F-35's Exorbitant Cost Clouds Its Future

F35 Canada Auditor General

First Posted: 04/ 2/2012 11:10 pm Updated: 04/ 3/2012 5:24 pm

These recent weeks have not been the best of times for the fate of the F-35 fighter jet, as the auditor general's devastating report on Tuesday bears out.

The Joint Strike Fighter (JSF) program that produces the fighter jet has already been weathering strong criticism in the U.S., about the plane's capabilities and its price tag. That has lead to threats and actual delays or cancellations of aircraft orders.

As the cost of the program spirals upward, some militaries around the world have delayed or cut their orders, driving the costs per plane still higher.

The list includes the U.S. Defence Department, which is now postponing its F-35 orders but sticking to its total purchase number of 2,443 production F-35 Lightning IIs.

Eight other countries including Canada are partners in the JSF program and plan to purchase 697 F-35s. Aircraft manufacturer Lockheed Martin expects to sell at least that many F-35s to other countries in the years to come.

Last month, the estimate of the lifetime cost of the U.S. F-35 program, the most expensive U.S. arms program ever, crossed the $1.5 trillion mark.

Orders cancelled, delayed

In February, Italy, a JSF partner, cut its order by 41 planes. In 2002, it had agreed to purchase 131 F-35s. State-owned Finmeccanica is to assemble the jets that Italy, the Netherlands and Norway purchase.

A few weeks later, Japan, the JSF's first customer in Asia, warned in a letter to the U.S. Defence Department that the growing cost and program delays may lead to cancellation of its order for 42 F-35s. The deal with Japan had only been reached in December 2011.

Julian Fantino, Canada's associate minister of National Defence, surprised a Commons committee on March 13 when he announced that Canada's purchase of 65 F-35s was not guaranteed.

Then on March 22, Australia announced it was delaying its orders for the F-35. Defence Minister Stephen Smith said the delivery date for 12 of the first 14 planes ordered was "under consideration" and the second batch of 58 jets was not a priority.

There was some good news for the JSF program amidst all these cancellations and delays. On March 23, Norway upped its order by four, and will now buy 52 F-35s.

American defence cuts

While the global forecast for the F-35 is cloudy, Lockheed Martin has to be concerned also about the storm warnings at home in the U.S.

The government is trying to reduce military spending and officials have warned orders will be cut if costs continue rising.

"We have told the contractor and the program office that there is no more money," Michael Donley, the U.S. secretary of the air force, said on March 20.

But the amount of money that is in the pot is still substantial. The 19 F-35As that the U.S. will acquire in fiscal year 2013 will cost $197 million each. In 2001, the projected cost for these jets was $69 million.

The cost per plane is expected to drop later in the production cycle, assuming the order numbers do not.

Over the course of the U.S. program, the "average" cost of acquiring each F-35 should be about $162 million each, according to Pentagon figures.

The Canadian government has estimated its 65 F-35s will cost just $75 million each to acquire. But the parliamentary budget officer pegs that number at $148 million.

JSF program in question

On March 20, 2012, the U.S. General Accounting Office (GAO) issued a report that raised serious questions about the JSF program.

According to Michael Sullivan, the GAO's director of acquisition management, "the long-stated intent that the Joint Strike Fighter would deliver an affordable, highly common fifth-generation aircraft that could be acquired in large numbers could be in question."

The report states that, "manufacturing processes and performance indicators show some progress, but performance on the first low-initial production contracts has not been good."

Daniel Zanatta, a vice-president at Magellan Aerospace in Mississauga, Ont., said he is not really concerned about the program's problems in the U.S.

Magellan is involved with the JSF program and Zanatta told Embassy Magazine that the program is "moving actually very nicely through those challenges in the last 18 to 24 months."

Unmanned aerial systems vs. F-35s

The F-35 is called a fifth generation aircraft because of its technology, but that technology also adds to its costs and delays.

The plane requires millions of lines of software, "with testing of the most complex software and advanced capabilities still in the future," according to the GAO. And only "four per cent of the aircraft mission system for full combat capability has been verified."

The emergence of unmanned aerial systems (UAS) has raised doubts in some quarters over whether the F-35 is the way to go. Current UAS have the elements of fifth generation fighters and are much cheaper to produce.

That view is challenged by Winslow Wheeler of the Centre for Defence Information in Washington. In a five-part series on Time magazine's website, he argues that UAS cost more and are less effective than the U.S.'s current fighter aircraft. Wheeler focusses his analysis on the MQ-9 Reaper, the U.S.'s first true hunter-killer drone.

Drones, or unmanned aerial vehicles, are already taking away assignments for reconnaissance and even strike roles from jets with pilots onboard.

The JSF program has also had some perception problems recently, due to revelations in the media.

On March 11, 2012, the Sunday Times in London reported that, "Chinese spies hacked into computers belonging to BAE Systems, Britain's biggest defence company, to steal details about the design, performance and electronic systems" of the F-35. The jet's advanced radar capabilities were thought to be one of the targets.

That report adds confirmation to a Wall Street Journal report about a hacking attack on BAE in 2009. China denied the claims then, and again after last month's story.

The CBC's Evan Solomon reported on March 26 that the Canadian government's 2010 statement of operational requirements for new fighter jets was drafted just two months before Defence Minister Peter MacKay announced the F-35 was the choice, suggesting the process had been hijacked for political aims as it would normally have taken a year or two.

Solomon also reported that the F-35 didn't even meet all the requirements.

The only choice

A lengthy article on the F-35 in the current issue of the Canadian Military Journal concedes that although "the JSF program has proven to be an exorbitantly expensive, imperfect and risky endeavour," the F-35 is Canada's only choice.

"If Canadians are set on equipping their military with the most advanced arms available, political considerations and market demands all but guarantee that their only choice of aircraft is the F-35," write researchers Marco Wyss and Alex Wilner.

In Canada, the process of selecting the F-35 has long been questioned by the government's critics. In April 2012, Auditor General Michael Ferguson released a report that finds the Department of National Defence "did not fully inform decision makers," "did not exercise due diligence," and understated the known costs to Parliament.

The federal government has accepted the auditor general's recommendations and conclusions on the F-35 and issued a statement that funding for F-35 acquisition is now frozen.

The government will establish a secretariat inside the Public Works Department to oversee the process, thereby removing the lead from Fantino, who is in charge of procurement at DND.

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Filed by Michael Bolen  |