F-35 overrun sticks taxpayers, allies with $444 million tab

A U.S. Marine Corps F-35B Lightning II fighter jet performs a maneuver during a media preview day at the Singapore Airshow in Singapore, on Feb. 9, 2020.


By TONY CAPACCIO | Bloomberg | Published: April 21, 2021

U.S. taxpayers and allied partners are absorbing a $444 million overrun on an upgrade for Lockheed Martin's F-35 that's key to increasing the power and memory of the fighter jet that's a flying computer.

The 63% overrun is on an initial $712 million contract awarded to Lockheed in December 2018 to develop and deliver redesigned hardware and software for the aircraft's cockpit computer. It was a task "more complex than originally thought," the Government Accountability Office said in its latest annual program assessment that disclosed part of the increase.

The estimated program completion cost is now $1.28 billion, which includes $118 million of added tasks unrelated to the overrun. Delays driving the increase "are due to the late completion of the final developmental hardware configuration, which is delaying software and system integration testing," Laura Seal, a spokeswoman for the Defense Department's F-35 program office, said in a statement.

Fully assembled, the F-35 has more than 8 million lines of computer code.

The overrun adds to a litany of problems for the F-35, the Pentagon's costliest weapons system, which is currently projected to cost $398 billion to develop and build. The setbacks include more than 800 unresolved software and hardware deficiencies of varying severity, an engine shortage caused by inadequate depot capacity and blades that crack too soon, an operating cost of $38,000-per flying hour for the Air Force model and a likely delay to a crucial combat simulation to August 2022 from last December.

About 625 of more than 3,000 planned jets have been delivered and are in operation with the U.S. and eight other air forces, including those of the U.K., Italy, Israel, Japan and South Korea.

Seal said no changes to requirements have been made by the Pentagon or allied partners "that have driven this cost growth" for the upgrade program. Compared to current computing power, the upgrade will provide a power increase of as much as 37 times and increase memory by 20 times, Seal said.

She said Lockheed is being required to meet contract terms, "including provisions associated with performance." Lockheed and its key subcontractor, L3Harris Technologies, "have agreed to forfeit a significant portion of their fee" on the upgrade contract, Seal said. The companies are foregoing $60 million, according to an industry official familiar with the contract who asked not to be identified.

Despite the overrun, Lockheed is expected to meet its contractual obligation of delivering the computer upgrade known as "Technical Refresh-3" on jets bought in the 15th production lot expected for delivery in 2023, according to Seal and the GAO. That contract remains in negotiation, according to Seal.

House Armed Service Committee Chairman Adam Smith said at a hearing last week that "it will be helpful if this committee would put pressure on those making the F-35 to actually deliver the product that they told us they were going to deliver at the price that they told us that they were going to deliver it at."

Two panels of his committee are convening an F-35 hearing Thursday where the test schedule and the overrun for Technical Refresh-3 are likely to discussed, as will the fighter's affordability as it approaches 20 years since Lockheed beat rival Boeing Co. in competition to build it.

Lockheed spokesman Brett Ashworth said the overrun on the computer upgrade was "primarily a result of hardware supplier challenges and COVID-19 impacts." He said the upgrade "will further enhance the combat-proven capability of the F-35, ensuring it continues to outpace the advancing high-end threat."

To avoid a repeat, Lockheed conducted a "root cause analysis and instituted robust remediation plans, as well as adding additional engineering and management talent." It also initiated last year a program-wide software assessment, which has "made significant progress in identifying and addressing opportunities that provide quality products on time and on budget," Ashworth said.