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United States

Apr 23, 2014

Lockheed wins out over taxpayers in the F-35 procurement nightmare

The history of the F-35 is that of a defence procurement disaster. But contrary to the claims of the Pentagon, the program is still not under control.

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The Joint Strike Fighter (pictured) — or the F-35 Lightning II, to give it its proper name — is a plane that divides defence commentators. Some say the aircraft, the most expensive United States defence project in history, is the future of air warfare, and the US and its allies will control the skies with its low radar visibility and high-tech information processing software. Others say it is a piece of junk that is already uncompetitive. We can defer to air warfare experts on which view is correct, or whether the truth lies somewhere in between.

What is not in dispute is that the aircraft’s builder, Lockheed Martin, has comprehensively triumphed over taxpayers and governments. The JSF program, as the US Department of Defense has itself acknowledged, was out of control from the awarding of the contract to Lockheed Martin in 2001, with commitments from the British, Australian and Canadian and several European governments, until at least 2010, when the program was the subject of a brutal Pentagon memo describing its extensive flaws and ballooning costs.

By that stage, the program was 57% over budget and six years behind schedule, and had incurred what is called a Nunn-McCurdy breach, the point at which costs go so far beyond budget that the Defense Secretary has to provide an explanation for it or risk the program being defunded by Congress. By that stage, too, the Pentagon had actually acquired F-35s before they were even flown. The head of the program was sacked, the plane delayed yet another year, and Lockheed Martin “punished” with more than half a billion dollars in withheld bonuses — though the overall project will now cost over US$390 billion.

Both the Pentagon and Lockheed Martin now insist that is ancient history. The Pentagon says the program is under control, and is scaling up to eventually purchasing 100 F-35s a year. Australia now says it will have 70 of the planes — it has already purchased 12, and will pick up another 58 for $12 billion. The Royal Australian Air Force says it eventually wants about 100 of them.

The problem is, the F-35 program is not under control, even according to the US government. In September, the Pentagon Inspector-General issued yet another in a long line of scathing reports about the program, having found over 700 separate problems with the program’s administration that led to over 300 findings. “The F-35 Program did not sufficiently implement or flow down technical and quality management system requirements to prevent the fielding of nonconforming hardware and software,” the Inspector-General found. “This could adversely affect aircraft performance, reliability, maintainability, and ultimately program cost.”

That apparently did not deter federal cabinet here from deciding to lock Australia into $12 billion on the planes. Nor had the fleet-wide grounding of the planes in the US last year after cracks were discovered in the plane’s turbine blades and elsewhere. Nor did another report, revealed in January this year by Reuters, by the Pentagon’s director of operational test and evaluation, that described the performance of the plane’s highly complex software as “unacceptable” and noted that Lockheed Martin had delivered less than half of the software capabilities its contract specified.

Software was the also the target of yet another critical report just last month, this time by the US government Accountability Office:

“The Director of Operational Test and Evaluation (DOT&E) predicts delivery of warfighting capabilities could be delayed by as much as 13 months. Delays of this magnitude will likely limit the warfighting capabilities that are delivered to support the military services’ initial operational capabilities—the first of which is scheduled for July 2015—and at this time it is not clear what those specific capabilities will be because testing is still ongoing. In addition, delays could increase the already significant concurrency between testing and aircraft procurement and result in additional cost growth.”

So the plane will be further delayed, and costs could blow out further. Defence Minister David Johnston today said that in the event of further cost blowouts, Australia would scale back the number of aircraft it purchases. Based on both the history of the project and the very latest official assessments, that’s a decision Johnston or his successors will have to take.

But no matter which plane dominates the skies in the future, the JSF is guaranteed to continue to deliver victory to Lockheed Martin. Even when a procurement program is as comprehensively bungled as the JSF has been, big defence contractors face minimal repercussions as the US government, and unquestioning allies like Australia, continue to hand over hundreds of billions of dollars.

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