Early F-35 costs increase $771M, Lockheed says

Arizona Sen. John McCain said via Twitter he thought the cost overruns were 'outrageous!' and 'disgraceful.'

From an unlikely pair of sources — Steve Trimble, aero-reporter extraordinaire, and the Twitter account of Arizona Sen. John McCain — here’s more bad news for the F-35 program: DoD notified Congress this week that Lockheed Martin is charging an additional $771 million for its first 31 F-35 Lightning IIs. First, Trimble gives the background:

The Department of Defense notified Congress of the overrun two months after F-35 programme officials admitted the costs for low rate initial production lots 1–3 would exceed the contracted cost. The government is required to absorb the entire bill for overruns under the terms of the first three LRIP contracts. Last year, Lockheed accepted a cost-sharing scheme for any overruns after LRIP-3.

He continues:

The $771 million reflects the impact of the 2004 weight reduction redesign on the Lockheed’s production system, the company said. The redesign carved off thousands of pounds of excess weight, but suppliers could not keep up with the flow of design changes. That led to late delivery of parts, then extra labour hours to install them outside of the normal manufacturing sequence, the company said.

As the F-35 continues to be developed even as the first production models are delivered, the $771 million bill also includes the cost of future modifications to make the aircraft standard with jets delivered after the development phase ends in 2016.

It is possible that the bill for LRIPs 1–3 could be reduced in the future. “The F-35 team is focused now on any opportunity to reduce the concurrency estimate and improve the final cost-to-complete on these early production lots,” Lockheed said.

And what does McCain, the top Republican on the Senate Armed Services Committee, think of this development? Here’s what he Tweeted on Tuesday:

Congress notified that first F-35 jets have cost overruns of $771M. Outrageous! Pentagon asking for $264M downpayment now. Disgraceful.

Lockheed company officials stress that they believe these increases should stop happening as DoD orders its next batches of airplanes, which will take advantage of early lessons and use fixed-price contracts. The company issued this Tweet of its own on Wednesday:

The F-35 team is focused on reducing costs of the jets and is showing significant improvement in key areas.