It is called the ‘death spiral’, and America’s newest warplane, the F-35 Joint Strike Fighter, is in danger of falling into it before the plane has even gone into service.
Designed to be the next-generation fighter jet for decades to come for the US Air Force, Navy and Marines, as well as key US allies in Asia and Europe, the F-35 appears bullet-proofed against cancellation
The term – recently invoked by top brass involved in the F-35 programme – refers to a budgeting catch-22 that plagues the defence industry. To keep the cost per airplane low, you need to build and sell a lot of planes. But in tough economic times, governments cut orders to save money. That pushes up the cost per plane, leading to more cancellations, pushing up the cost, leading to more cancellations, and so on.
The US military is in the process of making tough decisions due to mandatory budget cuts from sequestration which went into effect on March 1 and could lop off $46 billion (€35 billion) of Pentagon spending this fiscal year.
Earlier this year, Pentagon budgeteers crunched the numbers on Lockheed Martin Corp’s F-35 in an exercise that spoke volumes about the troubles facing the world’s most expensive weapons system and the Navy’s uncertain commitment to it.
Postponing orders for about 40 of the 260 Navy models of the plane, which will take off from and land on aircraft carriers, would save money in the short term, according to several defence officials familiar with the analysis, which has not been made public.
But it would also add from $1 billion (€0.8 billion) to $4 billion (€3 billion) to the eventual price of the F-35 programme, already at a record-setting $396 billion (€305 billion).
Seven years behind schedule and 70 per cent over early cost estimates, the stealthy F-35 Lightning II appears to have overcome myriad early technical problems only to face a daunting new question: is it affordable in an era of shrinking defence budgets?
According to a congressional watchdog agency, the average price per plane has already almost doubled from $69 million (€53 million) to as much as $137 million (€105 million) since the F-35 programme began in 2001. Any further price rise could scare off potential buyers – including vital foreign customers.
“It’s a house of cards,” said one senior defence official who is familiar with the F-35 programme, but was not authorised to speak publicly. “We have finally started improving performance on the programme and efficiency in testing, and bang, we get this budget challenge.”
Steve O’Bryan, one of Lockheed’s top F-35 executives, says the company has already cut F-35 production costs by 50 per cent, and is making progress on flight tests and software development.
“While there are still challenges and room for improvement, the programme is heading in the right direction and we see no insurmountable obstacles to delivering the F-35 and its unprecedented fifth generation capability to our three US service and international customers,” he said.
Built by Lockheed and designed to be the next-generation fighter jet for decades to come for the US Air Force, Navy and Marines, as well as key US allies in Asia and Europe, the F-35 appears bullet-proofed against cancellation.
There are no other new fighter jets in the pipeline; the US military’s fleet of warplanes is ageing; and 10 allies including Britain, Japan and Israel are deeply invested.
Manufacturing – and jobs – spread across 46 states ensure a vital layer of political protection as well.
With 10 million lines of software code onboard, and another 10 million lines in its logistics and ground systems, the F-35 is a flying computer with radars and other sensors that can see enemy threats 322km away in any direction.
In what was meant to be a money-saving move, US officials designed the F-35 as one basic fighter (with three variants) to replace a dozen warplanes flown by the US Air Force, Navy and Marine Corps, as well as US allies worldwide.
The US armed forces currently plans to buy 2,443 F-35s in total, comprising 1,763 A-models for the Air Force, 420 B- and C-models for the Marines, and 260 C-models for the Navy. Foreign orders are now slated to total 721.
The Marine Corps, under pressure to replace its ageing fleet of Harrier AV-8B ‘jump jets’, Boeing Co. F/A-18 Hornets, and EA-6B Prowlers, is scheduled to be the first US military service to use the jet, by late 2015.
Top Marine Corps officials are vigilant about the programme and the budgetary risks it faces.
“Any delay in fielding the F-35 brings adds risk to the Marine Corps’ ability to execute our mission as the nation’s crisis response force and it affects our ability to augment US Navy carrier air wings,” Lieutenant General Robert Schmidle, Deputy Commandant of Aviation, said in a statement. Schmidle and other planners at the Pentagon are desperate to avert the ‘death spiral’ that gutted the Air Force’s plan to buy 750 F-22 Raptor stealth fighters down to just 187 jets.
Behind closed doors, some US officials fret that sequestration budget cuts could trigger a similar dynamic on the F-35, which has already seen 410 orders pushed back beyond 2017.
Depending on how the cuts are implemented, the purchase of up to nine F-35s could be deferred in fiscal year 2013 alone, Navy and Air Force officials have said. That might not seem like much out of more than 3,100 destined for US and foreign clients.
But initial calculations show that while cutting nine jets would save about $1.3 billion (€1 billion), it would also raise the cost of the remaining aircraft by nearly $800 million (€617 million), said one defence official.
The Pentagon budget analysis found that postponing the 40 Navy C-model jets would raise the cost of the Navy version by about $4.5 million (€3.47 million) per plane, and add between $1.5 million (€1.15 million) to $2.6 million (€2 million) to the per-plane cost of the Air Force and Marine Corps versions, according to several defence officials familiar with the study.
“Cutting tails to pay bills is inefficient. Whether it’s nine planes in one year, or 40 across the (future years defence plan), you’re going to pay later,” said one of the officials.