
July 15, 2011

Category: Business Line, Companies, Congress, Contract Awards, Department of Defense, development program, Events, Federal Budget Process, Lockheed Martin, Military Aviation, production program, Proposal, Restructuring, Services, U.S. Air Force, U.S. Marine Corps, U.S. Navy | RSS 2.0

Earlier this week it was reported, and tweeted, by Senator John McCain (R-AZ) that the Department of Defense as part of a reprogramming request needed $264 million to cover cost increases on the first three Low Rate Initial Production (LRIP) contracts for the F-35 Joint Strike Fighter (JSF). Now Senator Levin (D-MI) the Chairman of the Senate Armed Services Committee (SASC) and McCain, the Ranking Member, have sent a letter with a series of questions to OSD about the reprogramming and the Government’s obligations to lead contractor Lockheed Martin (LMT).

The Omnibus Reprogramming request which is often annually submitted to Congress by OSD allows the move of large amount of funds from different appropriations and services to pay higher priority bills. Often during the years of heaviest engagement in Iraq and Afghanistan it converted Research & Development (RDT&E) and Procurement funds to those used to pay for Operations and Maintenance (O&M). In this years’ it asked for the $264 million to be reprogrammed to pay for “cost growth on the first three F-35 low rate initial production lots (LRIPs 1-3).” It also informed the Congress that there would be a requirement for a further $496.2 million found within JSF’s funding to pay for the rest of the cost increases coming to a grand total of $760.2 million.

The letter asks the Department to answer a series of questions and says the reprogramming won’t be considered until they are answered. These include whether the Government is legally obligated to pay the cost increases, what would be the effect if the request for reprogramming was denied, what other alternatives are there, are the cost increases recoverable, what would be the termination costs for the F-35 program, and how Defense intends to prevent these types of overruns in the first place.

This is the second time in recent months that McCain has raised the specter of cancelling the F-35 contract. Earlier he had tried to have an amendment added to the Authorization Bill requiring termination if cost growth was above a certain point. That failed in Committee by one vote. Now it is clear that Levin, the senior Democrat on the Committee and Chair, is willing to at least put the question out there.

Termination costs for a contract like the F-35 development and production would most likely be in the billions. While McCain has led discussion of this idea it will be hard for the Government to end the program. There is still a requirement for a new aircraft to replace the aging F-16, F/A-18 and AV-8A systems in current inventory. The U.S. has finished buying F-22 and the production line will be shutting down. The F/A-18 is available but any other exiting aircraft that might be considered is non-U.S. A new development program could be started but that would probably end up being more expensive then the current F-35.

Even so the continued cost growth in the program is leading many in Congress to reconsider the future investment in the F-35 in this time of budgetary pressures. McCain especially seems likely to keep up the pressure on the program and Lockheed.

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