Just a complete fucking mess.

Another victory lap for Obama.

Program cost increases and delays

The F-35 program has experienced a number of cost overruns and developmental delays. The program's delays have come under fire from the U.S. Congress and some U.S. Department of Defense officials. The program has undergone a number of reassessments and changes since 2006. The GAO warned in March 2006 that excessive concurrency might result in expensive refits for several hundred F-35 aircraft that are planned for production before design testing is completed.[36] In November 2010, the GAO found that "Managing an extensive, still-maturing global network of suppliers adds another layer of complexity to producing aircraft efficiently and on-time" and that "due to the extensive amount of testing still to be completed, the program could be required to make alterations to its production processes, changes to its supplier base, and costly retrofits to produced and fielded aircraft, if problems are discovered."[37] USAF budget data in 2010, along with other sources, projected the F-35 to have a flyaway cost from US$89 million to US$200 million over the planned production run.[38][39] In February 2011, the Pentagon put a price of $207.6 million on each of the 32 aircraft to be acquired in FY2012, rising to $304.16 million ($9,732.8 million ÷ 32 aircraft) if its share of research, development, test and evaluation (RDT&E) spending is included.[40][41]
On 21 April 2009, media reports, citing Pentagon sources, said that during 2007 and 2008, spies downloaded several terabytes of data related to the F-35's design and electronics systems, potentially compromising the aircraft and aiding the development of defense systems against it.[42] Lockheed Martin rejected suggestions that the project was compromised, stating it "does not believe any classified information had been stolen".[43] Other sources suggested that the incident caused both hardware and software redesigns to be more resistant to cyber attack.[44] In March 2012, BAE Systems was reported to be the target of cyber espionage. BAE Systems refused to comment on the report, although they did state, "[Our] own cyber security capability can detect, prevent and rectify such attacks."[45]
On 9 November 2009, Ashton Carter, under-secretary of defense for acquisition, technology and logistics, acknowledged that the Pentagon "joint estimate team" (JET) had found possible future cost and schedule overruns in the project and that he would be holding meetings to attempt to avoid these.[46] On 1 February 2010, Gates removed the JSF Program Manager, U.S. Marine Corps Major General David Heinz, and withheld $614 million in payments to Lockheed Martin because of program costs and delays.[47][48]
On 11 March 2010, a report from the Government Accountability Office to United States Senate Committee on Armed Services projected the overall unit cost of an F-35A to be $113 million in today's money.[49] In 2010, Pentagon officials disclosed that the F-35 program has exceeded its original cost estimates by more than 50 percent.[50] An internal Pentagon report critical of the JSF project states that "affordability is no longer embraced as a core pillar". In 2010, Lockheed Martin expected to reduce government cost estimates by 20 percent.[51] On 24 March 2010, Gates termed the cost overruns and delays as "unacceptable" in a testimony before the U.S. Congress; and characterized previous cost and schedule estimates as "overly rosy". Gates insisted the F-35 would become "the backbone of U.S. air combat for the next generation" and informed the Congress that he had expanded the development period by an additional 13 months and budgeted $3 billion more for the testing program while slowing down production.[52] In August 2010, Lockheed Martin announced delays in resolving a "wing-at-mate overlap" production problem, which would slow initial production.[53]
In November 2010, as part of a cost-cutting measure, the co-chairs of the National Commission on Fiscal Responsibility and Reform suggested cancelling the F-35B and halving orders of F-35As and F-35Cs.[54][55][56] Air Force Magazine reported that "Pentagon officials" were considering canceling the F-35B because its short range meant that the bases or ships it would operate from would be in range of hostile tactical ballistic missiles.[57] Lockheed Martin consultant Loren B. Thompson said that this rumor was a result of the usual tensions between the U.S. Navy and Marine Corps, and there was no alternative to the F-35B as an AV-8B Harrier II replacement.[58] He also confirmed further delays and cost increases because of technical problems with the aircraft and software, blaming most of the delays and extra costs on redundant flight tests.[59]
In November 2010, the Center for Defense Information estimated that the program would be restructured with an additional year of delay and $5 billion in additional costs.[60] On 5 November 2010, the Block 1 software flew for the first time on BF-4.[61] As of the end of 2010, only 15% of the software remained to be written, but this was reported to include the most difficult sections such as data fusion.[62] In 2011, it was revealed that 50% of the eight million lines of code had been written and that it would take another six years to complete the software to the new schedule.[63] By 2012, the total estimated lines of code for the entire program (onboard and offboard) had grown from 15 million lines to 24 million lines.[64]
