WASHINGTON A new restructuring plan for Lockheed Martin Corp's (LMT.N) F-35 Joint Strike Fighter has put the program on more solid footing and includes substantial government investment aimed at making the new jet more affordable, a senior Lockheed official said on Thursday.
Defense Secretary Robert Gates last month revamped the program for the second time in less than a year, amid an aggressive Pentagon drive to cut costs and secure more cost-efficient weapons programs.
The Pentagon's revamp would add $4.6 billion to the development program and cut 124 jets from production over the next five years.
Gates also warned that the Marine Corps variant faced cancellation if it did not show marked improvement in two years.
Larry Lawson, who took over as manager of the $382 billion fighter jet program in June, said Lockheed, the Pentagon's No. 1 supplier by sales, was closely involved at every stage of the restructuring and was committed to getting it right this time.
"I'm optimistic that we've got a better foundation underneath us," Lawson told Reuters in his first interview since taking over the program.
He said the extra development money includes "a substantial investment" in new processes, machines and materials to lower the cost of producing the airplanes, and insisted that remaining issues with the Marine Corps short takeoff variant could be resolved.
"I'm very confident; they're all solvable issues," he said, noting that the F-35B as it is also known, had already completed 26 vertical landings this year alone, more than twice the number done last year in total.
Lawson, Lockheed's former F-22 program manager, is known as a hands-on manager who said he talks daily with Vice Admiral David Venlet, the new three-star program manager brought in by Gates to replace the one his fired.
MATCHING "WAR ROOMS"
Lawson and Venlet have identical "war rooms" in Washington and Fort Worth, Texas, where Lockheed's program is based -- big rooms covered with dozens of paper charts that track the status of the complex weapons program, the most expensive in history.
"There's complete transparency in terms of the status of the program, a shared perspective on what the data means and how to go forward," Lawson said, describing Venlet as "a very deliberate individual" who shares his passion for details.
Venlet made his first public remarks on Tuesday, underscoring the Pentagon's commitment to buying a total of 2,443 F-35 fighter jets and insisting that the latest restructuring was realistic because was based on "very deep assessments" of all facets of the program.
"It is important ... having a common perspective and an informed perspective. It starts building the trust," said Lawson. But he acknowledged that it could take a year of good performance to restore confidence in the program.
He said Lockheed was in regular contact with congressional aides to lawmakers like Senator John McCain, the top Republican on the Senate Armed Services Committee, and hoped increasing flight tests and other results would help change his mind.
McCain told Gates on Thursday that he remains deeply concerned about the overall health of the F-35 program given cost increases and schedule delays in recent years.
"It has been an incredible waste of the taxpayers' dollar and it hurts the credibility of our acquisition process, our defense industry," McCain said. "It reinforces the view of some of us that the military-industrial-congressional complex that President Eisenhower warned us about is alive and well."
Asked about McCain's comments, Lawson said, "I'm disappointed. But I can only go forward from here."
Lawson said Lockheed and the Pentagon expected to complete work on a new integrated master schedule for the program this summer, about the same time they will start negotiating a contract for a fifth batch of production planes.
Lockheed and the Pentagon announced a fixed price contract for the fourth batch of planes in November.
COST ESTIMATES BEING REVISED DOWNWARD
The F-35 is supposed to be a low-cost replacement for more than a dozen fighter jets now in use around the world, but schedule delays and cost overruns have driven the projected average cost of three variants of the new fighter to $90 million apiece, nearly double the initial projected price tag of $50 million.
Pentagon acquisition chief Ashton Carter this week said the cost was still too high, but Lawson said the Pentagon's Cost Assessment and Program Evaluation office was revising downward its numbers to bring them more in line with actual contracts.
"There will be an update to those numbers," Lawson said, noting that the new Pentagon estimates would be very close to the prices in the fourth production contract.
(Editing by Steve Orlofsky)