* McCain tweets figure, calls it "outrageous"
* Aide: figure given to Armed Services panel on Monday
* McCain has sought to put F-35 program on "probation"
(Adds details on McCain effort to put F-35 on probation, adds
By Jim Wolf
WASHINGTON, July 12 Lockheed Martin Corp's
(LMT.N) F-35 Joint Strike Fighter early-production models
overshot their cost targets by a combined total of $771
million, U.S. Senator John McCain said on Tuesday.
"Outrageous!" the top Republican on the Senate Armed
Services Committee said in a tweet. The Pentagon is seeking
$264 million in reprogrammed funding as a kind of downpayment
on the overrun, he wrote, adding: "Disgraceful."
Lockheed is developing three F-35 versions for the United
States and eight international partners at a projected cost of
more than $382 billion for 2,443 aircraft over the next two
decades. It is the most expensive U.S. arms purchase.
The Pentagon's F-35 Joint Program Office previously had
said total costs on the first three production batches overshot
their contractual targets by 11 to 15 percent. These
"cost-plus" deals required the government to pay most of an
The tweet from McCain, who has spearheaded opposition to
what he regards as wasteful arms programs, was the first public
disclosure of the overrun's dollar figure. The program office
reported the sum to the Senate Armed Services Committee staff
on Monday, a McCain aide said. He said it applied to the first
Lockheed Martin, the Pentagon's No. 1 supplier by sales,
and the program office had no immediate comment on McCain's
McCain has argued that the radar-evading F-35 cannot be
allowed to drain resources from other Pentagon modernization
over the next 25 years. He failed last month in a push to put
the program on "probation" at the end of this year if the
aircraft being built in the fourth, low-rate production lot
tops target costs by 10 percent or more.
McCain's amendment to the fiscal 2012 defense authorization
bill called for ending the program a year later, at the end of
2012, if costs were not contained.
The amendment failed on a 13-13 committee vote. But McCain,
who lost the 2008 White House race to President Barack Obama,
told Reuters last month that he planned to revive it on the
Senate floor when the bill comes to a vote.
"By rejecting my amendment, I believe we lost an
opportunity to tell the Pentagon and the prime contractor
(Lockheed Martin) that increased cost on the F-35 cannot and
will not be tolerated," McCain wrote in the panel's report on
its version of the defense policy bill.
The fourth production contract calls for Lockheed and the
government to share equally any cost overrun up to 120 percent
of the negotiated price. Lockheed would be responsible for any
overruns beyond that. If costs are below the target, the
government and Lockheed would share the savings equally.
Lockheed shares dipped 0.3 percent to close at $79.71 on
(Additional reporting by Susan Cornwell, David Alexander;
Editing by Tim Dobbyn and Matthew Lewis)