The Weekly Debrief: No Easy Fix For F-35 Sustainment Cost Problems, GAO
Says
Steve Trimble September
25, 2023
Credit:
Royal Navy
Pentagon
officials think they can make the Lockheed Martin F-35 cheaper to operate by
taking over several of the sustainment functions outsourced to industry at the
beginning of the program.
The
problem is that the government still does not have a plan to successfully
wrestle those functions away from the collection of contractors that now
jealously own those roles.
The
lack of a transition plan is compounded by the pressure of a 2027 deadline to
transfer the sustainment activity for the F-35 to the U.S. Air Force, Navy and
Marines from the Joint Program Office (JPO).
Perhaps
more importantly, if the program can’t meet the services’ aggressive
affordability targets for operating the F-35, a clause in the National Defense
Authorization Act of 2021 will block the U.S. military from buying more of the stealth
fighters starting in 2028.
That
stark scenario is laid out in a 96-page report released on Sept. 22 by the
Government Accountability Office (GAO) that paints a grim picture of indecision
within the Pentagon over how to best rein in the F-35’s operating costs.
Lockheed,
as the prime contractor, has argued for years that the program should
transition to a long-term, performance-based logistics contract. The long-term
visibility on spending would, Lockheed argues, incentivize industry to invest
in efficiency improvements, which would lower overall costs by at least 10% or
more.
But
Defense Department officials aren’t persuaded that the JPO is ready to
negotiate performance-based logistics contracts, GAO’s auditors say in the new
report.
Besides,
the Pentagon thinks any savings from a performance-based logistics approach
would not exceed potential spending cuts from other approaches.
Instead
of handing Lockheed a long-term deal to sustain the U.S. F-35 fleet, the
Pentagon instead would prefer to save money by transferring some of the
functions now performed by industry to government-owned depots, the report
says.
Specifically,
the Pentagon could assume control over managing the supply of spare parts,
decisions over allocating workload for depots and maintaining the ground
support equipment, GAO says.
Such
moves would address a long list of government complaints about Lockheed’s
contractual stewardship of the F-35 sustainment enterprise. In visits to F-35
operating bases, GAO’s auditors heard that it can take up to 60 days for F-35
maintainers to receive responses to requests for access to technical
data.
“According
to maintainers we spoke to, part numbers reside in a database that is
proprietary to the prime contractor. Maintainers do not have access. Not having
ready access to part numbers hinders the repair of the aircraft because it
delays the ordering and receipt of needed parts,” the GAO report says.
Although
those problems have been known for years, the Pentagon still can’t find a
solution. At the beginning of the program, the government chose not to acquire
the F-35 technical data and to rely on Lockheed to oversee the sustainment
system.
Since 2017, Pentagon officials have been trying to find ways to pry the
necessary technical data on the F-35 from Lockheed’s proprietary control. The
JPO, for example, established a Technical Data Working Group, with the goal of
gathering “cataloging and provisioning data” that would support a
government-managed depot repair network.
“Progress
from the initiative has been minimal due to stalled negotiations and legal
actions,” GAO says.
The
delays could have consequences. Mission capability rates for the U.S. F-35
fleet declined in 2021 and 2022, wiping out gains achieved in 2020, GAO says.
Moreover, in 2036, the F-35 fleet is expected to cost about $6 billion more
than estimated to operate.
The
program now has four years to close the gap between cost estimates and actual
spending on a cost per tail per year basis. Unless the section of the fiscal
2021 defense authorization law is repealed, the Pentagon would be prohibited
from buying more F-35s after 2028 without a dramatic reduction in operating
costs.
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