Costly F-35 fighter under fire from lawmakers

By Jim Wolf

WASHINGTON (Reuters) - Lockheed Martin Corp's <LMT.N> increasingly costly F-35 Joint Strike Fighter is testing congressional support, with top Senators calling on the Pentagon to offer alternatives.

Ashton Carter, the Pentagon's top arms buyer, told the Senate Armed Services Committee on Thursday that buying more than 2,400 F-35s would cost twice as much in real terms as originally estimated, absent significant changes.

This was "unacceptable and unaffordable," he told the panel, while voicing confidence the government would succeed in cutting excess costs in the coming months and years.

The multinational F-35 family of fighters is the Pentagon's priciest arms purchase, most recently projected to total some $382 billion over the coming two decades for 2,443 aircraft.

Three F-35 models are being built for the U.S. Air Force, Navy, Marine Corps and allied countries.

Committee chairman Carl Levin said new estimates of "life-cycle" F-35 costs, including development, operation and maintenance, now top $1 trillion. The committee has been a strong supporter of the program, but he asked Carter to present alternatives as a "backup" option within a week.

"People should not conclude that we will be willing to continue that kind of support without regard to increased costs resulting from a lack of focus on affordability," the Michigan Democrat said.

Senator John McCain of Arizona, the panel's top Republican, described the F-35 program as "incredibly troubled" and a "train wreck." He suggested the Pentagon think of alternatives to the F-35 program if its costs cannot be brought down.

Carter, the undersecretary of defense for acquisition, responded that there were no good alternatives to the F-35, a multirole aircraft due to replace various aircraft in the military fleets of both the United States and its partners.

BACKBONE OF POWER

The U.S. Air Force's top arms buyer, David Van Buren, said he was looking at possible programs to extend the life of General Dynamics' <GD.N> F-16s to compensate for F-35 delays.

Boeing's <BA.N> F/A-18E-F Super Hornet could also benefit from F-35 problems and delays, aerospace analysts have said.

Lockheed Martin expects the F-35, due to be the backbone of U.S. air combat power for decades to come, to account for more than 20 percent of its global sales once full production kicks in, at a date still to be determined.

President Barack Obama has asked Congress for $9.7 billion in fiscal 2012, which starts October 1, for continued system development, test and purchase of 32 early production F-35s.

Asked by Alaska Democrat Mark Begich whether he would like to drive the costs down 20 percent to 50 percent, Carter replied: "You're in the right ballpark."

Lockheed Martin, the Pentagon's No. 1 supplier by sales, had done an "abysmal job" of keeping the F-35 on budget, McCain said, and suggested the company should absorb at least some of the overruns rather than taxpayers.

Carter, in a prepared joint statement with two colleagues, said the Pentagon believed it had put the program on a "sound footing for the future" despite the challenges that remain to drive down prices.

Eight countries have put up a total of more than $4 billion to co-develop the F-35 -- Britain, Italy, Netherlands, Turkey, Canada, Australia, Denmark and Norway. Carter said he expected foreign F-35 sales to total 600 to 700 aircraft. Low-rate initial production of aircraft began four years ago.

The Government Accountability Office, the investigative arm of the U.S. Congress, said the program has not fully shown that the aircraft design is stable or that manufacturing processes are mature and that the system is reliable.

Total development funding is now estimated at $56.4 billion to wrap up in 2018, a 26 percent cost increase and a five-year schedule slip from the program's current "baseline," said Michael Sullivan, GAO's director of acquisition and sourcing management, in written testimony.

Carter acknowledged at the hearing that some prospective F-35 buyers were now planning to hedge and buy other aircraft instead.

Competitors for foreign sales include Saab's Gripen, Dassault's Rafale, Russia's MiG-35 and Sukhoi Su-35 as well as the Eurofighter Typhoon made by a consortium of British, German, Italian and Spanish companies.

Tom Burbage, Lockheed's F-35 program general manager, urged the government in his testimony to ramp up its F-35 purchases, to help capture economies of scale early on to bring down prices.

(Reporting by Jim Wolf; Editing by Gerald E. McCormick, Dave Zimmerman and Tim Dobbyn)