In 2011, program head Vice Adm. David Venlet confirmed that the concurrency built into the program "was a miscalculation".[65] This was during a contract dispute where the Pentagon insisted that Lockheed Martin help cover the costs of applying fixes found during testing to aircraft already produced.[66] Lockheed Martin objected that the cost sharing posed an uninsurable unbounded risk that the company could not cover, and later responded that the "concurrency costs for F-35 continue to reduce".[67][68] The Senate Armed Services Committee strongly backed the Pentagon position.[69] In December 2011, Lockheed Martin accepted a cost sharing agreement.[70] The Aerospace Industries Association warned that such changes would force them to anticipate cost overruns in future contract bids.[71] As of 2012, problems found in flight testing were expected to continue to lead to higher levels of engineering changes through 2019.[72] The total additional cost for concurrency in the program is around $1.3 billion.[73] By the next year the cost had grown to $1.7 billion.[74]
In January 2011, Defense Secretary Robert Gates expressed the Pentagon's frustration with the rising costs of the F-35 program when he said, "The culture of endless money that has taken hold must be replaced by a culture of restraint." Focusing his attention on the troubled F-35B, Gates ordered "a two-year probation", saying it "should be canceled" if corrections are unsuccessful.[75] Gates has stated his support for the program.[76] Some private analysts, such as Richard Aboulafia, of the Teal Group state that the F-35 program is becoming a money pit.[77] Gates' successor, Leon Panetta, ended the F-35B's probation on 20 January 2012, stating "The STOVL variant has made—I believe and all of us believe—sufficient progress."[78]
Former Pentagon manager Paul G. Kaminski has said that the lack of a complete test plan has added five years to the JSF program.[79] Initial operating capability (IOC) will be determined by software development rather than by hardware production or pilot training.[80] As of May 2013, the USMC plan an IOC in "mid-2015" for the F-35B with Block 2B software which gives basic air-to-air and air-to-ground capability. It has been reported that the USAF is planning to bring forward IOC for the F-35A to the Block 3I software in mid-2016 rather than waiting for the full-capability Block 3F in mid-2017; the F-35C will not enter service with the USN until mid-2018.[2] The $56.4 billion development project for the aircraft should be completed in 2018 when the Block five configuration is expected to be delivered—several years late and considerably over budget.[81]
Delays in the F-35 program may lead to a "fighter gap" where America and other countries will lack sufficient fighters to cover their requirements.[82] Israel may seek to buy second-hand F-15Es,[83] while Australia also sought additional F/A-18 Super Hornets in the face of F-35 delays.[84]
In May 2011, the Pentagon's top weapons buyer Ashton Carter said that its new $133 million unit price was not affordable.[85] In 2011, The Economist warned that the F-35 was in danger of slipping into a "death spiral" where increasing per-aircraft costs would lead to cuts in number of aircraft ordered, leading to further cost increases and further order cuts.[86] Later that year, four aircraft were cut from the fifth Low Rate Initial Production (LRIP) order to pay for cost overruns;[87] in 2012, a further two aircraft were cut.[88] Lockheed Martin acknowledged that the slowing of purchases would increase costs.[89] David Van Buren, U.S. Air Force acquisition chief, said that Lockheed Martin needed to cut infrastructure to match the reduced market for their aircraft.[90] The company said that the slowdown in American orders will free up capacity to meet the urgent short term needs of foreign partners for replacement fighters.[91] Air Force Secretary Michael Donley said that no more money was available and that future price increases would be matched with cuts in the number of aircraft ordered.[92] Later that month, the Pentagon reported that costs had risen another 4.3 percent, partially resulting from production delays.[93] In 2012, the purchase of six out of 31 aircraft was tied to performance metrics of the program.[94] In 2013, Bogdan repeated that no more money was available, but that he hoped to avoid the death spiral.[95] In 2014 it was reported that another eight aircraft would be cut from the next year's order.[96]
Japan has warned that it may halt their purchase if unit costs increase, and Canada has indicated it is not committed to a purchase yet.[97][98] The United States is projected to spend an estimated $323 billion for development and procurement on the program, making it the most expensive defense program ever.[99] Testifying before a Canadian parliamentary committee in 2011, Rear Admiral Arne Røksund of Norway estimated that his country's 52 F-35 fighter jets will cost $769 million each over their operational lifetime.[100] In 2012, the total life-cycle cost for the entire U.S. fleet was estimated at US$1.51 trillion over a 50-year life, or $618 million per plane.[101] To reduce this high life-cycle cost over a 50-year lifetime, the USAF is considering reducing Lockheed Martin's role in Contractor Logistics Support.[102] The company has responded that this cost estimate relies on future costs beyond its control such as USAF reorganizations and yet to be specified upgrades.[103] Delays have negatively affected the program's worldwide supply chain and partner organizations.[104]
In 2012, General Norton A. Schwartz decried the "foolishness" of reliance on computer models to settle the final design of the aircraft before flight testing found the issues that needed redesign.[105] In 2013, JSF project team leader USAF Lieutenant General Chris Bogdan said that "A large amount of concurrency, that is, beginning production long before your design is stable and long before you've found problems in test, creates downstream issues where now you have to go back and retrofit airplanes and make sure the production line has those fixes in them. And that drives complexity and cost".[106] Bogdan praised the improvement in the program ever since Lockheed Martin was forced to assume some of the financial risks.[107]
