F-35 modernization program’s costs, schedule keeps growing: GAO

WASHINGTON: The F-35’s Block 4 modernization program added three years to its schedule and $741 million to its estimated cost in 2021, according to a new report released today. by the Government Accountability Office.

The Block 4 modernization program is set to upgrade the Lockheed Martin-made F-35 Joint Strike Fighter with more powerful computing systems, software updates and new weapons and equipment, much of which remains classified. However, the cost and schedule of the effort, which started in 2018, continues to snowball.

The Block 4 modernization plan was initially set up to wrap up in 2026. By 2020, the F-35 program office had pushed that date out until 2027, the GAO reported last year. This year’s report extends Block 4 development and delivery “into fiscal year 2029, in part, due to the addition of new capabilities,” the GAO said in its annual report on the F-35.

Meanwhile, “costs continued to rise during 2021 due to crucial hardware development and testing upgrades, among other things,” the GAO stated. In 2021, the F-35 joint program office increased its cost estimate for the Block 4 effort to $15.14 billion — $741 million more than its 2020 estimate of $14.4 billion.

According to the GAO, two main factors drove the cost increase.

First, the estimated cost of the Technology Refresh 3 (TR-3) effort grew by $330 million. TR-3 — which comprises a new integrated core processor, memory unit and panoramic cockpit display system — essentially provides the technological backbone for the Block 4 upgrades, which would not be able to run on the F-35’s current computing systems. “According to program officials, much of the increase in TR-3 costs occurred because its development is more complex than originally expected,” the GAO stated.

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While the report didn’t get into details, TR-3 is both behind schedule and over budget; for its part, the Pentagon still believes the upgrade will be ready for F-35 Lot 15. If the program doesn’t suffer further delays, TR-3 hardware will be introduced into the production line later this year, Lt. Gen. Eric Fick, the Pentagon’s F-35 program executive, said in March.

The second major factor in the cost spike was the growth in costs for testing and lab upgrades needed to update the aging F-35 test aircraft so that they can be used in future weapons tests. Costing an additional $312 million, this area also covered an “increase in flight test capacity” required to validate that Block 4 capabilities perform as planned.

Schedule Delays Continue

While cost increases and schedule delays often are tied together, the factors driving the three year delay are different from those that drove the extra costs

“We found three contributing factors for the recent Block 4 capability schedule delays: ongoing software quality problems, a pause in Block 4 software development due to funding issues, and the addition of new Block 4 capabilities,” the GAO stated.

For Block 4, the F-35 program office has adopted an approach it calls Continuous Capability and Development Delivery (C2D2), which incorporates agile development processes where new software is regularly created, tested, revamped and rolled out. However, the program office has routinely faced software quality issues, meaning that software coders sometimes have to focus on fixing defects rather than getting new capability out the door.

While software development problems have been a longstanding hurdle for the Block 4 development effort, an eight month pause starting from January to October 2021 added to delays.

According to the GAO, the temporary stoppage in Block 4 software development efforts occurred “when the program office ran out of funds due to the TR-3 cost overrun” and “the contractor paused work on Block 4 development and focused its work on TR-3.”

The program office believed that focusing on TR-3 was critical for keeping Block 4 development on track, as many Block 4 capabilities cannot be fielded without TR-3. However, the endeavor came at an expense — currently, 39 of the original 66 Block 4 capabilities are now behind schedule because of the pause, the GAO said.

Finally, the program office added 25 new capabilities to the Block 4 modernization effort, which further exacerbated schedule delays, the GAO said.

Air Force leaders have repeatedly spoken about the need to field Block 4 F-35s as quickly as possible.

“The Block 4 capabilities are what we really need for the pacing challenge — for China and their advanced systems. So we need to get that done,” Air Force Secretary Frank Kendall said last week. “We’ve been behind schedule for a couple of years with that.”

In the meantime, the service plans to slash F-35A procurement, which officials believe will allow it to avoid expensive costs to retrofit operational jets in the near future. The Air Force requested funds to buy 33 F-35As in FY23 and 29 jets in FY24, before ramping up to 43 in FY25. (In previous years, the Air Force had regularly requested 48 F-35As per year.)

Despite the near-term cuts to the Air Force’s annual F-35 buy, the service is ramping up its investment in the Block 4 effort, requesting $414 million for F-35 modernization in FY23, a sharp increase from the $248 million it received last year.

The Air Force’s approach to the F-35 program sharply contrasts with the Navy and Marine Corps’ buy plans. The sea services intend to keep F-35 procurement steady over the next five years, purchasing 13 F-35C carrier variants and 15 F-35B short takeoff and landing variants in FY23. Both services are also basically doubling their investment in Block 4 modernization in FY23,  requesting $114 million for the F-35B and $155 million for the F-35C.