Costly F-35 program faces pushback in Congress
The Pentagon’s F-35 fighter jet, a revenue mainstay for manufacturer Lockheed Martin Corp. and engine maker Pratt &Whitney, is facing pushback over its $1.7 trillion lifetime cost, the greatest in U.S. military history for a weapons system.
The Joint Strike Fighter program and its supply chain that’s developed into an industrial system across the United States face few serious threats in Washington. But Congress could halt the practice of adding money to the president’s funding request and, long-term alternative programs could be in the offing.
Rep. Adam Smith, D-Wash., chairman of the House Armed Services Committee, in March called the F-35 a “rathole” and suggested the U.S. consider cutting its losses by investing in competing fighter jets. A single F-35 costs as much as $80 million.
Rep. John Larson, D-Conn., whose district includes the East Hartford headquarters of Pratt &Whitney and one of its manufacturing plants, said he has “great respect” for Smith, but he said he and the Washington state Democrat haven’t always agreed, particularly in 2011 when Congress halted production by General Electric Co. of an alternate engine for the F-35, clearing the field for Pratt &Whitney as the engine’s sole source.
Still, Larson said his colleague has a valid point about the cost of the jet’s engine.
“Adam Smith does not speak out of turn lightly,” he said. “To deny the problem is wrong-headed.”
With Smith’s criticism, Lockheed Martin and Pratt &Whitney “had a shot across the bow, and they’ve taken it seriously,” Larson said.
“His message is we spend a lot of money on these things and we expect performance,” he said.
The U.S. Government Accountability Office said sustainment costs — those associated with maintaining and sustaining the aircraft over its 66-year life — have increased since 2012, to $1.3 trillion, from $1.1 trillion, despite efforts to reduce costs. It’s the Defense Department’s “most ambitious and costly weapon system in history,” the agency said in an April 22 report.
That’s in addition to the approximately $400 billion the Pentagon plans to spend for nearly 2,500 F-35s, the GAO said.
The armed services “face a substantial and growing gap between estimated sustainment costs and affordability constraints” the agency said.
Rep. Joe Courtney, D-Conn., a member of the House Armed Services Committee, said government and industry are “getting their arms around the obvious sustainment costs.”
“The trend is not good,” he said. “The real issue is this is becoming a major challenge or threat to the program, the relentless increase in terms of sustainment costs.”
President Joe Biden’s first budget is not yet out, but he’s expected to seek 85 F-35s at a cost of $11 billion.
Chris Calio, president of Pratt &Whitney, vigorously defended the weapons system at parent company Raytheon Technologies Corp.’s investor day May 18.
“It’s incredibly capable. It’s the most capable fighter engine in production today,” he said. “It’s reliable. It’s exceeding its reliability expectations.”
Calio said Pratt &Whitney expects $1.5 billion in revenue between 2022 and 2025 related to sustainment, which is the support and maintenance of the system. The manufacturer said it has cut unit costs by 50 percent since the first lot of six production engines was delivered starting in 2010.
Costs were reduced by using low-cost suppliers and other strategies, he said. Total lifecycle cost savings of $8 billion were realized by component redesign, supplier changes and improving manufacturing, said a spokeswoman for Pratt &Whitney.
With a steep decline in commercial aviation due to COVID-19, Raytheon Technologies is relying on a greater share of revenue from its defense businesses. Its mix of sales last year was 65 percent for defense, which includes Raytheon Missiles and Defense and Raytheon Intelligence and Space, and 35 percent for commercial aerospace.
In 2019, defense businesses accounted for 55 percent of Raytheon Technologies’ sales and commercial aerospace was 45 percent.
James D. Taiclet, Lockheed Martin’s chief executive officer, told industry analysts last month the F-35 is the “most capable fighter plane ever developed in history.”
Its propulsion system and stealth technology are “pretty groundbreaking,” he said on a conference call detailing the conglomerate’s first-quarter financial results.
In addition, the aircraft’s computer processing power and communications systems make it “much more than just a single-purpose fighter,” Taiclet said.
“So having said all that, it’s an expensive machine,” he said. “It’s expensive to maintain in large part because of the stealth technology that’s more advanced than anywhere else.”
Lockheed Martin says it’s producing F-35As below the $80 million unit cost, by $1 million to $2 million a year earlier than planned. The F-35A is a variant of the F-35 used by U.S. Air Force.
Aviation analyst Richard Aboulafia of Teal Group in Fairfax, Va., said the F-35 has “been a feature of the landscape for some time” and is the biggest program in the industrial base ever.
“It’s what makes it relatively secure,” he said.
The F-35 industrial base — a strong presence of Pratt &Whitney suppliers in Connecticut and, with Lockheed Martin’s supply chain elsewhere in the U.S. — includes more than 1,800 manufacturers and about 254,000 direct and indirect jobs in the U.S., according to congressional supporters of the aircraft.
Congress usually approves a “plus-up,” the practice of adding additional planes to the president’s proposal.
That’s now unlikely because of the ballooning cost of the F-35.
“There is a prospect that Congress stops adding money on top of the base budget,” Aboulafia said. “It’s not really a major threat. On the other hand, it’s been good for the program to get cash added.”
Larson agreed that future budget add-ons for the F-35 could end. “It’s a “fairly accurate description,” he said.
Aboulafia said a rival version could eventually be developed.
“They’ve got to be mindful of long-term competitiveness,” he said. “It could be accelerated if Congress gets frustrated, but there’s no sign of it.”
Sen. Richard Blumenthal, a Connecticut Democrat and member of the Senate Armed Services Committee, said Congress has “heard virtually nothing specific” about the administration’s military spending priorities. He defended the F-35 as an “absolute must.”
“It clearly has capabilities that other aircraft lack, and it’s becoming increasingly cost effective,” Blumenthal said. “The cost per plane comes down as more are made.”