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US Department of Defense raises F-35 cost estimate to $382 billion

The US Department of Defense has raised the cost estimate for the 35-year F-35 Joint Strike Fighter programme to more than $382 billion, but offered Lockheed Martin a vote of confidence by recertificating its acquisition strategy for the pivotal stealth fighter to Congress.

Recertification is legally required to spare the programme from an early termination, despite overall cost projections having grown by 64% compared with the estimate made when Lockheed won the contract nine years ago.

If the DoD buys all 2,457 jets planned until 2035, the average cost per aircraft rises to $92.4 million in 2002 values, or $133 million if adjusted for inflation each year up to 2035. This is roughly double the average cost across all three F-35 variants that the Pentagon projected in 2001.

But the DoD's mandatory review under the Nunn-McCurdy law determined that no cheaper options existed to meet the F-35 requirement, and that a major restructuring unveiled in February has created a new set of feasible cost and schedule targets.

However, Ashton Carter, undersecretary of defense for acquisition, technology and logistics, is concerned about Lockheed's ability to manage the programme.

In a 1 June letter to Republican congressman Ike Skelton, chairman of the House Armed Services Committee, Carter warns that Lockheed's failure to comply with the DoD's standards for managing vast projects is "disappointing and unacceptable".

The new flight-test schedule, which is extended by 13 months, includes "42 areas of concern" that can cause further delays if they are not fixed, Carter adds.

The galloping cost projections in the recertification report are likely to raise the most alarms. The $382 billion figure is nearly $54.2 billion higher than the DoD reported in February, which itself was about $30 billion more than previously forecast in 2007.

A senior Lockheed executive, however, says the company's own cost estimates are 20% lower than the DoD's new total.

Lockheed also plans to stem future increases by moving to a fixed-price incentive contract later this year, two years earlier than previously planned. The company will assume most of the risk for any new increases on the costs of manufacturing future production aircraft for all three variants.

Lockheed is also working to restore confidence in its slowed flight-test programme. Test pilots had completed 93 sorties through the end of May, or three more than planned.

A key event - the first flight of the programme's first F-35C carrier variant aircraft, CF-1 - is expected in early June. The aircraft's entrance into the flight-test programme has been delayed by more than eight months.

Lockheed plans to have delivered 13 flight-test aircraft by the end of this year.

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