Insight: Expensive F-35 fighter at risk of budget "death spiral"

http://www.reuters.com/article/2013/03/15/us-usa-fighter-f35-insight-idUSBRE92E10R20130315



Insight: Expensive F-35 fighter at risk of budget "death spiral"
By Andrea Shalal-Esa
WASHINGTON | Fri Mar 15, 2013 6:53pm EDT

(Reuters) - It's called the "death spiral," and America's newest warplane, the F-35 Joint Strike Fighter, is in danger of falling into it before the plane has even gone into service.

The term - recently invoked by top brass involved in the F-35 program - refers to a budgeting Catch-22 that plagues the defense industry. To keep the cost per airplane low, you need to build and sell a lot of planes. But in tough economic times, governments cut orders to save money. That pushes up the cost per plane, leading to more cancellations, pushing up the cost, leading to more cancellations. And so on.

The U.S. military is in the process of making tough decisions due to mandatory budget cuts from sequestration which went into effect March 1 and could lop off $46 billion of Pentagon spending this fiscal year.

Earlier this year, Pentagon budgeteers crunched the numbers on Lockheed Martin Corp's F-35 in an exercise that spoke volumes about the troubles facing the world's most expensive weapons system and the Navy's uncertain commitment to it.