September 10, 2011 By Eddie Walsh - the-diplomat.com/flashpoints-blog
Persistent talk that the Australian government is reassessing its $16 billion-plus,100-plane commitment to the F-35 fighter programme has sharpened following recent statements by Australian Defence Minister Stephen Smith.
As one of only eight official F-35 global partners, analysts fear that any serious reduction in Australian commitments could have a major impact on the shareholders and indeed the approximately 125,000 employees of the defence contractor.
When asked about reports that Australia is reconsidering its options, Tom Casey, Director of International Communications at Lockheed, said the firm ‘isn’t aware of any change in the Australian government’s decisions concerning the F-35 Lightning II programme.’
In fact, Lockheed has such strong faith in Australia’s commitment that it continues to advertise the following on its the F-35 website: ‘Eventually, some 100 fifth generation F-35As will transition the RAAF into a next generation net-centric fighter force that is capable of assuring the nation's territorial integrity and national security.’
However, regional analysts don’t all share Lockheed’s optimism. Indeed, many believe that the programme is facing serious political and bureaucratic pushback – even those who maintain that the F-35 represents the best option for the Royal Australian Air Force.
More importantly, they argue that Australia likely will pull back from a portion of its 100 unit commitment in favour of procuring other platforms. In their eyes, the question is not ‘if’ a reduction in unit orders will occur, but rather ‘how much’ that reduction will be.
Ultimately, they judge that the issue facing Lockheed isn’t poor performance in the early stages of research and development. Instead, it is lingering concerns with Lockheed’s ability to guarantee on-time and on-budget delivery of F-35 units designed to meet Australian national security needs after multiple budget, schedule, and technical requirements revisions.
Alan Stephens, visiting fellow at the University of New South Wales at the Australian Defence Force Academy, echoes this view. ‘My take is that most people accept that the F-35’s development is back on track, after frustrating delays, and that it will clearly offer the best capability for Australia,’ he says. ‘The issue now, and it’s a serious one, is the constantly increasing price tag.’
‘Matters haven’t been helped by what are regarded as Lockheed Martin’s less than forthcoming statements on the subject,’ he adds.
While some analysts believe that the Pentagon’s failure to put its full political weight and confidence behind the programme has been a factor, one Australian think tank scholar suggests that schedule and cost remain the core concerns for key stakeholders. ‘I haven’t heard that the administration is the driver behind Smith’s recalculation,’ he said. ‘The primary concern for the Australian Department of Defence is whether the defence industry behind the F-35 is capable of producing the aircraft on-time and on-price.’
If these are in fact the major concerns driving the reassessment, Canberra may seek to offset the risks associated with the F-35 programme by shifting some of the programme’s budget to less technically cutting edge but still competent platforms.
‘Smith is…aware that…the RAAF effectively bypassed the usual acquisition process when it (recently) bought the C-17 and Super Hornets,’ he says. ‘These were bought more or less “commercial-off-the-shelf,” and are regularly cited in Defence circles here as great acquisition successes.’
‘Presently, Defence can’t spend the acquisition funding it’s been allocated because of system inefficiencies. More “COT” purchases therefore seems an attractive way to go. Canberra is rife with rumours to that effect.’
If Canberra elects to go the COT route, analysts agree that the most likely beneficiary would be Lockheed’s strategic rival, The Boeing Company. This could be a major boon for Boeing, which is strategically focused on expanding its presence within the Asia-Pacific region.
Eddie Walsh is The Diplomat's Pentagon (accredited) correspondent and a MPhil/DPhil candidate in Politics at the School of Oriental and African Studies. His work has been featured by ISN Insights, CSIS, The East Asia Forum, The Jakarta Globe and The Journal of Energy Security. He blogs at Asia-Pacific Reporting and can be reached at email@example.com.