Pentagon sees no erosion on F-35 total buy

US Senator Carl Levin (D-MI) answers reporters' questions during the 2009 Reuters Washington Summit in Washington, October 19, 2009 file photo.

WASHINGTON (Reuters) - The Pentagon's chief arms buyer on Thursday said he was not seeing signs that the U.S. military services or international partners would cut their planned purchases of Lockheed Martin Corp F-35 fighter jets, but acknowledged that was a risk for such a big program.

Defense Undersecretary Ashton Carter said a restructuring plan would put the $300 billion radar-evading new fighter on a more realistic footing for the future, and underscored the Pentagon's continued commitment to the program.

But he said officials would continue to work closely with Lockheed and its industry partners, offering incentives for improved performance against specific milestones.

"We now have a realistic program plan going forward for the Joint Strike Fighter -- not a blindly optimistic one, but not a fatalistic one either," Carter told reporters during a meeting in Fort Worth, Texas, with industry chief executives and top officials from the eight countries developing the new plane.

The chief Pentagon arms buyer said the restructuring plan would stretch the development phase by 13 months -- not the 30 months initially recommended by an independent review panel. The plan also added new aircraft to accelerate testing and called for appointment of a three-star military officer to oversee the program, he said.

But he emphasized that the program remained the core of the Pentagon's future fighter fleet, and said no fundamental technological or manufacturing problems had surfaced.

He also said he did not expect cuts in the overall number of 2,443 jets to be bought by the U.S. military services or international partners, but said the risk of a "death spiral" in which lower orders push the cost of each airplane higher, ultimately trimming affordability, was clearly driving Pentagon efforts to fix the program now.

"I have not been hearing that here at this meeting," Carter said. "Most of the partners have a real need for the Joint Strike Fighter as we do, and delay is not in their interest. They'd like to see the program stay as close to schedule as possible. They obviously want affordable aircraft as well."

"It's an all for one and one for all kind of thing."

Pentagon Comptroller Robert Hale on Wednesday said any further cost growth in the F-35 program would result in cuts to the number of fighters the Pentagon is able to buy.

"I think we are to the point in our budgetary situation where, if there is unanticipated cost growth, we will have to accommodate it by reducing the buy," Hale was quoted as saying by Defense Daily, a trade publication.

In Washington, lawmakers on the U.S. Senate Armed Services Committee on Thursday underscored mounting concerns about the program, and scheduled a separate hearing next week to dig deeper into projected cost overruns and schedule delays.

The committee's chairman, Carl Levin, a Michigan Democrat, said the hearing was needed, given recent revelations of troubles with the system design and demonstration phase, the Pentagon's decision to fire the F-35 program manager, news of delayed fielding of the fighters, and expected cost overruns.

"There's a lot of questions that need to be answered," Senator John McCain, the top Republican on the committee, said, noting that just a month ago Defense Secretary Robert Gates had told lawmakers he did not expect the delays in when the service would start using the new fighters in combat.

McCain, who requested next week's hearing, said he remained concerned about the ability of the F-35 test program to detect and anticipate problems, how effectively software risk will be managed going forward, and the reliability of flight testing and production schedules.

Lockheed Chief Executive Robert Stevens said the restructuring plan was very clear, and the industry team was committed to improving its performance on the program.

He said the contract offered Lockheed the opportunity to win back some of $614 million in withheld award fees, and to add back in some of the 122 production aircraft trimmed from the Pentagon's five-year budget plan if it performed well.

"If that performance is better than the baseline plan, then we'll be able to offer the jets less expensively and more jets will be procured and in that way will be a countervailing pressure against that ... 'death spiral' that we are all quite familiar with," he said.

Lockheed built the F-22 fighter, where unit costs soared as the government trimmed its planned purchases from 750 to 187.

Levin said a date for the committee's F-35 hearing should be finalized later this week.

Air Force Secretary Michael Donley told senators the program would likely breach congressional cost thresholds, but said officials were already taking all the actions required under the mandatory "live or die" review that would trigger.

Donley told reporters this week no "showstoppers" had emerged during the review that could lead to cancellation, and the Pentagon had no alternatives to the fighter.

(Reporting by Andrea Shalal-Esa; Editing by Gary Hill)