DoD slashes F-35 orders to pay for cost overruns

Washington DC
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The US Department of Defense will buy five fewer Lockheed Martin F-35s in the next yearly production contract and use the savings to cover the government's share of rising costs for manufacturing delays and development mistakes.

Orders for the fifth lot of low-rate initial production (LRIP-V) will be cut to 30 F-35s, or two fewer than awarded in the previous year, according to the programme office.

The cuts will reduce orders for the US Air Force's conventional take-off and landing F-35A and the US Navy's F-35C carrier variant, but leave the US Marine Corps' order for three short take-off and vertical landing F-35Bs unchanged.

Terms for the LRIP-V contract are continuing to be negotiated between Lockheed and the programme office, one month after the fiscal year expired.

The talks have been underway since Lockheed submitted a proposal for LRIP-V in April based on a planned order for 35 aircraft, but have been complicated by cost overruns from previous years.

The government revealed in July that it owed an extra $771 million to pay for the overruns in the first three LRIP contracts. Instead of asking for more money in a declining budget environment, the programme office is paying the bill by cutting aircraft from the LRIP-V order.

It is the last step in a two-year process that has gradually reduced the LRIP-V order from 47 to 30 F-35s. Australia was the first country to postpone plans to buy four aircraft in LRIP-V.

But the US Congress made the biggest cut, trimming seven aircraft from the order. The reduction was included in a $1 billion budget cut for the overall F-35 programme.

A 30-aircraft order means the production rate will actually decline from the previous year. The LRIP-IV contract signed last November ordered 32 aircraft, including one for the UK and one for the Netherlands.

The Senate Armed Services Committee, meanwhile, wants the DoD to freeze F-35 production for another two years. The decision would devastate the programme office's original plan to sharply increase the production rate over the next five years, ultimately reaching one aircraft per day by fiscal year 2016.

The DoD has already backed away from the ramp-up plans, however. The LRIP-VI order, scheduled for award later this year, has been reduced to 38 aircraft, or 80 fewer than planned only two years ago. Ongoing budget discussions for the FY2013 budget request are considering further F-35 cuts in LRIP-VI and beyond.