Is Lockheed Martin's F-35 a Colossal Waste of Taxpayer's Money?

F-35 Lightning II. Photo credit: Lockheed Martin via Northrop Grumman.

Lockheed Martin's (NYSE: LMT  ) F-35 is projected to cost almost $400 billion just for acquisition and development. Further, an estimate from the Cost Analysis and Program Evaluation office, or CAPE, puts the price to operate and maintain the F-35s for the next 55 years at $1.1 trillion. The F-35 is the most costly weapons system in U.S. history. Additionally, while the F-35 was designed to replace a number of weapons systems like the A-10, so far it hasn't. So, is the F-35 a colossal waste of taxpayer's money?

Electronic warfare vs. the F-35
As I wrote before, Boeing (NYSE: BA  ) has been incredibly critical of the F-35's ability to survive against evolving threats across the electromagnetic spectrum -- and for good reason. In 2009, espionage efforts, believed to be the work of the People's Republic of China, lead to the successful theft of sensitive design data for the F-35. 

Fortunately, Pentagon and Lockheed officials told Reuters that no classified information was taken. However, USAF Col. Michael W. Pietrucha argues that espionage efforts, as well as technological advances, may have compromised the F-35 long ago. More importantly, recent activities on Capitol Hill may confirm this fear.

The A-10 battle

A-10 Thunderbolt II. Photo credit: U.S. Air force via Wikimedia Commons.

The A-10 attack plane has been in service since the late 1970s, and the F-35 is supposed to take its place. Unfortunately, while the Air Force has recommended retiring the A-10 -- something that's estimated to save $3.7 billion over five years -- and replace it with F-35s, lawmakers have become increasingly skeptical of the idea due to fear over the F-35's abilities. 

Brian Davis, president of the National Guard Association of Michigan, told National Defense Magazine that one of the benefits of the A-10 is that the 30mm cannon is immune to electronic warfare -- the same can't be said of the F-35's bombs. Plus, Sen. John McCain, a longtime critic of the F-35, criticized the Air Force's plan to retire the A-10 by pointing out that the F-35 is supposed to reach initial operating capability in 2016, but only by using a "less lethal version of software," according to 

Furthermore, in its latest defense bill, the House of Representatives voted against the Air Force's attempt to retire the A-10 fleet. And that was before the F-35's latest "episode."

As if espionage and doubts weren't enough, earlier this week an F-35A caught fire as it was taking off from Eglin Air Force Base. So far, there's no official word on what caused the fire, but military commanders have suspended flights of the F-35A at Eglin. More importantly, as Breaking Defense rightly pointed out on its site, considering that the F-35 is still in the test phase, and a low rate of production, this could prove to be a problem. 

The flip side
The above news paints a bad picture for the F-35, but there are counterarguments to the critics. First, Lockheed emphatically rejects Boeing's assessment, and states that the F-35 is more than capable of surviving, and thriving, in a conflict.  Second, while it's true that the F-35 hasn't been "battle tested" yet, some of the unease in Congress regarding the A-10's retirement could be based on re-election concerns, and not strictly on the F-35's "believed" lack of ability. For example, Rep. Candice Miller has strongly opposed retiring the A-10, but she represents a district in Michigan that would be negatively affected from the A-10's retirement.   

What to watch

F-35. Photo: Lockheed Martin via Northrop Grumman.

Lockheed Martin's F-35 is a hot topic on Capitol Hill. Moreover, it's cost taxpayers a significant amount of money. Unfortunately, only time will tell if it's worth it. The good news is that Frank Kendall, undersecretary of defense for acquisition, said about the F-35, "Program progress is sufficient for the department to budget for an increase in the production rate in fiscal year 2015." However, considering that the F-35 made up 16% of Lockheed's total consolidated net sales in 2013, and that there's still a great deal of uncertainty regarding its ability as a next-generation fighter, Lockheed investors would be smart to closely follow the F-35's progress, or lack thereof.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 01, 2014, at 4:32 AM, LOB2065 wrote:

    Let's start from the top.

    Firstly the F35 is NOT stealth, the International Aviation Authority has already confirmed that Russia's radars can pick up on them.

    Secondly, the F35 flies like an elephant because it has the requirements of 3 different planes rolled into one. So now you have a plane that does everything badly.

    Thirdly, the F35 only has one engine so it's no good for Canada or any other country where they may have to fly large distances where there are birds.

    Lastly the Europeans make a better quality fighter jet for a much cheaper price tag and given that EU and US military technology is not interoperable the EU countries and Turkey should buy Eurofighters instead of an over priced F35.

  • Report this Comment On August 17, 2014, at 2:28 AM, RFortier69 wrote:

    Well you can start any place you wish but your information is not correct. The F-35 is a stealth fighter. The problems have been worked out. I have many friends who are still in the AIr Force who are working on the F-35 and they have stated that every pilot who has flown it loves it. Now that they have the new helmets wit hthe heads up inside the helmet not on the window it is a better fighter now. They can see everything around it under it and over it and behind it.IT has the same speed of the F-16 if not a little faster. We are in American and we do not care if the EU nations can fly it or not. We will not sell it to Turkey or anyone else but just a hand full of counties.. If you wish to talk about something please do your work and find out about it all before you open your mouth. All the information you gave was old and outdated. The F-35 is like all military air craft and can be refueled in air. SO no problems with long flights.

  • Report this Comment On November 10, 2014, at 2:50 PM, Ruraraid wrote:


    lol I love how the way you said that it leads me to beleive the only place your getting your information is those in the US air force which would obviously be biased.

    The F35 is is a multirole fighter more than a stealth fighter and it does poorly not to mention one EMP blast and its a 1trillion dollar crater on the ground compared to older aircraft which still have analog functions left in them.

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Katie Spence

Katie Spence has been a financial journalist for The Fool since 2011. She specializes in defense companies, “green" technology, autos, and robots. Follow her on Twitter for breaking news in the defense, auto, and robot industry.

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