Engine order is the largest Defense contract.
With a Senate showdown over the troubled F-35 Joint Strike Fighter expected when the chamber debates the defense authorization bill this fall, Deputy Defense Secretary Bill Lynn has told key lawmakers that canceling the stealthy aircraft would be a costly and complicated move.
In a July 25 letter to Senate Armed Services Chairman Carl Levin, D-Mich., and ranking member John McCain, R-Ariz., Lynn said that the Defense Department would have to pay termination costs to the plane's maker, Lockheed Martin, as well Pratt & Whitney, which builds the engine for the multiservice fighter, if Congress killed the program.
Both contracts contain clauses governing termination, but the total costs to the government incurred by canceling the program--which is the largest on the Pentagon's books--would require a "detailed analysis" of the aircraft, the engine and sustainment contracts, Lynn wrote.
Lynn, who was responding to questions posed by the two senators, added that agreements already in place to sell the aircraft to several allies would further complicate any effort to end the massive program.
Reiterating arguments made by other defense officials who support keeping the F-35 program alive despite a history of cost and schedule problems, Lynn stressed that "there is no alternative to the JSF program that delivers an acceptable level of capability at a lower cost."
Frustrated with the cost hikes on the fighter jet, McCain has said he plans to offer an amendment during floor debate that could eventually kill the fighter program.
During the committee's closed-door markup of the defense authorization bill in June, McCain offered an amendment that would have put the F-35 on probation on December 31 because of cost hikes. The fighter would be terminated a year later if the program's price tag remained 10 percent or more above Lockheed Martin's target cost.
The committee split, 13-13, and the amendment failed to make it into the bill. But McCain has signaled that he wants to take his fight to the full Senate.
"We'll revisit it on the floor," McCain told reporters in June. The committee's tied vote was "ample testimony to the lobbying power of Lockheed Martin. That's all it was."
Last month, the Pentagon notified Congress that the price tag for the first 28 fighters had grown by $771 million. To pay for a fraction of those increases, defense officials want to shift $264 million in funding--tapping $179 million intended for other programs and $85 million set aside for an F-35 award fee that Lockheed Martin will not receive.
All four congressional defense committees must sign off on a reprogramming request before the Pentagon can shift the funds. Congress left for August recess before the panels all agreed to the request.
McCain, who has called the cost increases "outrageous," tweeted July 14 that he intended to oppose the request. "The buck stops here," he said.
In his letter, Lynn said that the government is responsible for paying for the increases under the cost-plus-incentive fee contracts negotiated for the first three lots of aircraft. After problems forced the Pentagon to restructure the program last year, defense officials negotiated a fixed-price contract for the fourth lot of fighters.
If all four congressional defense committees do not sign off on the reprogramming, the Pentagon will have to move money within the F-35 accounts, including potentially siphoning money from three of the Air Force planes planned for this year, Lynn wrote.
Another approach could be cutting funds for tooling, sustainment, and spare parts for the fifth lot of aircraft, which Lynn said would have the "undesirable effect" of increasing the program's costs in the future.
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