Despite continued delays for Lockheed F-35 fighter, new $11bn deal on the cards

Lockheed Martin continues to deliver its next-generation F-35 aircraft late because of production flaws, even as the Pentagon is poised to award the company a potential $11 billion contract that’s the biggest yet.

The contractor for the costliest US weapons system has been “late to contract requirements” in providing 209 of 308 of the planes to US and international customers through June 30, the Defence Contract Management Agency (DCMA) said in a statement to Bloomberg News. While Lockheed and the Pentagon’s F-35 programme office said they expect on-time delivery of all 91 F-35s due this year, the contract agency predicted seven won’t make that deadline.

Lockheed versions of the F-35A include the conventional takeoff and landing variant, the F-35B short take-off and vertical-landing variant, and the F-35C carrier-based catapult-assisted take-off but arrested recovery variant.

“The government expects and needs better performance by Lockheed Martin and its suppliers,” Mark Woodbury, a spokesman for the DCMA, said. Major improvements on the assembly floor will be “more difficult to achieve since many of the easy corrections have already been made”, he added.

While the Pentagon’s F-35 office concurs with most of the contract agency’s concerns, according to Joe DellaVedova, a spokesman, he said Lockheed “remains on track” to deliver all 91 jets this year. Carolyn Nelson, a Lockheed spokeswoman, said the company is making steady progress in eliminating production-line failings.

By early September, the Defence Department is expected to complete the award of a potential $11bn contract for 141 F-35s for the US and allies, the 11th production batch. A $5.6bn down payment was awarded in July 2017. The Pentagon and Lockheed have also been negotiating a larger “block buy” of 440 aircraft for international partners.

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The F-35 accounted for 27 per cent of second-quarter sales for Bethesda, Maryland-based Lockheed and is expected to be its main source of growth as production increases to about 160 aircraft a year by the early 2020s.

Both the Pentagon and Lockheed have invested “considerable funding to improve the capacity and quality of the F-35 manufacturing process but aircraft are still being produced behind schedule with a high number of defects,” the contract management agency said.

Although previous US fighter jet programs have encountered similar difficulties, Lockheed’s production line “has a considerably larger amount” of assembly floor issues, the agency said.

Ms Nelson said “as we ramp up production, each year we have lowered cost, reduced build time, improved quality and on-time delivery. F-35 production is stable, costs are coming down and the 310-plus aircraft in the fleet are delivering exceptional capability every day.”

She said delivery of 91 aircraft this year will represent a 40 per cent increase from 2017. Next year, she said, the company intends to deliver 131 F-35s.

Defects, or “quality variances” per delivered aircraft have dropped with each lot, and “our time required” for reworking and repairs has decreased by 79 per cent since the first early production contract.

Despite a history of performance setbacks, the stealth F-35 retains strong support in Congress as a next-generation fighter and as a job creator. Lockheed boasts that it uses 1,500 suppliers in 46 states and more internationally.

This week, the Senate is debating a fiscal 2019 defence appropriations measure that would add $1.2bn for 12 more F-35s than the 77 the Pentagon requested. Earlier the House approved adding 16 F-35s in its version of the measure. The added jets would be delivered in early 2020, Ms Nelson said.