Industry isn’t building enough parts for upgraded F-35s, DOD says

Shortages of just a few parts are slowing deliveries of the F-35’s latest upgrade, which is on track to cost almost $1 billion more than expected, Pentagon officials told lawmakers.

Hardware for the Technology Refresh-3 upgrade is not being produced fast enough, F-35 Program Executive Officer Lt. Gen. Michael Schmidt said Tuesday during a House Armed Services tactical air and land forces subcommittee hearing.

Lockheed Martin and other companies are “not meeting our contractual requirements and there's really a couple of components within the TR-3 hardware that is driving that—but you need all the components to make the TR-3 kit,” Schmidt said. 

“If we can get these two components to come up, we will catch up quickly. But that's where we're at,” he said. 

Lockheed’s contracts require it to deliver 52 upgraded jets this year, but it has finished just 21, Schmidt said.  

During the hearing, lawmakers said cost overruns for the upgrades are set to reach almost $1 billion, which U.S. taxpayers and allied nations will shoulder under the cost-plus development contract with Lockheed. 

Schmidt didn’t say just what consequences Lockheed faces for the delays. 

“Lockheed is paying [a] significant price relative to the contract,” he said. “Lockheed is very much incentivized to deliver here.” 

The parts shortage isn’t the only reason for the delays, Schmidt said. Another problem is that the software labs are “not properly representing” the flight environment and “too much discovery” is happening in flight testing. 

Lockheed announced in September that the new technology package wouldn’t be ready until somewhere between April and June next year, more than a year late. The Pentagon has stopped accepting new F-35s until the testing of the technology on the stealth fighters is complete.

Schmidt said “data” shows the TR-3 problems will be resolved by the middle of the next spring, but he was not fully confident in that date. 

“I wish I had all the solutions in place that prove to me that when I do something in the lab, it's going to show up that way in the air. We have a number of fixes addressing the stability challenges. We will get to a stable, capable, maintainable airplane here,” Schmidt said. 

In a statement, Lockheed officials said they began testing the next software release a few months ago. 

“We also began test flights using TR-3 software on F-35 production jets in Fort Worth, and flight test continues at Edwards Air Force Base and Naval Air Station Patuxent River. As of early December, we have completed more than 160 flights. We also remain focused on expediting hardware delivery from our subcontractors that will be integrated with TR-3,” the statement said.

Lawmakers also questioned Pentagon officials about their decision to pause negotiations with Lockheed over a new five-year deal to sustain the F-35 fleet. For years, Lockheed has wanted to move to a performance-based logistics, or PBL, contract, under which the company would be paid to produce outcomes, not provide quantities of parts and services. 

“I find it puzzling that a multi-year sustainment contract as compared to the annual sustainable contract could not either deliver and drive down costs or increase revenue,” said subcommittee ranking member Rep. Donald Norcross, D-N.J.

The sustainment contract proposals from industry wouldn’t have delivered enough cost or performance savings, and the program had to move staff away from those discussions to focus on extending the current contract to keep sustainment going, said Pentagon acquisition chief Bill LaPlante.

“Simply, we were not going to approve PBL that did not perform well, it didn't get the cost savings. For [Rep. Norcross], how you expressed your question, how could we not have a better price and performance—completely agree with you. Almost the words out of my mouth when we made this decision. So we have not given up on it, but we've got a lot of work to do there with industry,” LaPlante said.