Lockheed Martin has added $771 million to the final bill for the first 31 early production models of the F-35 Joint Strike Fighter, prompting a key lawmaker to describe the latest cost overrun as "disgraceful".
The Department of Defense notified Congress of the overrun two months after F-35 programme officials admitted the costs for low-rate initial production (LRIP) lots 1-3 would exceed the contracted cost.
The government is required to absorb the entire bill for overruns under the terms of the first three LRIP contracts. Last year, Lockheed accepted a cost-sharing scheme for any overruns after LRIP 3.
Sen John McCain, minority leader of the Senate Armed Services Committee, on 12 July revealed the amount of the F-35 cost overrun on his Twitter account, adding the revelation was "outrageous" and "disgraceful".
Lockheed declined to respond directly to McCain's criticism. But company officials released a statement to explain the cause of the cost overruns in LRIPs 1-3.
The $771 million reflects the impact of the 2004 weight reduction redesign on Lockheed's production system, the company said. The redesign carved off thousands of pounds of excess weight, but suppliers could not keep up with the flow of design changes. That led to late delivery of parts, then extra labour hours to install them outside of the normal manufacturing sequence, it added.
As the F-35 continues to be developed even as the first production models are delivered, the $771 million bill also includes the cost of future modifications to make the aircraft standard with jets delivered after the development phase ends in 2016.
It is possible that the bill for LRIPs 1-3 could be reduced in the future.
"The F-35 team is focused now on any opportunity to reduce the concurrency estimate and improve the final cost-to-complete on these early production lots," Lockheed said.
Meanwhile, Lockheed is continuing to negotiate costs for the LRIP 5 contract for 35 aircraft even as it learns more about actual cost data on the 32 F-35s ordered under the LRIP 4 contract last year.
"It is important to note that our LRIP 4 settlement was significantly below the government's estimate and our initial proposal for LRIP 5 is also below the December 2010 government estimate," Lockheed said.
Source: Flight International
