Lockheed F-35 output should slow: program chief

WASHINGTON Fri Dec 2, 2011 7:10pm EST

The F-35 Lightning II, also known as the Joint Strike Fighter (JSF), planes arrive at Edwards Air Force Base in California in this May 2010 file photo. REUTERS/Tom Reynolds/Lockheed Martin Corp/Handout

The F-35 Lightning II, also known as the Joint Strike Fighter (JSF), planes arrive at Edwards Air Force Base in California in this May 2010 file photo.

Credit: Reuters/Tom Reynolds/Lockheed Martin Corp/Handout

WASHINGTON (Reuters) - Production of Lockheed Martin Corp's (LMT.N) F-35 Joint Strike Fighter, the costliest arms purchase in history, should be slowed because of the potential number of airframe cracks and "hot spots" turning up in testing and analysis, the Pentagon's F-35 program director said.

"The analyzed hot spots that have arisen in the last 12 months or so in the program have surprised us at the amount of change and at the cost," U.S. Navy Vice Admiral David Venlet, the program chief, said in an interview published Thursday.

"Most of them are little ones. But when you bundle them all up and package them, and look at where they are in the airplane and how hard they are to get at after you buy the jet, the cost burden of that is what sucks the wind out of your lungs," he said.

"I believe it's wise to sort of temper production for a while here, until we get some of these heavy years of learning under our belt and get that managed right," Venlet added.

The Pentagon program office confirmed the vice admiral's quotes on Friday. He spoke in an interview with AOL Defense, a web site aimed at the industry.

The Pentagon currently plans to buy more than 2,440 F-35 aircraft in three models, at a projected cost of $382.5 billion through 2035. It has been developed with eight foreign partners to replace at least 13 types of aircraft, including Lockheed's F-16, for 11 nations initially.

The Defense Department already has restructured the F-35 program twice in recent years, with the next production batch due to fall to 30 from a previously planned 42. Venlet did not say how much more he favored slowing output.

The program chief raised doubt about the acquisition strategy known as "concurrency," under which Lockheed builds production models even as flight testing continues with fixes to be incorporated later.

"Fundamentally, that was a miscalculation," Venlet told AOL Defense. He said more changes were required than had been hoped and new planes had to be torn apart for modifications to make sure they would last the full 8,000 flight hours planned.

Lockheed, the Pentagon's No. 1 contractor by sales, has projected the radar-evading F-35 would account for just over 20 percent of its revenue when it hits full production. It says it expects to sell about 750 aircraft to the co-development partners.

F-35 competitors include Saab's Gripen, the Dassault Rafale, Russia's MiG-35 and Sukhoi Su-35, and the Eurofighter Typhoon made by a consortium of British, German, Italian and Spanish companies

The plane is currently in early, low-rate production. It has been expected to ramp up to full output, with the concomitant economies of scale, by 2015 or 2016 once it gets a U.S. government go-ahead.

Lockheed said Friday that none of the required changes to the F-35 are safety issues, affect aircraft performance or go beyond "normal expectations."

"Going forward, the savings associated with building at increased production rates will continue to mitigate the diminishing concurrency costs," Michael Rein, a company spokesman, said by e-mail.

The cost to upgrade and maintain the aging aircraft that the F-35 is designed to replace should be factored into the equation, he added.

Separately, General Electric Co (GE.N) and Rolls Royce (RR.L) dropped their drive Friday to build an alternate engine for the F-35, giving up on what they had said could be a $100 billion market.

The decision "recognizes the continued uncertainty in the development and production schedules for the JSF program," the companies said in a joint statement. It was a boost for United Technologies Corp's (UTX.N) Pratt & Whitney unit, maker of the engine used in the F-35's early production models.

House of Representatives' Armed Services Committee Chairman Howard McKeon, a second engine backer, voiced disappointment that "the uncertainty regarding the future of our military budget, and the Joint Strike Fighter program in particular," had ended what he considered a model for government-industry partnership to contain costs.

"But decisions that could cripple our national security and our economy are being made today that will be difficult, if not impossible, to undo tomorrow," the California Republican added in a statement.

He was referring to deep spending cuts mandated by a U.S. congressional "super committee" failure to strike a $1.2 trillion deficit reduction deal last month. That could force cuts totaling some $1 trillion from security-related spending over 10 years, compared with Obama administration projections a year ago.

(Additional reporting by Andrea Shalal-Esa; Editing by Vicki Allen and Gunna Dickson)

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