U.S. general's Australian outburst could undermine F-35 program

Fri Mar 1, 2013 8:30pm EST
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By Andrea Shalal-Esa

March 1 (Reuters) - An outburst in Australia this week by the Pentagon's chief buyer for the costly F-35 Joint Strike Fighter risks undermining the program at home and abroad, U.S. defense officials and industry experts say.

At an Australian air show, Lieutenant General Christopher Bogdan accused the plane's manufacturer, Lockheed Martin Corp and engine maker Pratt & Whitney, a unit of United Technologies Corp, of trying to "squeeze every nickel" out of the U.S. government for the planes.

Bogdan, who took over the $396 billion program in December, told reporters it's not his job to be a "cheerleader for the F-35." But for some in the industry, the words stung.

"Airing dirty laundry in front of a key customer who's on the fence about buying more competing aircraft, is a very dangerous game," said aerospace analyst Richard Aboulafia of the Teal Group. He said Australia is already considering plans to buy more Boeing F/A-18 Super Hornets, which could wind up reducing its planned purchase of 100 F-35 fighter jets.

"By implying that the contractors are greedy ... he could inspire politicians to cut funding as a form of punishment, which would raise unit costs and inspire them to cut funding again. It's the classic death spiral," Aboulafia said.

A similar dynamic undercut an Air Force's plan in the 1990s to buy 750 F-22 fighter jets from Lockheed, raising the unit cost and leaving the Air Force with just 183 planes in the end.

The cost of each F-35 jet has already risen in recent years as Washington delayed orders until later in the decade. Unit costs are calculated assuming 2,443 orders for the U.S. military and over 600 orders for eight partner countries.

Bogdan's remarks in Australia raised eyebrows among some senior Pentagon leaders, who prefer a more measured, less public approach to dealing with industry. The comments came up when the service chiefs of the Air Force, Navy and Marines Corps met to review the F-35 program on Thursday, said one official who could not speak publicly about the private meeting.   Continued...