US Air Force photo
A group of 70 lawmakers is pressing appropriators to fund significantly more joint strike fighters than the Pentagon asked for in its fiscal year 2017 budget request. But a contract disagreement has raised concerns about the future of the program.
The Defense Department requested about $8.3 billion to procure 63 F-35s for the Air Force, Navy and Marine Corps in 2017. The House defense appropriations bill added 11 joint strike fighters to the planned buy. The Senate version added just four aircraft.
In an Oct. 4 letter to the leaders of the House defense appropriations subcommittee, representatives from both parties prodded them to stick with the House blueprint in upcoming budget negotiations.
“As you head into conference [with Senate lawmakers], we write in strong support of the F-35 joint strike fighter and urge you to continue supporting increased production rates at this critical juncture for the program,” they said.
The letter was signed by 41 Republicans and 29 Democrats.
“Increasing the production rate is the single most important factor in reducing future aircraft unit costs,” they said. “Additionally, significantly increasing production is critical to fielding F-35s in numbers needed to meet the expected threats in the mid-2020s.”
The lawmakers expressed concern about cuts to follow-on modernization that were included in the Senate bill.
“These cuts would delay critical … capability upgrades needed to ensure the F-35 stays ahead of increasing future threats. We urge the conferees to restore as much of this funding as possible,” they said.
US Air Force photo
Loren Thompson, a defense industry consultant and the chief operating officer of the non-profit Lexington Institute, said increasing the production rates would help reverse a negative trend.
“The Air Force has slipped off of its production ramp for F-35, and as a result each plane is going to cost more,” he said. “That is not the way the business plan was supposed to be implemented.”
Thompson believes there is enough support in Congress to fund additional F-35 buys beyond the level requested by the Pentagon.
“The most likely approach would be to take money out of other items” in the budget, he said. One option would be to scale back upgrades of legacy fighters, he noted.
But a contract spat could potentially upend future production of the F-35.
In November, the Defense Department announced a $6.1 billion low-rate initial production contract for 57 F-35s in lot 9. In a statement, Lockheed said it was “disappointed” by the Pentagon’s “unilateral” move, and noted that the contract was “not mutually agreed upon.”
The company could potentially take legal action and appeal the decision. Lockheed executives “will evaluate our options and path forward,” the statement said.
Roman Schweizer, an industry analyst at the Cowen Washington Research Group, said in a note to investors: “The government’s decision to use a bazooka on LRIP 9 could signal turbulence ahead as the program ramps into a potential block buy.”
The spat could make it more difficult for the Pentagon and Lockheed to reach large production deals in the future, he said.
The next “inflection point” in the program is a potential three-year block buy deal for 450 or more aircraft that would start with international customers in 2018, he noted.
“We have been optimistic that deal would really kick the program to another level but are concerned now that … rolling up a deal three times the size [of LRIP 9 and the anticipated LRIP 10] may be extremely difficult,” Schweizer said.
