Jim McAleese on Sequestration and the Future of the F-35 Program

Jim McAleese, McAleese & AssociatesJim McAleese, founder and principal at McAleese & Associates, recently spoke with Executive Mosaic about the effects of sequestration on different agencies and programs in the U.S. federal government ahead of the Potomac Officers Club’s Post-Sequestration Summit Tuesday May 14.

In this piece, McAleese offers his perspective on the F-35 program’s trajectory for the next five years as it relates to each service branch, the sequester and the federal budget.

To learn more about the Post-Sequestration Summit and hear McAleese’s insight into the future of departments and contractors, visit the event site here.

 

The Program Executive Officer for the F-35 Program, General Bogdan, did a very good job in his recent Congressional Testimony, and his public appearances have really demonstrated that the Program has turned a corner, in terms of Program Execution.

The primary remaining issue that really has come out of General Bogdan’s testimony, has been that Software-integration remains a risk. He seems to have strong confidence that what’s referred to as the “Block 2B Software” will be delivered by 2015.

That is particularly critical for the Marines, because the Marines want to have their first squadron of F-35s Operational by 2015. They have already taken several production aircraft deliveries. They want to be able to declare “Initial Operational Capability”, which is the ability to go to war, in 2015.

(Click Here, to find out McAleese’s thoughts on how the sequester will impact each U.S. service branch.)

2 f35A handful of programs, such as the proposed USAF Global Hawk retirement, have really dominated Congressional Hearings in both the House and Senate.  So there’s a general sense of a cautious optimism in the external community for the affordability, and schedule, of the F-35 Program. The Resourcing is a particularly important issue, because under 2013 Sequester, the Navy will lose one F-35 CV. The Marines will lose one F-35 STOVL, so they’ll lose two of the 29 aircraft that were funded by Congress already in the 2013 Defense Appropriations Act.

The Air Force has been predicting publicly that they will lose somewhere between three to five aircraft out of those 29 total 2013 funded-aircraft. It is widely-expected that  sometime during the summer, that the Air Force will at least request to shift funds from lower priority Investment Programs, to be able to protect two Specific Programs, in particular.

One is the F-35 CTOL production, and the speed of the Development (SDD) schedule. Production is obviously-funded with Procurement Funding.  The separate F-35 SDD Development is funded through RDT&E Funding. So, that is a very positive development, in terms of the level-of-support. The other Priority USAF Program is the KC-46A Tanker.  The Air Force Leadership is clearly saying they want to be able to move funding to offset the 2013 Sequester, to protect those two programs.

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The 2014 Budget Request turned out to be a positive development, in terms of the new 2014 to 2018 Plan, the “FYDP” or the Program-of-Record. It continues the buying of approximately 29 F-35 aircraft per year for the Department of Defense in 2014, which is consistent with 2013, 2012 and 2011. The good news is that the Air Force begins to aggressively increase the F35 CTOL Procurement starting in 2015, and continuing into 2016 and 2017.

McAleese_Logo_JPGThere was a little slippage in new 2014-2018 Plan, relative to the previous 2013 to 2017 Plan. There’s two fewer USAF F-35 CTOL aircraft in 2015, and I think there’s four fewer in 2016 than the previous Plan. But, as a general rule of thumb, the F-35 Program-of-Record held up very well. The Air Force will be pivotal to making sure that they can afford the aggressive production ramp‑up in 2015, 2016, and 2017.

Then, 2017 and 2018 is when the Navy and the Marine Corps really aggressively ramp up their F-35 CV and STOVL production as well.

The F-35 Program, from a projected Resourcing perspective, turned out particularly-well. And there’s no doubt that it enjoys strong support from the Air Force (CTOL), strong support from the Marines (STOVL), and support from OSD, and of course, Mr. Kendall, and his F-35 PEO Team.

The one potential factor that still needs to be addressed is in the 2017-2018 period, is how many F-35 Carrier Variants does the Navy really need? That would be expected to be a fairly modest number, and that would be a change that would occur based upon both the Navy’s actual requirements, and their affordability at that time. Any changes probably would not happen until at least 2016, if not 2017.

So, overall, the F-35 Program seems to be doing well from Program-execution, for Congressional support, and in terms of offsetting the 9% 2013 Sequester “tax”. One important thing that did occur, was that the Department formally awarded an “undefinitized contract action” contract while it was still negotiating final Pricing for the aircraft in 2012.  Consequently, the Department immediately protected that 2012 Procurement money from Sequester.

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