Joint Strike Fighter Budgetary Machinations Affect Lockheed, GE, Rolls-Royce and Pratt & Whitney

The future of the United States’ military aviation in the near term will be the F-35 Joint Strike Fighter (JSF). The sophisticated jet aircraft will perform fighter and attack missions for the Air Force, Navy and Marine Corps as well as a number of NATO and other U.S. allies across the globe. Lockheed Martin has also been marketing it to other countries looking to upgrade their air forces.

Because of the decision to end the F-22 Raptor fighter program in the 2010 budget the F-35 will be the only major fixed wing tactical aircraft built for the next several years. In order to meet the needs of the services now the Secretary of Defense Robert Gates decided to increase production in the 2010 and out budget. The program will also have a higher content of what is called “concurrency” where it is being developed, tested, produced and fielded.

One of the key components of the program is that the high number planned should lead to lower prices across the board. This means that more may be bought with the available number. Concerns have been raised that the projected prices and quantities are not realistic and this will have a spiraling effect on the program as less are actually bought increasing the price leading to even fewer being built in each program year.

Now some in Congress have become concerned that a new revised program cost estimate will be much higher then currently planned. A team of analysts was established this Summer by DoD to look at the program and do an independent cost estimate. The concurrency now inherent in the program could lead to schedule delays which adds costs and lengthens the production ramp-up and total production. These all add money to the program cost.

One risk mitigation that has received Congressional support is the second source for the aircraft’s engines. The current plan utilizes Pratt & Whitney provided ones but over the last several years General Electric and Rolls-Royce have been receiving funds to support development of another potential engine so as to reduce delays if the P&W engine does not do well in testing or production. The Obama Administration had asked for that program to end and provided no funding in 2010 to keep it going. The current House and Senate versions of the Defense Authorization Bill contain funding for the second engine and the Administration had threatened a veto of it due to that inclusion.

Now some are reading into a speech by Obama this week in Florida that he will go ahead and approve the Bill even if the second engine is contained in it. The idea that the bill would be vetoed seemed a little extreme over a $430 million dollar addition in a budget of almost $700 billion always seemed unlikely. Obama and Gates won the big fight over the F-22 which many in Congress wanted to continue so they could accept the second engine. In the end if problems do occur it may end up being a good risk reduction albeit at quite a high cost.

If the budget plans continue the F-35 will become the main part of the defense budget. This will mean that it will be hard to reduce the program in the future if it is necessary to trim spending. The other problem will be that the aircraft may eat up more-and-more of the total available budget forcing the services to make choices about what to buy. The JSF is the future for now.