November 2012, Week 5


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Fri, 30 Nov 2012 00:23:46 -0500
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Costliest Jet, Years in Making, Sees the Enemy: 
Budget Cuts
New York Times
November 29, 2012

LEXINGTON PARK, Md. - The Marine version of the F-35
Joint Strike Fighter, already more than a decade in the
making, was facing a crucial question: Could the jet,
which can soar well past the speed of sound, land at sea
like a helicopter?

On an October day last year, with Lt. Col. Fred Schenk
at the controls, the plane glided toward a ship off the
Atlantic coast and then, its engine rotating straight
down, descended gently to the deck at seven feet a

There were cheers from the ship's crew members, who
"were all shaking my hands and smiling," Colonel Schenk

The smooth landing helped save that model and breathed
new life into the huge F-35 program, the most expensive
weapons system in military history. But while Pentagon
officials now say that the program is making progress,
it begins its 12th year in development years behind
schedule, troubled with technological flaws and facing
concerns about its relatively short flight range as
possible threats grow from Asia.

With a record price tag - potentially in the hundreds of
billions of dollars - the jet is likely to become a
target for budget cutters. Reining in military spending
is on the table as President Obama and Republican
leaders in Congress look for ways to avert a fiscal
crisis. But no matter what kind of deal is reached in
the next few weeks, military analysts expect the
Pentagon budget to decline in the next decade as the war
in Afghanistan ends and the military is required to do
its part to reduce the federal debt.

Behind the scenes, the Pentagon and the F-35's main
contractor, Lockheed Martin, are engaged in a conflict
of their own over the costs. The relationship "is the
worst I've ever seen, and I've been in some bad ones,"
Maj. Gen. Christopher Bogdan of the Air Force, a top
program official, said in September. "I guarantee you:
we will not succeed on this if we do not get past that."

In a battle that is being fought on other military
programs as well, the Pentagon has been pushing Lockheed
to cut costs much faster while the company is fighting
to hold onto a profit. "Lockheed has seemed to be
focused on short-term business goals," Frank Kendall,
the Pentagon's top weapons buyer, said this month. "And
we'd like to see them focus more on execution of the
program and successful delivery of the product."

The F-35 was conceived as the Pentagon's silver bullet
in the sky - a state-of-the art aircraft that could be
adapted to three branches of the military, with advances
that would easily overcome the defenses of most foes.
The radar-evading jets would not only dodge
sophisticated antiaircraft missiles, but they would also
give pilots a better picture of enemy threats while
enabling allies, who want the planes, too, to fight more
closely with American forces.

But the ambitious aircraft instead illustrates how the
Pentagon can let huge and complex programs veer out of
control and then have a hard time reining them in. The
program nearly doubled in cost as Lockheed and the
military's own bureaucracy failed to deliver on the most
basic promise of a three-in-one jet that would save
taxpayers money and be served up speedily.

Lockheed has delivered 41 planes so far for testing and
initial training, and Pentagon leaders are slowing
purchases of the F-35 to fix the latest technical
problems and reduce the immediate costs. A helmet for
pilots that projects targeting data onto its visor is
too jittery to count on. The tail-hook on the Navy jet
has had trouble catching the arresting cable, meaning
that version cannot yet land on carriers. And writing
and testing the millions of lines of software needed by
the jets is so daunting that General Bogdan said, "It
scares the heck out of me."

With all the delays - full production is not expected
until 2019 - the military has spent billions to extend
the lives of older fighters and buy more of them to fill
the gap. At the same time, the cost to build each F-35
has risen to an average of $137 million from $69 million
in 2001.

The jets would cost taxpayers $396 billion, including
research and development, if the Pentagon sticks to its
plan to build 2,443 by the late 2030s. That would be
nearly four times as much as any other weapons system
and two-thirds of the $589 billion the United States has
spent on the war in Afghanistan. The military is also
desperately trying to figure out how to reduce the long-
term costs of operating the planes, now projected at
$1.1 trillion.

"The plane is unaffordable," said Winslow T. Wheeler, an
analyst at the Project on Government Oversight, a
nonprofit group in Washington.

