May 27, 2011 – By Andrea Shalal-Esa
WASHINGTON (Reuters) - A high-level Pentagon review of the Lockheed Martin Corp
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Defense Undersecretary Ashton Carter, the Pentagon's top weapons buyer, and other senior defense officials are due to establish a new procurement baseline at the meeting for the radar-evading F-35, or Joint Strike Fighter, which is currently estimated to cost $382 billion.
The new baseline -- against which any future cost growth will be measured -- will reflect a major restructuring of the program announced by Defense Secretary Robert Gates in February, the program's second major revamp in two years.
Pentagon spokeswoman Cheryl Irwin gave no specific date, but said the panel would now meet in mid- to late-June for a detailed review of the Pentagon's costliest weapons program.
The F-35 program came under fire for rising costs at a Senate hearing last week, but Lockheed Chief Executive Robert Stevens this week said he was confident the company could resolve development challenges facing the program. The F-35 is expected to account for more than 20 percent of Lockheed's global sales once it enters full production.
Carter told the committee that buying the planned 2,443 F-35 planes for the U.S. Air Force, Navy and Marine Corps was estimated to cost twice as much in real terms as originally expected. Carter said that price was "unacceptable and unaffordable," but expressed confidence that the Pentagon would be able to trim excess costs in the coming months and years.
Defense consultant Jim McAleese said he did not expect the postponed Pentagon meeting to result in significant new decisions since it was largely intended to validate the restructuring that had already been announced.
But the sources said the panel is also expecting a new "independent cost estimate" that is being prepared by the Pentagon's Office of Cost Assessment and Program Evaluation (CAPE), as well as new updated dates for when the military services expect to begin using the warplanes.
One source said neither the cost estimates or fresh "initial operating capacity" dates had been finalized yet.
Carter told Reuters this month he did not expect the new cost estimate to differ substantially from the earlier ones.
The Government Accountability Office, the investigative arm of Congress, estimates that development of the new warplanes will cost a total of $56.4 billion and conclude in 2018, a 26 percent cost increase and a five-year schedule slip from the program's current baseline.
The total cost of operating and maintaining the new planes over coming decades is expected to top $1 trillion, according to Pentagon estimates, but defense officials and industry executives say they are working hard to reduce those costs.
(Reporting by Andrea Shalal-Esa, editing by Bernard Orr)
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