The development cost of the F-35 fighter’s Block 4 upgrade is up more than $16.5 billion over original estimates, the Government Accountability Office said in a new report. But because of the way the program is structured, it’s hard to know whether the jump is due to mismanagement, added scope, or a combination of factors.
Block 4 is an ambitious, long-planned, and highly-anticipated upgrade to the F-35, the basic design of which was set in the early 2000s. It includes the new AN/APG-85 radar, electronic warfare systems, other sensors such as an upgraded electro-optical targeting system, communications and navigation upgrades, new weapons, new antennas, and a raft of classified capabilities.
But costs have steadily increased in recent years. Starting in 2018, it was expected the program would cost $10.6 billion in then-year dollars. The GAO recorded a $300 million increase in 2019, then a $3.5 billion jump in estimate in 2020. By June 2021, the estimate had grown another $700 million, and just two months later, it had surged again, to $16.5 billion. The figures were not adjusted for inflation.
The GAO’s most recent congressionally-mandated assessment, released May 30, is based on that August 2021 estimate—data that is now almost two years old. Costs have likely increased since then.
“The program’s cost reporting mechanisms do not fully explain the reasons for cost growth,” the GAO report states. “For example, DOD’s reports to Congress on Block 4 cost growth do not distinguish higher-than-expected costs for previously planned Block 4 capabilities from growth due to adding new capabilities. Consequently, Congress does not have a complete picture of escalating F-35 modernization costs.”
Keeping Block 4 within the baseline F-35 program masks cost increases by making them a smaller percentage of the overall program, GAO noted, making them less likely to trigger “Nunn-McCurdy breaches”—under the Nunn-McCurdy law of 1982, if a program has cost increases beyond certain benchmarks, it receives added scrutiny or may be automatically canceled.
The audit agency said better visibility into where the money is going could be obtained by making Block 4 its own Major Acquisition Program, something GAO previously recommended but the Pentagon has declined to do.
Previous F-35 program executive officers have argued against separating Block 4 or the planned F-35 propulsion upgrades from the main F-35 program, saying such moves would create obstacles to coordination and information-sharing within the program and reduce their ability to manage it comprehensively. It would also make it harder for partners and allies to participate in those aspects of the program, they have said.
The F-35 Joint Program Office “describes Block 4 as an evolving, and ever-increasing, set of new capabilities with a rising overall cost for completing them,” the GAO report states. But without information on what parts of extra costs are due to newly-added capabilities, “the program’s cost reporting is inadequate for useful oversight,” the GAO pointed out.
Further, “without the program formally tracking the estimated cost of each capability to the actual cost of developing each and sharing that information,” it’s harder to hold the program and contractor Lockheed Martin accountable, the audit agency said.
That issue formed the basis for one of GAO’s recommendations: the undersecretary of defense for acquisition and sustainment should ensure the F-35 program office reports to Congress on the difference between original estimates and actual costs for a defined group of capabilities.
The Pentagon concurred with that recommendation. In a statement, the F-35 Joint Program Office said it looks forward to working with Congress and Pentagon leadership on GAO’s recommendations. It did not offer a rebuttal to GAO’s assessment of the program.
The centerpiece of Block 4 will be its electronic warfare system, outgoing Air Combat Command chief Gen. Mark D. Kelly said at at the AFA Warfare Symposium in March.
“Most of what we need the F-35 to do rests on the Block 4 electronic warfare capabilities,” he told reporters.
However, Block 4 depends on the timely success of the Tech Refresh 3 upgrade, now in flight testing, which adds a reported 25 times more processing power to the jet. That additional processing activity is one of the reasons the F-35 will need much more cooling power with the advent of Block 4, which GAO discussed separately in its report.
In addition to Block 4 costs and cooling power, the GAO report also noted that as of January 2023, the F-35 has 821 open deficiencies.
Five of those deficiencies are classified as “Category 1,” defined as “critical and could jeopardize safety, security, or another requirement.” The rest are Category 2, “those that could impede or constrain successful mission accomplishment.”
The report did not specify what the Category 1 deficiencies are but did say flight testing is needed to close them. The program office said it would address three of the Category 1 problems in 2023. The other two require additional documentation and one will also need additional funding.
The program office “does not plan to resolve all of the Category 2 deficiencies because the program office, in consultation with the warfighters and contractors, have determined that they do not need resolution,” the GAO reported.
One of the newest technical risks identified with the fighter is “Fuel Tube Vibration,” discovered in the wake of the December 2022 crash of an F-35B. The tube failed “due to a malfunction with the main fuel throttle valve.” One attempt at mitigation for the tube issue—which Pratt & Whitney has described as a “harmonic resonance” issue—hasn’t worked, the GAO said, and Naval Air Systems Command is still seeking a root cause for the December crash.
Another new issue is cracking of the “gun blast panel,” where the aircraft skin is blistering and cracking near the internal gun—unique to the F-35A model. The issue, found in Lots 13-15 aircraft, has been ascribed to higher-than-expected pressure conditions when the gun is being fired. If not corrected, the panel could break off in flight. The issue is being addressed with post-flight inspections and panel replacements.
Amid all this, the GAO noted the F-35 still has not passed its full-rate production milestone, which has been postponed four times from the original target of 2013. The main roadblock has been integrating the F-35 with the Joint Simulation Environment, which pits various configurations of the U.S. military against anticipated adversaries. The point is almost moot, though, because the F-35 program is producing 125 jets a year for U.S., partner and allied countries, very near its maximum capacity, the report stated.