WASHINGTON - The program is to get new leadership and Lockheed Martin is to forgo hundreds of millions of dollars in award fees, but U.S. defense secretary Robert Gates is "not sure" whether the F-35 Joint Strike Fighter can avoid breaching Nunn-McCurdy limits on cost growth.

The F-35 program is being restructured in a bid to stabilize its cost and schedule, after Lockheed fell behind in delivering aircraft for flight testing. The nearly $11 billion requested for fiscal 2011 reflects the Pentagon's decision to increase funding for development and reduce procurement in an effort to get the program back on track.

In addition, Gates announced a change of leadership at the F-35 Joint Program Office (JPO) in Arlington, Va., and elevation of the JSF program manager to a three-star officer. The new program executive officer will be named "in a few days," Gates said, and will replace U.S. Marine Corps Maj. Gen. David Heinz, a two-star officer.

"Progress and performance of the F-35 over the past two years has not been what it should, as a number of key goals and benchmarks were not met," Gates said at the Pentagon midday. As a result, and with the company's agreement, the Defense Dept. is to withhold $614 million in performance award fees from the Lockheed-led contracting team.

While withholding the fees will help offset the extra costs of restructuring development and boosting funding, Gates said he was "not sure about Nunn-McCurdy." Breaching limits on cost growth would force the department to go through a formal recertification of its need for the F-35 to Congress - a process made more difficult since last year's acquisition reforms.

The 2011 budget request also marks the Pentagon's fifth successive attempt to cancel the General Electric/Rolls-Royce F136 alternate engine for the F-35. In previous years Congress has always reversed the cancellation. Gates said he will make a "strong recommendation" that President Obama veto any legislation sustaining the F136.

Last year, Congress defied a veto threat and reinstated funding for the alternate engine. But lawmakers got around that threat by fully funding F-35 development and procurement. This time, Gates said, the veto will be tied to providing any funding for the F136. "The level of cost is such now that we have to take a final stand," he said.

Development funding requested for the F-35 in 2011 is in line with the higher cost projections of the independent Joint Estimating Team (JET), which has historically disagreed with the JPO's lower, more optimistic, estimates.

"It is clear there were more problems than we were aware of," Gates said. "We think the restructuring will work because it's more realistic. The cost estimates are in accord with the JET and not the JPO. And we think the restructuring will mitigate the more pessimistic conclusions of the JET."

The 2011 budget requests procurement of 43 aircraft, up from 30 in 2010 but fewer than originally planned. The U.S. Air Force would get 22 F-35As, plus one funded from the Overseas Contingency Operations budget; the Marine Corps would get 13 F-35Bs and the Navy seven F-35Cs. Advanced procurement funds are sought for 45 aircraft in Fiscal 2012, a substantial reduction from the previously planned production ramp rate.