Todd Harrison, an analyst at the Center for Strategic
and Budgetary Assessments, a research group in
Washington, said Pentagon officials had little choice
but to push ahead, especially after already spending $65
billion on the fighter. "It is simultaneously too big to
fail and too big to succeed," he said. "The bottom line
here is that they've crammed too much into the program.
They were asking one fighter to do three different jobs,
and they basically ended up with three different

While weapons cost overruns have long been a problem,
the F-35 is also running into the changing budget
realities, and a new focus on rivalry with China, that
will probably require shifting money to a broader mix of

Yet, for years, the problems with the F-35 raised few
red flags, as money flowed freely after the 2001 terror
attacks and enthusiasm for a three-in-one jet blinded
officials in the Clinton and Bush administrations and in
Congress to its overly ambitious design. Now, unless the
Pentagon can substantially reduce the price of each
plane, analysts say, it may be lucky to buy 1,200 to

Robert J. Stevens, the chief executive of Lockheed
Martin, said company officials were "working as
aggressively as we can" to fix the problems and cut
costs. Vice Adm. David Venlet, who now runs the program
at the Pentagon, said he was confident that "good old-
fashioned engineering is going to lick" the flaws. But
he declined to predict how many planes would be bought.

"It's a very fair conversation that ought to be had for
the country," he said.

'Acquisition Malpractice'

Right from the start, Pentagon officials were warned of
the dangers of beginning to produce an aircraft before
it was tested. And right from the start, Pentagon
officials did not listen.

The roots of the problems go back to the mid-1990s, when
military officials pitched the F-35 as simple and
affordable, like a Chevrolet of the skies, with the
three versions sharing 70 to 80 percent of their parts.
The planes would also be versatile, capable of fighting
other planes but focused mainly on attacking ground

Pentagon officials thought advances in computer modeling
would simulate so precisely the way the F-35 would fly
that only minor problems would be discovered in the
flight tests.

And given a ban on exporting the F-22, the top stealth
fighter, moving quickly on the F-35 would lock up
foreign buyers and keep Europe from creating its own
stealth planes.

"There was this big desire to kill the competition,"
said Richard L. Aboulafia, an analyst at the Teal Group
in Fairfax, Va.

Lockheed beat out Boeing for the F-35 contract in
October 2001.

 Pentagon testing experts and Congressional auditors
 warned as the program got under way that it would be
 wiser to "fly before you buy." They cautioned that some
 of the new technologies were not ready and that years
 of flight tests would find flaws that the simulations
 had not anticipated.

  Lockheed and the joint Air Force and Navy office that
  runs the program countered that the sooner they
  started building a sizable number of planes, the
  sooner they could realize economies of scale that
  would lower the price of each plane, even if some
  needed updating.

But almost immediately, the project proved to be
incredibly complicated. Lockheed's initial designs were
late and had to be redone, delaying the manufacture of
parts for the test models. While most military programs
start building before all the testing is done, the
Pentagon took that to an extreme, starting production of
the F-35s in 2007, before flight tests had even begun.

Mr. Kendall, who became the Pentagon's top weapons buyer
in May, has said that diving into production so soon
amounted to "acquisition malpractice."

Mr. Harrison, the analyst at the budget center, said the
willingness to "roll the dice" reflected the peculiar
incentives at the Pentagon, where rushing into
production creates jobs and locks in political support,
even if it allows programs to drift into trouble.
Lockheed and its suppliers on the F-35 employ 35,000
workers, with some in nearly every Congressional

 "The military services want to get the planes as
 quickly as possible," Mr. Harrison said. "The defense
 industry wants to start producing as quickly as
 possible. But it's not in the best interest of
 taxpayers, and it ends up catching up with you."

 Asked who protects the taxpayer, he said, "That's what
 the Pentagon's civilian leadership is supposed to

 But with the Iraq and Afghanistan wars raging, Robert
 M. Gates, who was then the defense secretary, did not
 deal with the problems with the F-35 until late 2009
 and early 2010, when he fired the general in charge and
 brought in Admiral Venlet, a former fighter pilot who
 had overseen testing of Navy aircraft. According to the
 admiral, Mr. Gates said, "Dave, the program has made
 small adjustments over the years and persistently
 disappointed people."

 Then, sweeping his finger in a wide arc, Mr. Gates
 added, "If you evaluate that we need a big adjustment,
 tell me, and I'll make it, so we don't disappoint any

Contractor in the Hot Seat

Admiral Venlet's first move was to bring in technical
experts from the services who had been shut out of the
program. He said his predecessors had given Lockheed too
much leeway earlier, when government oversight was
considered "a hindrance more than a help."

Another method that he chose to assert control is
decidedly low-tech: printouts of charts, hung from
whiteboards on all four walls of a "war room" in the
F-35 offices near the Pentagon.

"It looks maybe a little dinosaurlike," he acknowledged,
standing near cutout plane shapes tracking the flow of
parts into Lockheed's mile-long plant in Fort Worth.
"But you know what? It works."

