By Emelie Rutherford

Called before Congress to explain delays and cost growth with Lockheed Martin‘s [LMT] F-35 Joint Strike Fighter, Pentagon officials said yesterday the aircraft’s initial operational capability (IOC) for the Air Force and Navy will be delayed by years.

In addition, Air Force officials steering the multi-service program "within days" officially will notify Congress it suffered a unit cost breach of more than 50 percent triggering a so-called Nunn-McCurdy recertification to Congress, military-procurement brass told the Senate Armed Services Committee (SASC).

SASC Ranking Member John McCain (R-Ariz.) and Chairman Carl Levin (D-Mich.) grilled the Pentagon officials on an array of F-35 issues, ranging from the slow notification they said Congress received on program snags to plans for concurrently developing and producing aircraft.

"Delays in general are a concern,…we’ve got to keep focused on cost, we’ve got to keep focused on concurrency to make sure there’s not excessive concurrency, so there’s a lot of concerns here," Levin told reporters after the hearing. "But I think the main focus here today was to try to put some heat on the contractor, frankly, to get this to an affordable point."

"The fundamental issue here is the lack of leverage on the contractor," Levin added. "How do you design leverage?"

Defense Secretary Robert Gates announced last month a restructuring of the 2,443-aircraft F-35 program that extends its development phase, reduces the number of production aircraft delivered in the early years, and withholds $614 million from Lockheed Martin.

Under Secretary of Defense for Acquisition, Technology, and Logistics Ashton Carter said yesterday the F-35 IOCs for both the Air Force and Navy now are projected to fall in 2016, a three-year delay for the air service and two-year lag for the sea service. Yet IOC date for the Marine Corps, the first service slated to receive the F-35, remains at 2012, he said.

Previously, the Air Force’s IOC was pegged for second quarter of 2013 and the Navy’s date was the fourth quarter of 2014, Gates told the SASC Feb. 2. The newer dates are based on the revised schedule for the end of F-35 developmental and operational test as spelled out in one of four recent F-35 assessments: the Pentagon’s Joint Estimating Team’s second review (JET II) from last October, Carter said.

"What I am saying today is (the IOC dates) increased over what you’ve heard in the past, because the services have taken the revised JET II estimate as…the most-realistic plan we can give them for when we’ll deliver the jets," Carter testified. "And then they have done their separate thing with respect to defining IOC, so they have adjusted their IOC dates in accordance with the change in the program, so here it’s different from what we said before."

Gates, by contrast, told the SASC on Feb. 2 he expected those IOC dates for the services to remain unchanged by the restructuring.

"Based on information that I was given in preparation for this hearing, the IOCs for the services, for the arrival of the training squadron at Eglin (AFB, Fla.) all remain pretty much on track," Gates said at the time. "The difference will be somewhat fewer aircraft delivered." (Defense Daily, Feb. 3)

Air Force leaders earlier this month told reporters their service’s F-35 IOC would be delayed, but the new date would not be known for months. (Defense Daily, March 5)

With much attention being paid to the services’ F-35 IOC dates, Carter said yesterday such time periods differ from initial aircraft delivery dates. The current F-35 program plan calls for standing up the first training squadron at Eglin in 2011, and for delivering production aircraft to the Marine Corps in 2012, Air Force in 2013 and the Navy in 2014, he said.

"Those are deliberate delivery of aircraft," Carter said. "That is not IOC," he added, saying there has been "so much confusion surrounding what IOC is."

"The IOCs are determined by the services based upon both the program’s performance and how each of the services define(s) IOC. Each service has a somewhat different definition, depending on…what capabilities they intend to have at IOC, their operational test and training requirements, and the number of aircraft they require for IOC. And, since the restructuring, the services have specified these definitions."

Senators and aides said after the hearing they were puzzled by the Pentagon’s differing definitions of IOC and initial aircraft delivery.

"It’s not (as) clear an issue as I thought it was before today, where I thought it was clearly defined what IOC meant," Levin said.

Carter appeared before the SASC with three other officials from the Pentagon and one from the Government Accountability Office (GAO).

Christine Fox, director of the Pentagon’s newly configured cost assessment and program evaluation (CAPE) office, confirmed the expectation that the program suffered a cost breach requiring a recertification to Congress under the Nunn-McCurdy statute.

Air Force Secretary Michael Donley will officially notify Congress of the breach before April 1 and a required package recertifying the F-35 as a vital program that must continue will be sent to Capitol Hill around early June, the Pentagon officials said.

The average-procurement-unit cost for the recently restructured F-35 program is $80 million to $95 million in 2002 dollars, a growth of at least 50 percent of the cost of $50.2 million in 2002, set in 2001 when the Joint Strike Fighter received milestone B approval, Fox said.

The precise figure, ranging from $80 million to $95 million in 2002 dollars, has not been determined but will be in the forthcoming recertification package, she added.

The GAO estimates the new F-35 unit cost in current-year dollars to be approximately $112 million, according to Michael Sullivan, director of the GAO’s acquisition and sourcing management team.

While Pentagon officials previously said they anticipated the Nunn-McCurdy breach, and began preparing for it last November, yesterday’s testimony was the first notification to the SASC, an aide said.

Quizzed by Levin on causes of the unit-cost growth, Carter pointed to the longer-than-forecasted development schedule, increased development cost for the Marine Corps’ short- takeoff vertical-landing variant, increases in labor and overhead rates, and "degradation of airframe commonality."

Carter said the government and contractor both experienced "failures" with the F-35 effort. The Pentagon must work to garner the best business deal, surface problems, and tell the truth, he told the SASC. Committee members have been frustrated the Pentagon did not share more information on F-35 problems with them.

Levin said he was pleased the Pentagon officials relayed "realism" with the F-35 program by stating they have accepted a more-expensive program cost estimate.

The GAO’s Sullivan said while the Pentagon’s F-35 restructuring efforts "go a long way to getting at what the problems are," his office believes "there’s substantial overlap across development test and production activities and there’s still significant risk on the program."

The GAO’s concerns with the F-35 relate not to the technology behind the aircraft but to the actual manufacturing of the jets, he said.

"I think that the JET team got as realistic as they can get at this time, however, there are still a lot of risks in the manufacturing of development aircraft," Sullivan said.

The GAO plans to release its sixth annual F-35 review later this month. The report’s recommendations including calling on the Pentagon to reassess warfighter requirements and deferring capabilities to future aircraft increments, if needed, Sullivan said in written testimony.