Pentagon Is $7.1 Billion Short on F-35 Operating Costs, GAO Says

(Bloomberg) -- The U.S. military is confronting a projected $7.1 billion shortfall in the cost of operating its F-35 jets during the years the fighter will be flying at maximum capacity compared with current long-range budget forecasts, according to a draft audit by Congress’s watchdog agency.

The Air Force, Marines and Navy “collectively face annual multibillion-dollar gaps between the projected costs to sustain their respective F-35 fleets” starting in about 2036 and their “stated affordability goals,” Diana Maurer, a Government Accountability Office director, is informing two House Armed Services subcommittees Thursday in prepared remarks previewing what’s still a draft report.

As the F-35 built by Lockheed Martin Corp. has begun to surmount years of delays and escalating costs for development and production, attention has turned increasingly to the long-term price to maintain and operate the complex planes.

Maurers’s written testimony summarizes well-known current problems including flawed software and engine shortages while acknowledging some improvements in “mission-capable rates” for the planes. But it also puts a new focus on the long-term “sustainment” costs, an unresolved issue that Defense Secretary Lloyd Austin inherited from the Trump administration.

Read More: F-35 Combat Test Risks a Delay to 2022, Five Years Late

The Defense Department “recognizes the critical need to reduce sustainment costs,” and it “has undertaken efforts to do so,” Maurer said. “However, these efforts have produced limited results.” Pentagon officials “told us that they do not believe the current cost-savings approach will be sufficient to make the program affordable for the services.”

Overall, the F-35 program’s estimated sustainment costs have increased by more than $150 billion to what’s now an estimated $1.27 trillion over 66 years, and “these costs are already preventing the services from reaching their respective readiness objectives,” she said.

The Air Force, which is buying 1,763 of the planes, the most of any customer, faces the biggest funding mismatch, Maurer said: It must reduce the average $7.8 million estimated annual support cost for each plane to $3.7 million by 2036 or cut the number it buys, officials told GAO auditors.

In 2036 -- the first year of maximum operations -- the Air Force expects to own 1,192 F-35s. Unless it can decrease costs, it will need to pay $4.4 billion “more than it projects it can afford to sustain those aircraft,” Maurer said in the preview of her report.

Air Force officials told the agency the service “will not be able to afford the cost of sustaining the 1,763 aircraft it plans to purchase without dramatic cuts to sustainment costs.”

Yet “there is little room left for the program to make significant sustainment-related cost reductions” because it “has already made definitive design decisions and established a maintenance strategy,” Maurer said.

The service’s officials told the GAO that “the only remaining options” for the F-35A, the Air Force version, are to reduce the number of purchases “or to reduce the aircraft’s planned flying hours, which would have implications on the force structure and capabilities of the Air Force,” Maurer said.

©2021 Bloomberg L.P.