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Investing.com -- The F-35 stealth fighter program continues to face significant challenges, with contractors receiving incentive payments despite substantial delivery delays, according to a Government Accountability Office (GAO) report released Wednesday.
The GAO assessment revealed that Lockheed Martin received on-time payment bonuses even when delivering aircraft up to 60 days late. In 2024, all 110 aircraft delivered by Lockheed were late by an average of 238 days, a dramatic increase from the 61-day average delay in 2023.
The Pentagon has paid contractors "hundreds of millions of dollars in incentive fees" intended to improve on-time delivery, yet delivery timeframes have worsened, the GAO noted. The report called the incentive structure "largely ineffective at holding the contractors accountable."
The F-35 modernization effort, known as Block 4, has experienced significant cost overruns and schedule delays. Current Block 4 costs exceed original estimates by over $6 billion, with completion projected at least 5 years behind schedule.
Lockheed Martin’s Technology Refresh 3 (TR-3), a $1.9 billion suite of hardware and software upgrades critical to Block 4 modernization, was identified as the primary cause of late aircraft deliveries in 2024.
The GAO made six recommendations to the Department of Defense, including evaluating Lockheed Martin’s production capacity, reevaluating incentive fees, and expanding the use of leading practices for product development. The DOD concurred with four recommendations and partially concurred with two.
The F-35 plays a crucial role in U.S. national security and that of its allies. The DOD estimates that Block 4 modernization, engine upgrades, and lifecycle costs for the planned 2,470 aircraft will exceed $2 trillion over 77 years.
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