Pentagon Wants 78 Lockheed F-35s in 2020, Six Fewer Than Planned

(Bloomberg) -- The Pentagon will request 78 F-35 jets built by Lockheed Martin Corp., six fewer than previously planned, in the budget expected to be sent to Congress next week, according to defense officials.

The cutback from the 84 fighters projected a year ago for fiscal 2020 is a setback for Lockheed, the No. 1 defense contractor, even as interest in the plane from foreign buyers increases. The officials asked not to be identified in advance of the budget release.

It's likely to raise questions from skeptical lawmakers about why the Defense Department, which has spent years saying it needs the more advanced F-35, cut back the planned purchases even as the Air Force is seeking money to buy eight new, upgraded F-15 jets from rival Boeing Co. They would be the first F-15s the Pentagon bought since 2001.

Among the likely questions is whether Acting Defense Secretary Patrick Shanahan, a former Boeing official, played any part in the decision to buy fewer planes from Lockheed and more from Chicago-based Boeing. However, Shanahan has recused himself from participation in all Boeing matters.

The Air Force still plans to buy all 48 jets in fiscal 2020 that it had originally sought, according to a person familiar with the budget who asked not to be identified. That means the quantity sought by the Navy or Marine Corps was cut.

Combat Capability

If recent history is a guide, Congress will increase the F-35 request in the final version of the fiscal 2020 budget. Despite a history of performance setbacks, the F-35 has drawn praise for its flying qualities as the Air Force, the Marine Corps and now the Navy have declared that the aircraft has an initial combat capability. It also retains strong support in Congress as a job creator. Bethesda, Maryland-based Lockheed boasts that it uses 1,500 suppliers in 46 states and more internationally.

For the current year, Congress appropriated $9.34 billion for 93 F-35s, 16 more than requested. For fiscal 2018, lawmakers added 20 F-35s to the 70 requested.

Republican Senator James Inhofe of Oklahoma, chairman of the Armed Services Committee, has said he wants to triple F-35s purchased by 2024, making it the most ambitious procurement request on his agenda for next year.

Shanahan's Praise

While Shanahan has pledged to stay out of Boeing decisions, he isn't hesitant to praise the F-35 built by its rival. In an interview last Thursday with Bloomberg News, he sought to make clear he's a fan.

“What's really important for people to always take away is I've found the aircraft -- the F-35 as a product, its capability and performance -- to be eye-watering. It is high, high-performing -- no ambiguity -- no ifs, ands or buts.”

But Shanahan said he's focusing on “program execution,” which includes driving down the long-term costs of maintaining and operating the fleet of 2,456 F-35s that the U.S. plans to acquire.

“This is the largest program in DoD history and the cost of sustainment is about the same cost as nuclear modernization,” he said, referring to an estimated price tag of more than $1 trillion over at least several decades, according to the Congressional Budget Office.

Because the F-35 is just entering its decades-long expected service life, he said, “if you were ever going to fix” the sustainment cost and “if you were ever going to realize high performance -- you would do it on the front end. We have a small window.”

‘Big Opportunity'

Shanahan said he has “decades of experience” in managing the costs of operating aircraft, and that his concern about the high costs of operating and maintaining multibillion-dollar weapons systems isn't limited to Lockheed.

“People write about like it's” just Lockheed, Shanahan said. “It's Lockheed, it's BAE, it's Northrop,” he said. “There's a lot of opportunity to achieve higher levels of performance. There's a big opportunity.”

While that sounds like a long-term agenda, Shanahan hasn't commented on whether he expects President Donald Trump to nominate him for defense secretary, a job that's been vacant since Jim Mattis stepped down at the end of last year in protest of the president's vow to withdraw U.S. troops from Syria.

Compared with the taciturn Mattis, Shanahan has been vocal in supporting Trump's initiatives, from reducing troops in Syria to using the military to bolster security at the Mexico border. He says his acronym is GSD, for “get stuff done.”

“Let's not worry about whether he's a ‘yes man' or a ‘no man' but whether he's a ‘can-do' man,” Shanahan said of himself in the interview. “I just spend all my time getting stuff done.”

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editors responsible for this story: Bill Faries at wfaries@bloomberg.net, Larry Liebert, Ros Krasny

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