An F-35A Lightning II assigned to the 388th Fighter Wing takes off for the Utah Test and Training Range for a training mission at Hill Air Force Base, Utah, May 13, 2021.(U.S. Air Force photo by Capt. Kip Sumner)
RIAT 2024 — Despite a recent resumption of deliveries after a year-long freeze, the Pentagon is still withholding payments to Lockheed Martin for new F-35s over continued delays with the Technology Refresh 3 (TR-3) upgrade, according to the Air Force’s top acquisition executive Andrew Hunter.
“There are still withholds. Since not everything that we contracted for has been delivered, payment is also not complete,” Hunter said in a briefing with reporters today at the Royal International Air Tattoo (RIAT) air show. “We will not pay for that which we have not yet received.”
The Pentagon began withholding payments — totaling about $7 million per plane, according to Bloomberg — when deliveries of new F-35s with the TR-3 upgrade were paused in July 2023. Hunter did not specify the details of continued payment withholdings, and the F-35 Joint Program Office (JPO) did not immediately respond to a request seeking more information.
A Lockheed spokesperson directed Breaking Defense to a financial disclosure form, known as an 8-K [PDF], the company released yesterday, which stated that the aerospace giant is “working with the JPO on the terms and conditions related to the timing of the final payments for TR-3 configured aircraft and a phased approach to delivery.” Lockheed expects to deliver “between 75 and 110 aircraft in the second half of 2024, primarily in the TR-3 configuration,” the company said in the disclosure.
The delivery freeze was implemented due to developmental woes with the TR-3 upgrade, which consists of hardware and software necessary to field a forthcoming suite of upgrades to the tri-variant jet known as Block 4. The TR-3 hardware was deemed mature enough to cut it into production last year, enabling Lockheed to manufacture the upgraded planes, but the jets were sequestered due to glitchy software. (Lockheed continued to build and deliver jets in the TR-2 configuration in the meantime.)
As undelivered jets stacked up, the Pentagon eventually relented to the operational pressure. Under a “truncation” plan detailed by Air Force Lt. Gen. Mike Schmidt, the head of the F-35 program, the DoD is accepting jets with software that only enables training. Additional software that enables full combat capability isn’t expected for at least another year, Schmidt said.
It’s not clear exactly how many jets were impacted by the delivery freeze, though Bloomberg previously reported it could total as many as 124 by the end of June 2024. Additionally, the Government Accountability Office previously found it could take up to a year to clear the fighter backlog.
Besides the payment withholds, the JPO has said Lockheed has forfeited $60 million of fees for TR-3 work. Lawmakers have additionally warned the upgrade, originally expected in April 2023, is about $1 billion over budget.
Hunter said the TR-3 issues may actually have catalyzed developmental breakthroughs for the F-35 program, where several major defense companies serve as key subcontractors.
“They have worked very hard. Lockheed, Northrop Grumman, BAE, Pratt, the whole F-35 team has worked very hard to get past a lot of the stovepipes within their development processes because they’re all dependent on each other. And I want to say that’s one of the big things that has improved in the last 6-to-12 months in this process. I think it was because of the pressure of TR-3 being behind and then the other things that are coming along the way, the rest of Block 4,” he said.
In the briefing with reporters today, Air Force Secretary Frank Kendall said Lockheed had sufficient motivation to work as quickly as possible to finish remaining work on TR-3. (Kendall was recused from the decision to pause deliveries due to his previous work with Northrop.)
“I don’t think Lockheed’s trying not to deliver,” the Secretary quipped. “There’s a lot of motivation. It’s inherent in the program that they want to get this done. Their sales depend upon it.
“But we are using some financial incentives to strengthen that a little bit.”
