From the NY Times…
http://www.nytimes.com/2010/02/03/business/03fighter.html
February 3, 2010
Gates Tries to Get F-35 Program Back on CourseBy CHRISTOPHER DREW
WASHINGTON — The Joint Strike Fighter was supposed to be the program that broke the mold, proof that the Pentagon could build something affordable, dependable and without much drama.But rather than being the Chevrolet of the skies, as it was once billed, the fighter plane, also called the F-35, has turned into the Pentagon’s biggest budget-buster. And with worries growing that the rise in costs could overwhelm other programs, Defense Secretary Robert M. Gates fired the general in charge this week and said he would withhold $614 million in fees from the prime contractor, Lockheed Martin.
The decision was an embarrassment for Lockheed Martin, the nation’s largest military contractor, which could eventually draw at least a quarter of its sales from the F-35. But Pentagon officials said they wanted to make sure they avoided the kind of death spiral that had caused so many other weapons programs to collapse.
The Air Force, the Navy and the Marines are planning to buy more than 2,400 of the planes. But any delays could force them to spend billions of dollars on less advanced fighters to avoid a shortfall. That, in turn, would reduce their orders for the F-35, driving up the price for each plane and forcing them to cut orders further.
The main problem, some analysts say, is that even with recent improvements in acquisition practices, the military persists in buying new weapons systems before all the kinks are worked out.
At the Pentagon’s behest, Lockheed Martin has already started building production models of the F-35, even though only 2 percent of the flight test program has been completed. “Unless they convert the program to a fly-before-you-buy approach, they will continue to have pain,” said Winslow T. Wheeler, an analyst for the Center for Defense Information in Washington.
But Pentagon officials said that given the rapid changes in technology, they could not afford to take such a gradual approach without systems becoming outdated before they rolled off the line. Lockheed Martin executives said that they had gotten the message about picking up the pace, and that they believed they would be able to start delivering the planes faster than the government now projects.
“They have been very clear that they intend to hold us to more aggressive standards, and we intend to perform to those,” Daniel J. Crowley, one of Lockheed Martin’s project managers, told reporters on Tuesday.
Mr. Crowley acknowledged that the program, which has been adjusted several times, was running six months behind the latest schedule. But he said that after building the first few planes, the company had been able to sharply reduce how much time and money each one required. And that has given it more confidence that it can get back on track.
Mr. Gates also said on Monday that he knew of “no insurmountable problems, technological or otherwise, with the F-35.” But he added a year to the development phase of the program, and slowed plans to increase production, to give the company a chance to catch up.
Still, that solution is basically a gamble that the company will do better. The program, which is by far the Pentagon’s largest, is expected to cost nearly $300 billion if all of the 2,456 planes are purchased in the next 25 years. Eight allied nations have also invested in the program and could buy hundreds of additional planes.
Some senators sounded skeptical in questioning Mr. Gates at a hearing on Tuesday. “I’m still concerned about whether the services will get the J.S.F. when they need them,” said Senator John McCain, Republican from Arizona, referring to the plane.
Other senators criticized Mr. Gates, who promoted the coming of the F-35 as a reason to kill the more costly F-22 fighter program last summer, for not having a handle on the problems sooner.
Many of the concerns were outlined in a report by a special Pentagon assessment team in late 2008. Mr. Gates said at the hearing on Tuesday that he did not recall that report. He said he had intervened now to try to head off the dire projections in a similar assessment completed in the fall.
That study found that the development of the plane could be delayed by two and a half years and cost an extra $16.6 billion if no changes were made. Mr. Gates has also said that he replaced the head of the program, Maj. Gen. David R. Heinz of the Marine Corps, to show that officials would be held accountable “when things go wrong.”
When the Pentagon began thinking about the F-35 in the mid-1990s, the Pentagon was building the F-22, the world’s stealthiest fighter, for aerial dogfights, and it expected to buy 650 to 750 of them. The F-35, which also has stealth features to avoid radar, was meant to focus more on attacking ground targets. Creating three versions with a similar core — one each for the Air Force, the Navy and the Marines — was supposed to make it more affordable.
But while delays and overruns pushed the cost of the F-22 so high that only 187 are being built, the projected costs of the F-35 program have also risen to $298.8 billion from an early estimate of about $200 billion.
Counting all the development costs, each F-35 is now projected to cost about $122 million compared with about $350 million for each F-22. Another concern is that additional problems often appear in flight testing. And a recent Navy study concluded that the F-35 could be significantly more expensive to operate than older fighters.
But Mr. Crowley, one of Lockheed Martin’s top managers on the project, said the company had greatly reduced the parts shortages that delayed the first planes. He said the company was talking to the Pentagon about adding another plane to the flight test program, and it was much closer to finishing sensitive systems, like the software that operates the plane and its sensors, than it was at a similar stage on the F-22.
He added that it was “our intent to outperform” projections for the program, enabling the government to buy more planes than it expected to over the next few years.
Other industry officials said they had heard that Mr. Gates was likely to name Vice Adm. David J. Venlet, commander of the Naval Air Systems Command, to succeed General Heinz in overseeing the program. And given that Mr. Gates has had to backtrack from his praise for the program, he now has even more on the line in holding it together.