Pentagon needs $12.6 billion per year through 2037 for F-35: report

The Pentagon needs to budget $12.6 billion each year through 2037 to finish developing and paying for all the Lockheed Martin Corp F-35 fighters it plans to buy, according to a report released by a congressional watchdog agency on Monday.

This amounts to $2 billion per year more the Pentagon would need for this program than the Government Accountability Office (GAO) had projected in a draft report obtained and published by Reuters on Saturday.

The draft report excluded the cost of the fighter's single engine, which is built by Pratt & Whitney, a unit of United Technologies Corp, said Joe DellaVedova, a spokesman for the Pentagon's F-35 program office.

The report said the Pentagon was expected to spend a total of $316 billion each year through 2037 on procurement and development of the radar-evading warplane.

"Overall, the F-35 Joint Strike Fighter program is now moving in the right direction after a long, expensive, and arduous learning process. It still has tremendous challenges ahead," GAO concluded in its annual report to Congress on the F-35, the Pentagon's costliest weapons program.

The F-35 is an advanced fighter meant to serve the U.S. Air Force, Navy and Marines for decades to come. The program, which has seen costs rise 70 percent from initial projections and numerous technical complications, is facing a critical phase in which any new setbacks or reductions in orders from the U.S. military and its allies would further boost the cost per plane.

The program is slated to cost nearly $400 billion overall, plus over $1 trillion for so-called "sustainment" costs that cover operating and maintaining the warplanes over an estimated 30-year service life. The Pentagon and F-35 program office are working to reduce those costs, which the GAO report said were 60 percent higher than those applicable to aircraft the F-35 is slated to replace.

The GAO report said the Pentagon's Cost Assessment and Program Evaluation (CAPE) office recently forecast annual operations and maintenance costs of $18.2 billion for all three models of the F-35, compared to $11.1 billion spent in 2010 to operate and sustain the legacy aircraft.

The "(Department of Defense) and the contractor now need to demonstrate that the F-35 program can effectively perform against cost and schedule targets in the new baseline and deliver on promises," the report said.

"Achieving affordability in annual funding requirements, aircraft unit prices, and life-cycle operating and support costs will in large part determine how many aircraft" the U.S. military can ultimately acquire, it said.

(Reporting By Andrea Shalal-Esa)