An Air Force F-35A Lightning II trains during the Lonestar Lightning exercise at Naval Air Station Joint Reserve Base Fort Worth in Texas, July 16, 2025. (Reagan Hardy/U.S. Air Force)
The cost of the Pentagon’s modernization program for the F-35 Lightning II fighter jet is more than $6 billion over original estimates, with the date of completion now five years later than the initial timeline, a federal watchdog said Wednesday.
The so-called Block 4 modernization will not be complete until 2031 at the earliest, the Government Accountability Office said in a 54-page report on the program.
The report also found that the Defense Department was paying incentives to contractors even though production deadlines had not been met.
The F-35 is a fifth-generation single-engine stealth fighter characterized by advanced sensors, electronics and networking capabilities. Its advanced features make it the leading strike-fighter aircraft for the Air Force, Marine Corps and Navy.
The Defense Department is in the seventh year of a $16.5 billion modernization effort to upgrade the F-35’s hardware and software, the report said.
Central to the Block 4 modernization is Lockheed Martin’s Technology Refresh 3, or TR-3, a suite of hardware and software upgrades.
Congress in 2023 directed the Defense Department to manage the Block 4 and TR-3 elements collectively as a subprogram of the joint strike fighter program, the GAO said.
“As a major subprogram, DOD will have improved insight into Block 4 cost, schedule, and performance, allowing it to make more informed decisions about the modernization effort,” the report said.
Implementation of the subprogram, however, has had drawbacks.
“According to program officials, the new Block 4 major subprogram will have fewer capabilities, will experience schedule delays, and will have unknown costs until the program office finishes developing its cost estimate,” the GAO said. That estimate is expected before year’s end.
The GAO offered a mix of optimism and warning in the report’s conclusion.
“In our reviews of the F-35 program over the last 2 decades, we have routinely recounted cost and schedule overruns and other shortfalls,” the report said. “With the program now focused on production and modernization, it has an opportunity to cut a new path of greater accountability for delivering highly capable aircraft that meet warfighter needs at the pace of relevance.”
But after 20 years of production, the F-35 program “continues to overpromise and underdeliver,” the GAO said.
Compounding the problem is that contractors are rewarded incentive fees even as “delivery time frames continue to worsen,” according to the report.
“In recent years, the program paid contractors, such as Lockheed Martin, hundreds of millions of dollars in incentive fees that were intended to improve on-time delivery,” the report said. “However, the structure of on-time delivery incentives allowed the contractor to deliver aircraft up to 60 days late and still earn some of the fee.”
To avoid rewarding late deliveries, GAO said, the program should reevaluate its use of fees in future contracts and better align them to achieve desired production outcomes.
“It is increasingly important that DOD obtains real value for providing increased fees to contractors, above and beyond the profits already built into the contracts, through incentives,” the report said.
In 2024, Lockheed Martin delivered 110 aircraft, and all were late by an average of 238 days, up from 61 days in 2023, the GAO said.
Among the report’s recommendations are that the Defense Department evaluate Lockheed Martin’s capacity to meet planned deliveries on time and to expand and formalize leading practices for product development.
