F-22 drama upstaged by its writers; Lewis serves notice that he'll have lots to say about last act; A pause before the storm


Message sent.

That's the humble-sounding conclusion to 11 weeks of struggle over the fate of the Air Force's F-22 fighter plane.

The Lockheed Martin-built jet survived the gravest threat Congress has posed in recent times to a major weapons program. The outcome is complicated, however.

A House-Senate conference committee restored enough money to buy the six planes that the House of Representatives had cut from next year's budget. But it also delayed buying combat-ready versions until more testing is completed.

The compromise left experts scattered on the ultimate impact. The deal may yet ruin the program, it could have no effect or it could be a benign strike down the middle that actually benefits taxpayers.

The fact remains that a defense budget produced by a Republican-controlled Congress will contain no production money for a weapon that has been one of the most coveted programs at the Pentagon for more than 15 years. Some in Congress say one result of the process begun this year is that the Air Force will wind up with far fewer than the 339 F-22s it now envisions.

"It sends a message to the Air Force and the contracting communities that it's not going to be business as usual," said Rep. Jerry Lewis, the California Republican who heads the defense spending subcommittee of the House Appropriations Committee.

"There has been a pattern of the contractor community presuming that it can just deal with [the Defense Department] or just deal with one of the forces," Lewis said. "Well, now a pause is in place that's going to cause a new kind of discussion." Lewis, who took over the subcommittee at the beginning of the year, has now made everyone understand that he intends to be involved in shaping the Pentagon's shopping list.

With Lewis' panel poised to strike again next year, the coming months could be critically important to the future of the $62.7 billion F-22 program.

The Senate had approved full funding for the F-22 for next year -- a $3 billion allotment that included $1.2 billion for research and $1.8 billion in production money for buying the next six combat-ready planes.

Getting production funding is a critical milestone, because weapons programs are almost never canceled once they graduate from research to assembly lines.

The Pentagon agreed last fall to buy the first two production models of the F-22, and made a down payment on the next six. But the prices agreed to in that deal were contingent on full funding for those next six planes in 2000. When the House voted to keep the research money but zero out production, Lockheed Martin and the Air Force warned that such an action would break that contract and hundreds of subcontracts, adding more than $6 billion in costs and virtually destroying the program.

The House-Senate conference committee wound up giving the program $2.5 billion for next year, an overall cut of $500 million. None of that money is for production in 2000. Instead, about $730 million is for beginning work on up to six more test planes, and $277 million is a down payment on 10 production planes planned for 2001.

Another $300 million is set aside to cover penalties for any terminated contracts. If there are no penalties, the Air Force can pump the money back into the program.

The deal also requires more testing before moving on to production. With its combination of sophisticated electronics, efficient engines and radar-avoiding stealth design, the F-22 is considered the most complex fighter plane ever built. But it has completed only about 5 percent of its flight-test regime.

The conference report will make Lockheed Martin demonstrate all of the plane's key qualities before production money can flow. Congress almost always approves such reports, especially one, such as this, that has been pushed by the leadership of both chambers. The defense-spending bill containing the F-22 could be acted on by the House as soon as Wednesday.

Lewis said requiring more testing is a major way to control costs, because it will allow engineers to correct problems before assembly lines start turning out faulty planes.

In the short term, though, the plan will increase program costs. The F-22 has been laboring since 1997 under research and production spending caps imposed by Congress. The research cap now stands at $18.9 billion.

The program was already butting into that limit, and adding six new test planes and requiring more research will push far beyond it. So the new spending plan removes the cap.

One military aircraft expert complained that, while Lewis and other House members said they want to hold down costs, they have now guaranteed that the price of the F-22 -- already about $184 million per plane -- will skyrocket.

"Whoever came up with this compromise ought to be enshrined in the museum of mediocrity," said Richard Aboulafia of the Teal Group consulting firm. "Any more favors done to the program will probably kill it."

But Rep. John P. Murtha, a Pennsylvania Democrat who allied with Lewis in the fight to cut the F-22, said any cost increases now will lead to savings later by creating a more efficient program. He added, though, that the Air Force is unlikely to get all 339 F-22s that it currently plans to buy.

"We're not going to ever build the numbers they want to build; there just isn't enough money," Murtha said. He predicted that the Air Force could wind up with fewer than half the expected number.

For now, the Air Force is expressing only relief that its top-priority program survives. Officials there and at Lockheed Martin have declined to discuss the situation until the text of the conference report is available, but an Air Force spokesman said the funding plan should not create a major disruption.

"It now appears the F-22 program will be able to stay on track," the spokesman said.

One Wall Street analyst said the F-22 deal should work out well for the company. "They've reached an agreement which makes a point but doesn't shoot the civilians in the process here," said Joseph Campbell of Lehman Bros. in New York.

The overall cut of $500 million for next year is not devastating, he said, and the fact that the six new planes will be designated for research is not significant because they can one day convert to combat status.

"I think this thing's OK," he said.

Provided, of course, that F-22 test planes meet their goals over the coming year. In the end, that is the ultimate message that Lewis, Murtha and the rest of Congress sent with their action.

"Superficial observers will say either that this sets the program back, or that in the end Congress didn't touch the program at all. Those are both wrong," said Loren Thompson of the Lexington Institute public policy think-tank. "This is a significant impact on the program, but it only has cost or schedule consequences if the contractor can't make the program perform up to snuff."

Pub Date: 10/10/99

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