Military officials said the testing had picked up
substantially at the Patuxent River Naval Air Station
here and other bases, where the planes have already
flown near their top speeds of Mach 1.6. Still, the
overlap between testing and production remains a serious
problem, and the extra cost of refitting planes built
while the flight tests are under way could reach $2.4
billion to $3.8 billion, Admiral Venlet said.

Lockheed has already lost profits, earning only $28
million of a possible $87.5 million in award fees for
meeting development goals in 2010 and 2011. In tense
negotiations over the latest batch, the Pentagon has
been demanding that the company shoulder some of the
costs of fixing the problems found in the tests.

"It should not take 10, 11, 12 months to negotiate a
contract with someone we've been doing business with for
11 years," General Bogdan said.

The general started as Admiral Venlet's deputy in
August, and he will succeed him next week. His criticism
startled Lockheed officials, because in his last job,
overseeing the award of a $35 billion contract for
aerial refueling tankers, Boeing gave the Air Force such
a good price that analysts think Boeing is subsidizing
the early work.

Lockheed argues that the government's estimates of what
the F-35s should cost now are too low and that the
program was far riskier than the military said it would
be. Only 20 to 30 percent of the structural parts ended
up in common, though the models will share engines and
software. Lockheed officials also noted that commercial
plane makers had run into delays with their most
innovative planes, Boeing's 787 Dreamliner and Airbus's

Mr. Stevens, the Lockheed chief executive, said military
programs bog down in many layers of auditing, a process
he described as "sclerosis in the system." In World War
II, he said, "We managed to either invent or refine jet
propulsion, nuclear weapons, radar, radio communication,
electronics in three years and eight months." In that
time today, he said, the Pentagon cannot even finish the
initial design of a system.

Lockheed is fixing the most glaring problems. A support
wall in the fuselage of the Marine version - the only
one that can land like a helicopter - was strengthened
after it cracked in a test in 2010. The tail-hook on the
Navy model was just seven feet behind the landing gear,
much closer than on other Navy planes. After the wheels
flattened the arresting cable, the cable did not bounce
up quickly enough for the hook to grab it. Lockheed is
reshaping the hook to try to scoop up the cable.

But the "gorilla in the room," General Bogdan said, is
testing and securing the 24 million lines of software
code for the plane and its support systems, a mountain
of instructions that goes far beyond what has been tried
in any plane.

Under the latest plan, Lockheed will be held to about 30
planes in each of the next two years. But the Pentagon
will still have bought 365 planes before the flight
tests end in 2017.

Two years ago, General Bogdan said, the F-35 program was
like an aircraft carrier that "was going to run
aground." But if the military and Lockheed can "hold
each other accountable," he said, "we've got a shot at
getting this done."

Rough Skies Ahead

With the budget problems at home, Pentagon and Lockheed
officials are looking to allies to help pay for the
F-35. They have stepped up phone calls and visits,
trying to reassure the eight countries that have
invested in the program, as well as persuading two
others, Israel and Japan, to sign up.

Lockheed needs more foreign orders to realize volume
savings and get closer to the Pentagon's targets of $79
million to $106 million a plane, depending on the model.
But to get those orders, said Mr. Aboulafia, the Teal
Group analyst, Lockheed must be more aggressive in
cutting its prices, especially since the allies have
their own economic difficulties.

  This year, Italy cut its planned order 30 percent.
  Britain and Australia have delayed decisions on how
  many F-35s to buy. Lawmakers in Canada and the
  Netherlands are questioning the costs.

And while Congress continues to support the F-35, the
leaders of the Senate Armed Services Committee are
concerned that production is now set to ramp up later in
this decade just as two other major projects - the
refueling tankers and a $55 billion stealth bomber
program - will seek financing.

On top of that, the F-35 could be too sophisticated for
minor conflicts, and its relatively short flight range
could be a problem as the Pentagon changes its view of
possible threats. Mark Gunzinger, a retired Air Force
colonel who is now an analyst at the Center for
Strategic and Budgetary Assessments, said the Pentagon
would need to shift money to  longer-range planes as
China and other countries expanded the reach of missiles
capable of destroying American ships and bases.

 The Navy is developing a stealthy unmanned fighter that
 could fly from carriers and go two or three times as
 far as the F-35. The Air Force is studying concepts for
 the bomber, which could fly much farther and carry more
 firepower than the F-35.

Representative Norm Dicks of Washington, the top
Democrat on the House defense appropriations
subcommittee, said support for the F-35 could also
dwindle if lawmakers faced tougher choices between
military and domestic programs. "Anything where there
are still issues hanging out is going to be vulnerable
to some extent," he said.


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