Sen. John McCain (R-Ariz.) warned recently if the Pentagon does not force Lockheed Martin [LMT] to pay for a greater portion of cost overruns with the next F-35 Joint Strike Fighter contract the program may lose congressional support.
The top Republican on the Senate Armed Services Committee (SASC) said he is concerned by news the fourth lot of aircraft may be 10 percent over the contract’s target cost and also by a report that the F-35’s manager wants to slow production of the fifth lot because of problems found during testing.
McCain said the Pentagon “must” negotiate a fixed-price contract for the lot 5 aircraft that requires Lockheed Martin to “assume fully cost overruns.”
“I expect that this contract negotiation will reflect unit costs that are lower than for the last lot purchased, and that the contract will ensure shared responsibility for reasonable concurrency cost increases,” he said on the Senate floor. “Put simply, the deal we negotiate on this next production lot must be at least as good, if not better, than the deal we negotiated under the previous one. Otherwise, I can only conclude that we are moving in the wrong direction and it will be only a matter of time before the American people and the U.S. Congress and our allies lose faith with the F-35 program, which is already the most expensive weapons program in history.”
McCain told reporters he does not have legislation ready to remedy his F-35 concerns, but that he will keep an eagle eye on the program that he said is increasingly vulnerable during Pentagon cost-cutting debates.
“The question is where do you reach the tipping point,” he said.
The Arizona Republican fought earlier this year, during the SASC’s initial markup of the fiscal year 2012 defense authorization bill, for an unsuccessful amendment to put the F-35 program on a one-year probation if costs for the lot 4 aircraft grew by more than 10 percent.
His language was not adopted, and the bill the Senate passed recently instead says Lockheed Martin must pay all costs that exceed the target amount for the lot 5 aircraft’s fixed-price contract–language McCain supports.
He learned recently that the fourth F-35 lot may cost as much as 10 percent more than the contract’s $3.46 billion target cost. Yet he said he does not know at this point if his previous idea to put the program on probation under such a scenario still has legs.
“The thing is the Marine Corps version (of the F-35) is already on probation, by (former Defense Secretary Robert) Gates,” McCain told reporters at the Capitol. “So you really kind of run out of options and, you know, there’s no doubt we need the airplane. The question is where do you reach the tipping point.”
McCain said he will keep watch over negotiations between the Pentagon and Lockheed Martin on the lot 5 aircraft.
“We’ll keep demanding additional information,” he said. “We send questions over to them all the time. It’s really not wait and see.”
He vented about the F-35 program on the Senate floor recently, citing an AOL Defense article in which F-35 Program Executive Officer Vice Adm. David Venlet said lot 5 production must slow to fix cracks and “hot spots” found during fatigue testing. Venlet reportedly said the fixes may add $3 million to $5 million to each plane’s cost.
McCain also picked up on the admiral’s reported concern that the F-35 program has had too much concurrency, which allows the Pentagon to buy training aircraft at the same time they are being developed.
“The overlap between development and production is still too great to assure taxpayers that they will not have to continue paying for costly redesigns or retrofits due to discoveries made late in production,” McCain argued.
He maintained that when “the head of the most-expensive, highest-profile weapon systems program in U.S. history effectively says, ‘Hold it, we need to slow down how much we are buying,’ we should all pay close attention.”
McCain said Adm. Venlet’s comments “clearly conveyed that the path we are on is neither affordable nor sustainable.”
“If things do not improve, quickly, taxpayers and the warfighter will insist that all options will be on the table, and they should be.” the SASC ranking member said. “We cannot continue on this path.”
Meanwhile, McCain said he hopes the House and Senate will reconcile their differing versions of the FY ’12 defense authorization bill by the end of next week and send a final version to President Barack Obama. The White House threatened to veto the House bill over language supporting the F-35’s alternate engine, which may be moot because the contractor team is no longer pushing a plan to keep it alive. Obama objects to the Senate bill because of language regarding military detainees.
On the budget front, McCain said he and Sen. Lindsey Graham (R-S.C.) are busy talking to other lawmakers about a plan to lessen or do away with up to $600 billion in defense cuts triggered by the failure of a congressional committee to craft a deficit-cutting plan last month.
McCain told reporters he “honest to God” doesn’t know if and how he and Graham can stop the cuts, which could come through the so-called sequestration process spelled out in the Budget Control Act of 2011.
“Everybody’s all over the map,” he said. “There’s so many different divisions….Things that Lindsey and I have talked about with others they don’t agree with, so we’re still working on it.”