DTN News: U.S. Defense Secretary Robert Gates Says Lopsided F-35 costs "Drove Me Nuts"

DTN News: U.S. Defense Secretary Robert Gates Says Lopsided F-35 costs "Drove Me Nuts" * Gov't paid 70 pct overhead, project used 6 pct of plant * Pentagon declines to name the contractor involved * Gates not referring to a Lockheed Martin plant (Adds Gates veto threat over second engine, C-17) Source: DTN News / Reuters By Jim Wolf (NSI News Source Info) WASHINGTON, - March 25, 2010: U.S. Defense Secretary Robert Gates said he was driven "nuts" by the revelation that taxpayers were funding 70 percent of the overhead at a plant involved in the increasingly expensive F-35 fighter jet, even though the work used only 6 percent of the floor space. The lopsided overhead charge "just drove me nuts" when it was revealed at a briefing, Gates told the House of Representatives Appropriations subcommittee on defense on Wednesday. "I think we can fix that," Gates added. Although Lockheed Martin Corp (LMT.N) is the primary F-35, contractor with overall responsibility for the program, Gates was not referring to a Lockheed plant, said Geoff Morrell, the Pentagon press secretary. Citing what he called proprietary concerns, Morrell declined to identify the company in question. Lockheed's chief subcontractors on the program include Northrop Grumman Corp (NOC.N) and BAE Systems Plc (BAES.L). Two separate, interchangeable F-35 engines are under development, one built by United Technologies Corp's (UTX.N) Pratt & Whitney unit and another by a team made up of General Electric (GE.N) and Rolls-Royce Group Plc (RR.L). At an estimated $300 billion-plus, the F-35 is the Pentagon's costliest arms purchase. Gates also vowed anew to urge a presidential veto of any legislation that funds the GE-Rolls Royce alternate engine or more Boeing (BA.N) C-17 cargo aircraft. Lawmakers have kept both programs going for years despite Pentagon efforts to end them in a belt-tightening move. "I am fully aware of the political pressure to continue building C-17s and to proceed with an alternate engine for the F-35, so let me be very clear," Gates told lawmakers. "I will strongly recommend that the president veto any legislation that sustains the unnecessary continuation of these two programs." "NOT GOING WELL" Gates fired his F-35 program manager in February and withheld $615 million in Lockheed's potential award fees as part of a restructuring. He also added 13 months and $2.8 billion to the plane's development phase and slowed its transition to full production to cap the cost of potential design tweaks. Michael Sullivan, the top expert on the F-35 at Congress's nonpartisan Government Accountability Office, told lawmakers that an "awful lot of design changes" were being carried out now on the factory floor. Lockheed is "still having trouble learning how to build" the aircraft, he said. "That's not going well." Gates tied the program's problems to administration and management, not technology or capabilities. "The Joint Strike Fighter will do everything the military services need it to do, and it will become the backbone of U.S. air combat for the next generation," he said. The program is projected to cost more than $300 billion over the next two decades for 2,443 planes in three different models for the U.S. Air Force, Navy and Marine Corps. Affordability was supposed to be a hallmark of the F-35, which is also being built for eight overseas partners and other projected foreign buyers, including all those now flying the F-16, the world's most widely deployed fighter. One of those partners, Denmark, said on Wednesday it was postponing a decision on buying new fighter jets, saying it could keep flying its F-16s for two to four years longer. (Reporting by Jim Wolf; Editing by Tim Dobbyn and Ted Kerr)