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Pentagon to review progress of F-35 fighter program next week

By Andrea Shalal-Esa

WASHINGTON (Reuters) - Top Pentagon officials will examine the cost of building and operating the Lockheed Martin Corp F-35 fighter jet at a major review of the $392 billion program next week that will also provide updates on lingering technical issues.

Kyra Hawn, spokeswoman for the Pentagon's F-35 program office, said a high-level Defense Acquisition Board meeting was expected to proceed on Monday despite the partial government shutdown. The meeting has already been postponed several times.

She said officials would receive an update on how the program was meeting cost and schedule targets, as well as progress on technical challenges including the millions of lines of software code being written for the planes.

One key issue to be discussed will be whether to increase F-35 production in coming years, as planned, according to Hawn and other officials familiar with the program.

Current plans call for Lockheed's production of the F-35 to triple from the 36 planes ordered in the sixth batch of jets for delivery in fiscal 2014. By the fiscal 2018, Lockheed is slated to be delivering around 110 planes a year, according to government documents.

Another topic at the meeting will be the long-term cost of operating and "sustaining" the plane, an issue of great concern to the U.S. military and the eight partner countries that are funding its development: Britain, Canada, Australia, Denmark, Norway, Turkey, the Netherlands and Italy.

The Pentagon's Cost Assessment and Program Evaluation (CAPE)office is expected to present an updated estimate of the cost over 55 years of operating and maintaining the U.S. military's future fleet of 2,443 F-35s.

CAPE has maintained its forecast for that cost at around $1.1 trillion for some time, but Pentagon acquisition chief Frank Kendall has said he expects the estimate to come down.

The F-35 program office has already lowered its estimate by 20 percent to $857 billion.

The U.S. Marine Corps has also done a detailed analysis that shows the cost per flying hour of the F-35B model, which can land like a helicopter, is likely to be 16.6 percent lower than earlier Pentagon estimates. That reduction would result in savings of $12.3 billion over the next five decades.

"Sustainment cost will be a large topic of discussion," said Hawn, noting that it was critical to lower the longer-term costs of operating the warplanes so they are affordable.

She said the program in November would also be hosting the first of twice-yearly summits on operating and maintenance costs, an initiative that grew out of a September meeting of the F-35's Joint Executive Steering Board.

Details were still being worked out, but the meeting is aimed at generating ideas for driving down operating and maintenance costs, Hawn said.

For instance, in September, Britain and Norway said they would work together more closely to lower costs by pooling resources for technical maintenance once the new fighter jets start arriving in Europe in the second half of the decade.

The meeting is expected to include representatives from Lockheed and other major suppliers for the program: Northrop Grumman Corp, BAE Systems Plc and Pratt & Whitney, a unit of United Technologies Corp, as well the U.S. military and the eight partner countries.

Air Force Lieutenant General Chris Bogdan, the Pentagon's F-35 program chief, has said he hopes to inject more competition into the overall effort of operating and maintaining the planes once the program completes development around 2018.

Lockheed oversees sustainment of the F-35 under the current development contract, but the Pentagon is exploring other options, including dealing directly with component suppliers that work on maintenance, instead of having Lockheed coordinate that work, according to one source familiar with the program.

Monday's Pentagon meeting is also expected to touch on last week's news that extended durability testing of the Marine Corps' F-35 B-model had resulted in minor cracks in the bulkhead of the plane.

Hawn said investigators were still trying to determine the cause of the cracks.

(Reporting by Andrea Shalal-Esa; Editing by Cynthia Osterman)

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