F-35 Funding in Danger

The F-35 is said to be the answer to the worldwide problem of aging tactical aircraft, serving as the most advanced multi-role fighter in the world. It boasts versatility, lethality, and affordability – yes affordability. While this seems like an odd characteristic of a state-of-the-art war machine, the reality is that the US government and its allies sought to find the most cost-effective option to protect our skies and our fiscal policies.

In order to accomplish this feat, the government allows firms to compete for the contract, thus capitalizing on the competitive market. The lucky winner of the F-35 contract went to Lockheed Martin Corp., but as the US budget deficit continued to grow, the government took further steps to reduce costs; By threatening to cut the $728 million budget for fiscal 2020 in half, the Pentagon hopes to acquire the data rights to certain spare parts for the F-35, allowing the government to create more competition and procure parts cheaper.
Lockheed Martin, the current leading defense contractor, has yet to respond to the defense department. Byron Callan, a defense analyst with Capital Alpha Partners, believes that Lockheed will continue to resist, as he stated, “I assume Lockheed Martin will fight this as consensus growth expectations for the company include a healthy increase in revenues from sustaining the F-35 fleet.”

Should the government’s request for spare parts data be fulfilled, it could mean opportunity for other firms. Currently, spare parts are in high demand, as several nations employing the F-35 struggle to acquire the parts needed to keep their fighters in the air. According to the Government Accountability Office, the backlog of 4,300 spare parts last year caused 30% of F-35’s to remain grounded.