The Government Accountability Office (GAO) criticized the Pentagon’s practice of paying “incentive fees” to speed up F-35 construction, suggesting that these fees had had the opposite effect.
The nonpartisan Government Accountability Office (GAO) issued a new warning to U.S. lawmakers on Wednesday regarding the state of the Lockheed Martin F-35 Lightning II program, which is already on track to be the most expensive military platform in American history. The DC-based watchdog group observed that even as deliveries of the fifth-generation multirole stealth fighter were extremely late—running an average of 238 days behind schedule—the Pentagon paid two defense contractors hundreds of millions of dollars in additional incentives.
“After years of cost growth and schedule delays in its hardware and software modernization effort for the F-35 aircraft, known as Block 4, the Department of Defense (DOD) is in the process of establishing a new major subprogram to help meet cost, schedule, and performance goals,” the GAO cautioned.
The F-35’s two largest contractors are Lockheed Martin, the prime contractor responsible for manufacturing the stealth fighter, and Pratt & Whitney, the manufacturer of the F-135 engine that powers the aircraft. Deliveries of the completed Lightning II and the engines are running late.
The 238-day average delay is up from a 177-day average delay in 2023—an increase of 61 days.
Why Is Lockheed Martin So Slow to Build F-35 Fighters?
Part of the increase was due to a more than year-long pause, which began in the summer of 2023 when the US Department of Defense announced it wouldn’t accept deliveries until the Technology Refresh-3 (TR-3) upgrade was completed. Much more than just a software upgrade or patch, the $1.9 billion suite of hardware and software updates was designed to enhance the aircraft’s capabilities significantly. It was also critical to the Block 4 modernization.
It was only last year that Lockheed Martin released a truncated version, which allowed the deliveries to resume. Lockheed Martin then faced a backlog for the remainder of the year.
The three branches of the US military that operate the F-35 Lightning II—namely the US Air Force, US Navy, and US Marine Corps—have each scaled back their respective purchases of the multirole fighter, largely in response to the delays.
“Evaluating Lockheed Martin’s capacity to deliver aircraft on time would help determine how many aircraft the program should plan to purchase,” the GAO explained.
Sometimes Throwing Money at a Problem Doesn’t Work
GAO further explained in its report that the Joint Program Office (JPO) paid the contractors, including Lockheed Martin, “hundreds of millions of dollars in incentive fees,” which were meant to improve the deliveries. However, there was little evidence that the incentive fees had worked, considering that the delays increased after they had been paid.
“The structure of on-time delivery incentives allowed the contractor to deliver aircraft up to 60 days late and still earn some of the fee,” the watchdog further warned. It suggested that, in order “to avoid rewarding late deliveries,” the JPO should reevaluate the use of such incentive fees in future contracts.
As part of its findings, the GAO issued six recommendations to the Department of Defense, which included calling for an evaluation of Lockheed Martin and the defense contractor’s capacity to meet F-35 delivery deadlines on time.
The GAO further called for a reevaluation of the incentive feeds “to better achieve the desired schedule,” while expanding and formalizing leading practices in the aircraft’s development. It recommended that the Under Secretary of Defense for Acquisition and Sustainment establish a mechanism to collect and track quality information on the F-135 engines and other components, while employing an Adaptive Acquisition Framework pathway for its major subprograms.
“DOD concurred with four recommendations and partially concurred with two,” the GAO explained.
To date, more than 1,100 F-35s have been delivered to the US military and its allies and partners around the globe. The F-35 is also widely regarded as one of the most capable fifth-generation fighters in service today, even as its mission readiness rates continue to lag well behind DoD goals.
About the Author: Peter Suciu
Peter Suciu has contributed over 3,200 published pieces to more than four dozen magazines and websites over a 30-year career in journalism. He regularly writes about military hardware, firearms history, cybersecurity, politics, and international affairs. Peter is also a contributing writer for Forbes and Clearance Jobs. He is based in Michigan. You can follow him on Twitter: @PeterSuciu. You can email the author: [email protected].
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