In 2012, in order to avoid further redesign delays, the U.S. DoD accepted a reduced combat radius for the F-35A and a longer takeoff run for the F-35B.[108][109] The F-35B's estimated radius has also decreased by 15 percent.[110] In a meeting in Sydney in March, the United States pledged to eight partner nations that there would be no more program delays.[111]
In May 2012, Lockheed Martin Chief Executive Bob Stevens complained that the Defense Department's requirements for cost data were driving up program cost.[112] Stevens also admitted that a strike might cause a production shortfall of the target of 29 F-35s that year.[113] Striking workers questioned the standards of replacement workers, as even their own work had been cited for "inattention to production quality" with a 16% rework rate.[114] The workers went on strike to protect pensions whose costs have been the subject of negotiations with the Department of Defense over the next batch of aircraft.[115] These same pension costs were cited by Fitch in their downgrade of the outlook for Lockheed Martin's stock price.[116] Stevens said that while he hoped to bring down program costs, the industrial base was not capable of meeting the government's expectations of affordability.[117][118]
According to a June 2012 Government Accountability Office report, the F-35's unit cost has almost doubled, an increase of 93% over the program's 2001 baseline cost estimates.[119] In 2012, Lockheed Martin reportedly feared that the tighter policies for award fees of the Obama administration would reduce their profits by $500 million over the following five years.[120] This was demonstrated in 2012 when the Pentagon withheld the maximum $47 million allowed for the company's failure to certify its program to track project costs and schedules.[121] The GAO has also faulted the USAF and USN for not fully planning the costs of extending legacy F-16 and F-18 fleets to cover for the delayed F-35.[122] Due to cost cutting measures, the U.S. Government and the GAO have stated that the flyaway cost (including engines) has been dropping. The U.S. Government estimates that in 2020 a "F-35 will cost some $85m each or less than half of the 2009 initial examples cost. Adjusted to today’s dollars the 2020 price would be $75m each."[123]
In 2013 Lockheed Martin began to lay off workers at the Fort Worth plant where the F-35s were assembled.[124] They said that the currently estimated concurrency costs of refitting the 187 aircraft built by the time testing concludes in 2016 are now less than previously feared.[125] The GAO's Michael Sullivan said that the company had failed to get an early start on the systems engineering and had not understood the requirements or the technologies involved at the program's start.[126] The Pentagon vowed to continue funding the program during budget sequestration if possible.[127] The U.S. budget sequestration in 2013 could slow development of critical software,[128] and the Congress has ordered another study to be made on the software development delays.[129] As of 2014, software development remains the "number one technical challenge" for the F-35.[130]
In June 2013, Frank Kendall, Pentagon acquisition, technology and logistics chief, declared "major advances" had been made in the F-35 program over the last three years; and that he intended to approve production rate increases in September. Air Force Lt. Gen. Christopher Bogdan, program executive officer, reported far better communications between government and vendor managers, and that negotiations over Lot 6 and 7 talks were moving fast. It was also stated that operating costs had been better understood since training started, and he predicted "we can make a substantial dent in projections" of operating costs.[131]
In July 2013, further doubt was cast on the latest (long delayed) schedule, with further software delays, and sensor, display and wing buffet problems continuing.[132] In August it was revealed that the Pentagon was weighing cancellation of the program as one possible response to the budget sequestration,[133][134] and the United States Senate Appropriations Subcommittee on Defense voted to cut advanced procurement for the fighter.[135]
On 21 August 2013 C-Span reported that Congressional Quarterly and the Government Accountability Office were indicating the "total estimated program cost now is $400b—nearly twice the initial cost". The current investment was documented as approximately $50 billion. The projected $316 billion cost in development and procurement spending was estimated through 2037 at an average of $12.6 billion per year. These were confirmed by Steve O'Bryan, Vice President of Lockheed Martin on the same date.[136]
In 2013 a RAND study found that during development the three different versions had drifted so far apart from each other that having a single base design might now be more expensive than if the three services had simply built entirely different aircraft tailored to their own requirements.[137]
In 2014, the airframe cost went below $100 million for the first time, and the Air Force expected unit costs to fall.[138]
A 2014 Center for International Policy study cast doubt on the number of indirect jobs created by the program, which has been a key selling point for the F-35 to Congress. Lockheed stood by their job numbers and said that their accounting was in line with industry norms.[139]
A 2014 report by J. Michael Gilmore said that new software delays could push back the USMC IOC by another 13 months.[140] The F-35 program office considers software to be the top technical risk to the program, and the USMC has maintained their expectation of an IOC in July 2015.[141]
In 2014, U.S. Senator John McCain blamed cost increases in the program on "cronyism".[142]
In 2014 the GAO found that the F-35 fleet would have operating costs 79% higher than the aircraft it replaced.[143]