The maker of F-35 jets, Lockheed Martin, is reportedly being rewarded for on-time delivery despite failing to meet delivery schedules and required upgrades. This information comes from a recent report by the Government Accountability Office (GAO), which highlighted that Lockheed had been compensated with hundreds of millions of dollars in performance incentive fees while both the percentage of aircraft delivered late and the average number of days late increased.
According to the GAO report, Lockheed Martin and engine-builder Pratt & Whitney received these incentive fees, but the effectiveness of these incentives in holding contractors accountable has been questioned. The current structure allows Lockheed to deliver F-35s up to 60 days late and still receive payments. The GAO emphasizes that unless the F-35 program reevaluates and improves the alignment of these incentive fees with production schedule outcomes, there will be a significant risk of continuing to reward contractors for delays.
Lockheed Martin stated that the company is committed to meeting customer requirements and emphasizes its investment in mission-driven business and digital transformation for timely capability delivery.
The report also detailed ongoing delays in the program’s Block 4 modernization effort and the Technology Refresh 3 (TR-3) upgrade. Budgets for Block 4 have increased substantially, from an estimated $10.6 billion to $16.5 billion, with the expected completion for the reduced set of capabilities delayed until 2031—five years longer than initially projected. Program officials indicated that Block 4 will now offer fewer capabilities and face further schedule delays, with costs remaining unclear until a new estimate is finalized.
Moreover, the completion of Block 4 is contingent on finishing the Engine Core Upgrade (ECU), which is necessary for enhanced engine performance. This upgrade’s production will not commence until 2031. Additionally, the cooling system, which requires an upgrade called PMTU, won’t begin production until 2033.
The TR-3 is a crucial software and hardware upgrade that had a target completion date of April 2023 but is now expected to be fully ready in the following year. Lockheed has announced it plans to begin delivering some combat-capable F-35s equipped with TR-3 in 2026, reflecting a three-year delay attributed to various hardware and software challenges.
Chronic delays and costs led the Pentagon to halt new F-35 acquisitions temporarily, ending the pause in July 2024. Since then, the Pentagon has been receiving F-35s with a limited version of the TR-3 package. The GAO identified software stability, quality problems, and late deliveries of crucial components as reasons for the delays associated with TR-3, with the new core processor no longer causing issues but the aperture system scheduled for completion in 2026, contributing to further delays.
The F-35 program office has not provided comment by the time of publication.
