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F-35 jet funding is running $1.4 billion short, Pentagon tells Congress

If more government money isn’t found, Lockheed Martin Corp.'s pending three-year contract, valued at as much as $30 billion, will yield fewer F-35 aircraft for the U.S.’s costliest weapons program, which is now estimated at $412 billion. (Master Sgt. Darnell T. Cannady/U.S. Air Force/TNS)

The Pentagon has found that it’s $1.4 billion short of funds for the next major contract to buy F-35 fighter jets from Lockheed Martin Corp., according to a new list of so-called unfunded priorities sent to Congress.

If more money isn’t found, the pending three-year contract, valued at as much as $30 billion, will yield fewer aircraft for the U.S.’s costliest weapons program, which is now estimated at $412 billion.

The Defense Department and Lockheed are supposed to be in the final stages of crafting what was expected to be a contract for 375 aircraft in the F-35’s 15th through 17th production lots. But now they’re likely to be cut below that number. That already was a drop from 485 planes anticipated in February 2019, before negotiations began, and 404 in April of that year.

The new $25 billion wish list of programs on which the Pentagon said it would spend more money if appropriated was obtained by Bloomberg News. Inflation is blamed for the biggest portion of the shortfall — $19.3 billion. An additional $1.4 billion is needed to cover increased military compensation costs, according to the document.

The $1.4 billion shortfall for the F-35 is the latest challenge for a system that has long been known for soaring costs and technical problems. “Currently, the program has insufficient funds due to various cost drivers to fund the total planned quantities” in the three pending contracts plus adequate depot and support activities planned through fiscal 2023, according to the document.

“Without these additional funds aircraft procurement will be reduced,” the Pentagon said. Causes of the shortfall include the higher per-aircraft cost due to COVID-19 and supply chain disruptions, global inflation and a reduction in procurement quantities compared to the previous F-35 contract, according to Russell Goemaere, a spokesman for the Defense Department’s F-35 office.

The office can award the coming contracts without Congress approving additional funds by reducing the number of planes, he said. Lockheed didn’t have an immediate comment.

The new unfunded priorities list adds to ones submitted earlier in the year in tandem with the official defense budget request.

The Pentagon list was received Friday as Congress is in the final stages of deciding how much to boost the military budget for the fiscal year that started Oct. 1.

Other “unfunded priorities” sent to Congress by the Defense Department include:

—Providing about $4.3 billion to make up for the higher cost of fuel. The Pentagon budgeted $119.70 a barrel but the price it pays has increased to $173.46 a barrel since Oct. 1, the department said.

—Increasing the basic allowance for military families by 12% from its current level rather than the 3.4% that was scheduled for January and increasing the housing allowance by 11% from the current level instead of the planned 4.2%.

—Funding $1.26 billion to help the defense industry expand production of missiles and other munitions to make up for inventories drawn down to arm Ukraine, including $240 million to expand production of Lockheed’s Patriot missile system.

—Providing an additional $40 million to accelerate and increase production of 155mm rounds such XM1128 and XM1113 projectiles made by General Dynamics Corp. The Defense Department is also looking for the expansion of production for Harpoon missiles made by Boeing Co.


© 2022 Bloomberg L.P

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