UPDATE 1-Pentagon F-35 chief sees progress, but affordability still focus
* Bogdan says he never suggested the aircraft was in trouble * Message was about need for contractors to control costs * General says he's reached his quota for 'headline-making quotes' By David Alexander and Andrea Shalal-Esa WASHINGTON, March 5 (Reuters) - A week after his drubbing of the leading contractors on the F-35 Joint Strike Fighter raised eyebrows at the Pentagon, the U.S. program chief sought to maintain pressure on industry, while citing progress on software development and production costs. U.S. Air Force Lieutenant General Christopher Bogdan told a defense conference that he'd reached his quota for "juicy, controversial, headline-making quotes" for the month after lashing the plane's manufacturer Lockheed Martin Corp and enginemaker Pratt & Whitney during an air show in Australia. Bogdan told a conference hosted by Aviation Week on Tuesday that his comments were taken "a little out of context" and he had never said the $396 billion fighter program - the Pentagon's largest weapons program - was in trouble. "I will overcommunicate all the troubles we have on this program as long as you don't overreact," he said. U.S. defense officials and industry experts last week said Bogdan's remarks could undermine the program at home and abroad, tipping the scales for countries like Australia and Canada, whose F-35 orders are already on shaky ground. If the project stays on track, Pratt & Whitney, a unit of United Technologies Corp, will provide 4,000 engines and Lockheed 3,000 planes to the United States and its allies. Lockheed is building three different models of the F-35 fighter jet for the U.S. military and eight countries that helped pay for its development: Britain, Canada, Italy, Turkey, Denmark, the Netherlands, Australia and Norway. Israel and Japan have also placed orders for the new radar-evading fighter. On Tuesday, Bogdan cited progress on the quality of software work being done by Lockheed, and said production costs were the "shining star" of the program since they were now coming down. He said technical issues such as the plane's complex helmet and the tailhook on the Navy's version of the plane, did not keep him up at night since the program was still in development. "The fact of the matter is we are still in development. We only have a third of our flight test program completed. You've got to expect that we're going to find things," he said. Bogdan said defects and issues could still arise during the rest of flight testing, which meant that the jet could be grounded again at some point. "I hope not, but it's not unexpected," he said. The plane has already been grounded twice this year. The Pentagon last week resumed flights of all 51 F-35 fighters after a week-long grounding ordered after inspectors found a crack on an engine blade on a test jet in California. Bogdan said the crack was found on a jet that had been the workhorse aircraft for testing how far the Air Force version of the plane could be pushed before reaching its limits. It had flown at 1.5 times the speed of sound, had been supersonic at 5,000 feet altitude and had pulled seven to eight times the force of gravity. The Marines Corps version of the F-35 was grounded earlier for nearly a month because of a faulty hose in the engine. The Air Force general also said he was "moderately confident" that Lockheed would complete the Block 2B software in time for the Marine Corps to be the first military service to start operational use of the F-35 by the end of 2015. But he also noted that the most difficult bit of the software development was still to come. "Despite what you might hear that we're 90 percent or 95 percent done with software ... everybody who knows anything about software knows that ... integrating software is the hardest thing," he said. "That is the holy grail of software and we still have a lot of that left." To ensure better oversight of those efforts, Bogdan said the Pentagon had now created a board that included representatives from Naval Air Systems Command, which decided which software items to let slip and which to include. That marked a change from the earlier days of the program, when Lockheed made those decisions on its own, he said. Despite the improvements, Bogdan said he remained concerned about the longer-term cost of sustaining the plane and its overall affordability. He said his remarks in Australia were meant to underscore that issue. "I need everybody in this enterprise to worry about affordability," he said. "And that was a shot across the bow because I have been slightly frustrated with real results, real actions that need to happen to reduce costs on this airplane." He said he had spoken with leaders at Lockheed and Pratt & Whitney several times in the past few days and had received assurances that they had "heard my message." "They've assured me that they will concentrate on working ... to drive costs out of this program in the long term and I believe them," Bogdan said. "The question is now will the actions back up the words. I'm moderately confident that I have their attention now and we'll see what happens." Pratt spokesman Jay DeFrank said the company had invested more than $60 million to reduce production costs, costs usually borne by the government at this stage of a program. Pratt had also agreed to shoulder 100 percent of the risk of cost overruns on the fifth batch of engines a year earlier than planned, and production costs were down 24 percent from 2007. DeFrank said Pratt had taken these and other actions despite three successive restructurings that had postponed production of 394 aircraft. Pratt's production level was more than 400 engines less than it had anticipated as recently as January 2009. Lockheed said it fully supported Bogdan's efforts to reduce costs and increase efficiencies with all aspects of the F-35 program. It said it had lowered production costs by 50 percent since the first production aircraft was built, with labor costs down 14 percent from the fourth to the fifth plane orders.
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