October 23, 2009 / 8:22 PM / 9 years ago

UPDATE 1-Pentagon study shows F-35 jet to cost more--report

* Will need billions of dollars more, more time—report

* Study: program not markedly improving—InsideDefense.com

* Lockheed sees “modest risks” but “no substantial delay” (Adds Lockheed Martin comment, paragraphs 12-15)

WASHINGTON, Oct 23 (Reuters) - A new Pentagon study has affirmed previous findings that Lockheed Martin Corp’s (LMT.N) F-35 Joint Strike Fighter aircraft, the costliest U.S. arms purchase program, will require billions of dollars more than planned, and more time, an online news service said on Friday.

A military “joint estimate team” tasked in July to examine the program has found the F-35 program’s performance “is not markedly improving,” InsideDefense.com said, citing an unidentified source.

Lockheed is developing three radar-evading F-35 models to replace at least 13 types of aircraft, initially for 11 nations.

The United States plans to buy 2,443 F-35s. Purchases by partner nations Britain, Canada, Italy, Denmark, Netherlands, Norway, Turkey and Australia and others could raise production to 3,000 or more.

Northrop Grumman Corp (NOC.N) and BAE Systems Plc (BAES.L) are Lockheed’s chief F-35 sub-contractors.

“A new assessment of the Joint Strike Fighter program affirms earlier findings that substantially more money and time are required for the Pentagon’s largest acquisition effort, a conclusion that could pose a formidable test of Defense Secretary Robert Gates’ recent support for the F-35 program and President Barack Obama’s pledge to terminate weapons with bloated price tags,” InsideDefense.com reported.

Its headline said the program would need “billions” more.

Obama vowed in March to reform the Pentagon’s procurement practices and to crack down on programs that run over budget.

    Earlier this year, Defense Secretary Robert Gates decided to cap production of the Lockheed F-22 fighter at 187 planes, citing his support for the $300 billion F-35 program.

    The study was undertaken to update one last year that found the program would need at least two more years and nearly $15 billion more.

    “The initial results are as bad as last year’s,” InsideDefense.com quoted its source as saying. “In other words, things have not improved. And their cost estimate will be at least where they were last year.”

    In response, Bethesda, Maryland-based Lockheed Martin, the Pentagon’s No. 1 supplier by sales, said it disagreed with the joint estimate team conclusions.

    “Lockheed Martin acknowledges that modest risks to our cost and schedule baselines exist,” said John Kent, a company spokesman, “but we envision no scenario that would justify a substantial delay to completion of development or transition to production milestones.”

    Engineering development is 85 percent complete and yielding outstanding results in early ground and flight tests, Kent said. “Our test plans are based on detailed test requirements and build on the extensive investments in F-35 design architecture, systems engineering, risk reduction, and simulation facilities, as well as a rigorous disciplined verification plan, compared to legacy programs.”

    “The program is early in the flight test phase, so it is much too soon conclude that the expected payoffs will not be realized,” he added.

    Asked about the InsideDefense.com report, a Defense Department spokeswoman, Cheryl Irwin, said she believed the joint estimate team was still carrying out its review. A spokeswoman for the Pentagon’s F-35 program office did not return a call seeking comment.

    Air Force Major General C.D. Moore, the F-35 program’s deputy executive officer, said last month he was confident the program could meet its cost and schedule targets.

    The Weapons Systems Acquisition Reform Act that became law in May requires the Pentagon to presume termination of any program that breaches certain cost targets. Should the Pentagon want to retain the F-35, as it no doubt would, it would have to be restructured and recertified. (Reporting by Jim Wolf; Editing by Toni Reinhold, Gary Hill)

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