F-35 Costs Drop for Building Jets But Rise for Operating Them

• Pentagon estimates development, procurement will decline 7.1%
• Report projects long-term operation, maintenance rising 7.8%

The Pentagon’s costliest program, Lockheed Martin Corp.’s F-35, is starting to look a little less expensive, with the latest estimate for development and procurement down 7.1% to $397.8 billion.

Less encouraging for the lawmakers who craft defense budgets and for taxpayers: Operating and maintaining the fleet for 66 years is projected to cost $1.182 trillion, a 7.8% increase over the estimate from the Pentagon’s F-35 office last year, according to the Defense Department’s annual assessment of the jet obtained by Bloomberg News.

The lower acquisition estimate produced by the F-35 program office is the latest in a string of good news that also includes improved on-time delivery of aircraft, the elimination of all flaws that were considered life-threatening to pilots and a steady reduction since 2018 in the number of potentially mission-crippling software deficiencies.

The Selected Acquisition Report, which hasn’t been released to the public, also said the F-35 program anticipates sales over time of 809 aircraft to international partners, up from the 764 projected last year.

Cumulatively, the improvements might protect the F-35 from pressure to cut defense budgets as the federal deficit balloons due to spending for the Covid-19 pandemic. The Pentagon is already projecting mostly flat budgets through 2025.

Even under the current budget forecast, the Pentagon report discloses that previous plans to buy 94 F-35s in fiscal 2022 will be reduced by nine. The blueprint then calls for buying 94 each year in fiscal 2023 and 2024 and 96 in fiscal 2025. Those are up from the 79 requested for fiscal 2021.

The report was prepared in December before the coronavirus pandemic crippled the global economy. Lockheed announced last week that Covid-19 impacts will temporarily slow F-35 production because of subcontractor parts delays and that the Bethesda, Maryland-based company might fail to deliver as many as 24 of a planned 141 jets this year.

More than 500 of a potential 3,200 F-35s for the U.S. and allies already have been delivered and will have to be retrofitted as flaws are fixed, at a cost of as much as $1.4 billion. The F-35 is in the final stages of intense combat testing to demonstrate it’s effective against the most advanced Russian, Chinese and Iranian threats.

Lockheed spokesman Brett Ashworth said the report “highlights our ability to work with our partners to produce the world’s most advanced fighter at the cost of legacy aircraft” the F-35 is intended to replace. Brandi Schiff, a spokeswoman for the Pentagon’s F-35 program office, declined to comment on the report before its release.

The Pentagon assessment says that updating its numbers based on actual production performance data by Lockheed and its subcontractors, rather than projections, resulted in the reduction in acquisition cost estimates. For example, the “unit flyaway cost” of an F-35 for the Air Force’s version of the fighter, not including the engine, declined by $12.1 million to $57.4 million. The Air Force plans to purchase 1,763 jets, the most of the U.S.’s planned 2,456 aircraft. The Marine Corps version dropped to $72.1 million from $80 million, and the Navy model fell to $72.3 million from $79.5 million.

None of that resolves the projected long-term trillion-dollar burden of operating and sustaining the fleet through 2077.

Outlining the stakes, then-acting Defense Secretary Patrick Shanahan said in March 2019 that “this is the largest program in DoD history and the cost of sustainment is about the same cost as nuclear modernization.”

In the new report the F-35 program office said that it “remains committed to and continues pursuing multiple efforts to drive down” those costs.