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Mixed messages on possible F-35 funding cut?

When the House Appropriations Committee's defense panel passed their version of the Fiscal 2011 spending bill on Tuesday, the legislators buried a whopper of a mystery funding cut.

The aircraft procurement account for the US Air Force would be slashed by $2.263 billion next year if the subcommittee's version of the bill becomes law. By contrast, the navy's aircraft account is reduced by only $242 million and army aircraft spending would decline by $115 million.

A spokesman for the panel declines to identify the source of the cut until after the full committee votes on the bill, which is not scheduled until September.

So what could it be?

My colleague Gayle Putrich talked to Teal Group analyst Richard Aboulafia yesterday and he has a theory, which I think is very plausible. Aboulafia guesses such a huge cut could be the appropriators sending Lockheed Martin a message about the F-35.

Two months ago, the House Armed Services Committee passed a spending authorization bill that proposes to "ring-fence" funding for 12 F-35s. The funding would be released only if Lockheed achieves certain goals in the flight test program, such as completing 394 test flights and more than 3,900 test points by the end of the calendar year.

It's possible the appropriators acted on their colleagues threat. According to the USAF's budget justification materials, it costs about $2.05 billion for 12 F-35As in FY2011 budget, excluding long-lead production costs. Subtract $2.05 billion from the $2.263 billion figure, and you get a reasonable appropriations mark of about $121 million.

If Aboulafia's guess is correct, then it's even more clear that Congress is serious about holding Lockheed accountable for any more delays in the flight test program.

On the other land, it also could expose a potential loophole. Lawmakers may require Lockheed to complete 394 flight tests overall, but there's no objective goal for each of the three F-35 variants.

This appears to give Lockheed some room to maneuver as the flight test schedule for the short-takeoff-and-vertical-landing (STOVL) has started falling behind. The four STOVL test aircraft have completed 21 fewer flight tests than planned this year.

However, Lockheed can still reach the overall objective of 394 flights by increasing the pace of sorties for the other two variants, which have so far proven more reliable. On Tuesday, Lockheed reported the conventional takeoff and landing (CTOL) variant has completed 56 flights this year, or 32 more than scheduled, and the carrier variant has completed six flights compared to only one on the schedule.

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