GAO Finds Billion Dollar Overrun on Initial F-35 Production

by: Matthew Potter
March 21, 2012

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

Testifying to Congress yesterday the Government Accountability Office (GAO) reported on cost growth and overruns of the F-35 Joint Strike Fighter (JSF). The JSF program headed by Lockheed Martin (LMT) suffered cost increases of a billion dollars on the first four production orders for the aircraft.

These buys are for 63 aircraft which means about an average of almost $16 million each. The F-35 is the largest acquisition program in the world and ultimately over 2,000 will be built for the U.S. and allies to replace the F-16, F/A-18 and A/V-8A aircraft.

The cost overruns will be shared by the government and Lockheed in about a 65-35 ratio.

The GAO stressed there have been some improvements in the program and its stability but expressed concerns that there is still too much concurrency in it with simultaneous production, development and testing. This could lead to changes to the aircraft as they are being built adding time and cost.

The F-35 has suffered from schedule delays as it works through the testing and development program. One of the reasons for this added time and cost is that there are three different versions of the aircraft. One has vertical takeoff ability, another short and the the third conventional. This is for use not only on aircraft carriers but also to replace the unique capabilities of the A/V-8 Harrier which can land and take off vertically.

With the expected decline in the defense budget further increases like this will not only stretch out the production timeline but also reduce available funds for other programs. The Air Force has to invest in new tankers and bomber aircraft as well as the JSF. The Navy could see it needing more funds for ship building and the Marines ground vehicle programs could suffer.

As with all defense programs as time goes by it will solve its issues but the Pentagon has to face the question as to at what cost.

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