While the F-35 Joint Strike Fighter (JSF) program's recent Selected Acquisition Report points to some cost stability within the program, the program still faces some serious challenges ahead, a recent Teal Group report says.

Industrial "greed" abroad and program commitment at home continue to put the F-35 in the crosshairs, according to the report.

"The industrial situation has degenerated into a beg-a-thon," the report says. "For a program that was supposed to break the cycle of offset demands, F-35 has actually engendered nothing but industrial greed, fueled by implied promises and aggressive salesmanship."

Foreign interest

The report continues: "There appears to be no way to reconcile "best value" contracts and "strategic sourcing" contracts. As third-tier contracts continue to trickle down, there should be enough work to keep international partners happy, but if there isn't -- and if the competition provides some aggressive offers -- there could be one or two defectors."

Still, foreign interest remains high.

"So far, the international dimension looks great. By the end of 2002, there were more European countries committed to F-35 than there were to Eurofighter," the report says. "Notably, two key Eurofighter partner countries (representing more than half of the partnership's total defense spending) have joined F-35. But Eurofighter has been revitalized by the Saudi buy. And Saab is promoting the heavier Gripen E/F, which might find appeal in Scandinavia."

U.S. commitment

The only "concrete sign" of international partnership concern, Teal says, is Australia's 24 F/A-18F order, which marks the first export success for the Super Hornet, and to a JSF partner.

Of greater worry is the question of commitment at home. Reiterating earlier comments, Teal Group says the Navy embraces the JSF as much as it would "a proposal to go drink bleach. They aren't sold on stealth, and they seem unwilling to pay a premium for it -- in price or payload."

The Navy also is no fan of a single-engine plane, especially one that could actually threaten the linchpin of the service's survival: the aircraft carrier. "There's also the unpleasant prospect that the STOVL F- 35 version (U.S. Marine Corps version) could be nearly as effective as the CTOL naval variant, making large nuclear carriers relatively less appealing."

The Navy's biggest problem with the F-35, the report says, seems to be that it is a joint plane. Joint planes threaten the Navy's hope of ever getting a purely Navy combat aircraft again.

But the real JSF test is the U.S. Air Force, which would rather have F-22 Raptors but faces opposition to more Raptor buys.

Given a funding choice of the two, Teal Group says, the JSF doesn't have much of a chance. But there may be little choice, which could be the JSF's saving grace.

Still, prime contractor Lockheed Martin has to keep the unit price down. The basic A model's unit recurring flyaway cost needs to stay in the $50 million-$60 million range, Teal says. "If costs rise higher than $70 million, the qualities that make the F-35 unique will diminish."