The Pentagon must move out on affordability improvements for the Lockheed Martin [LMT] F-35 Lightning II fighter or risk breaking the budget for the plane, per a new Government Accountability Office (GAO) report, F-35 Sustainment: DOD Needs to Cut Billions in Estimated Costs to Achieve Affordability.
“The Air Force needs to reduce estimated costs per tail per year by $3.7 million (or 47 percent) by 2036 or it will incur $4.4 billion in costs beyond what it currently projects it could afford in that year alone,” the study said. “Cost reductions become increasingly difficult as the program grows and matures. However, GAO found that there is no agreed upon approach to achieve the constraints. The F-35 program estimates that it will declare Milestone C—a decision point for moving into full-rate production of the aircraft—sometime in the 2021-2023 time frame.”
The Air Force is to have 1,192 F-35As by 2036.
The Air Force has been negotiating a three-year sustainment contract with Lockheed Martin for the service’s F-35A fighter–a contract that is to have performance incentives for cost reduction (Defense Daily, June 22).
The Air Force divides F-35 sustainment costs into four areas: consumables and repairables for items on the aircraft that can break, manpower, fuel, and sustaining support in which the Air Force needs Lockheed Martin aid. The Air Force has said that the biggest sustainment obstacle has been a lack of depot capacity to ensure a fast turnaround time on F-35As being repaired.
“Without assessing cost-reduction efforts and program requirements (such as number of planned aircraft), and developing a plan prior to declaring Milestone C, the Department of Defense (DOD) may continue to invest resources in a program it ultimately cannot afford,” the GAO said in its new report. “Congress’s requiring DOD to report on its progress in achieving affordability constraints and making F-35 procurements contingent on DOD’s demonstrated progress would enhance DOD’s accountability for taking the necessary and appropriate actions to afford sustaining the F-35 fleet.”
The Pentagon’s Office of Cost Assessment and Program Evaluation (CAPE) identified an estimated $695 billion in future maintenance and unit-level manpower as the largest drivers of sustainment costs–53 percent–for the F-35. While the nearly $300 billion unit-level manpower estimate last year was a 12.2 percent decrease from CAPE’s 2018 estimate, the 2020 CAPE estimate of more than $400 billion for maintenance was a 15.7 percent increase from the 2018 estimate.
“Additionally, sustaining support—an element that captures, among other things, contractor related support costs to help maintain F-35 operations—experienced the most significant increase, $68 billion, or 61.3 percent, above the last  estimate,” GAO said. “This increase, according to CAPE officials, was mainly due to the program’s reliance on contractor labor, including ALIS administrators, to help maintain and operate the system.”
The F-35 program has been counting on the transition from the 20-year-old Autonomic Logistics Information System (ALIS) to the cloud-based Operational Data Integrated Network to save funds.
“In March 2021, Brigadier General David Abba, director of the Air Force’s F-35 Integration Office, stated, ‘The biggest cost challenge that we face in the airplane [F-35] is the life cycle sustainment cost of the jet,'” GAO said in the new report. “‘We have to find a way to make the aircraft
“Air Force officials also told us that the service’s only available remaining options to meet the affordability constraints are to reduce the total number of F-35A aircraft they plan to purchase, or to reduce the aircraft’s planned flying hours,” per the report. “Either of these options, according to the officials, could substantially reduce sustainment costs; however, either option would also require a change to the way in which the aircraft was originally intended to be used by the Air Force. Exercising these options would have implications on the force structure and capabilities of the Air Force.”
The Air Force has planned to buy 1,763 F-35As.