Air Force secretary says F-35 cost to breach legal limit

Air Force Secretary Michael Donley said on Tuesday he expects the F-35 Joint Strike Fighter to breach the Nunn-McCurdy cost-control law, which would trigger a congressional review and potentially force the Pentagon to prove the program is critical to national security despite its escalating price tag.

During a breakfast with reporters, Donley called it probable that the aircraft program, the largest weapons system on the Pentagon books, would exceed the limits set by the 1982 law. The statute requires congressional notification when unit costs are at least 15 percent over budget and harsher sanctions -- including termination -- when the cost spirals to 25 percent or more over budget.

"Exactly what the parameters of what that [breach] might look like and what might be reported, I'm not quite sure," Donley said. "We're still working through all these details."

But the secretary emphasized the importance of the F-35 program, which is aiming to provide more than 2,400 aircraft for the Air Force, Navy and Marine Corps, replacing their aging fighters.

Although three variants will be tailored to each service's needs, officials have long argued that common components and maintenance requirements as well as economies of scale will save money in the long run.

"These are not unusual issues for where this program is in making the transition from development [to production]," Donley said. "As difficult a challenge as this is, it's worse and it's more expensive to stop production lines and to restart them."

For fiscal 2011, the Pentagon is requesting $8.7 billion in procurement funding to buy 43 F-35s, plus $2.3 billion for continued research and development and $535 million for spare parts.

Due to cost increases and schedule delays, Defense Secretary Robert Gates on Feb. 1 announced plans to prolong and invest more heavily in the F-35s development phase while withholding $614 million in award fees from prime contractor Lockheed Martin Corp.

The decision to restructure the program will have a long-term impact on the F-35's schedule, including slippage of the Air Force's date for initial operational use from fiscal 2013 to late calendar year 2015, Donley reiterated on Tuesday.

But Donley said the Pentagon hopes to use incentives to speed up aircraft production over the next several years and ultimately "buy back" more than 100 planes that were deferred as part of the program's restructuring.