DoD Cost Estimate Questions Could Cause Trouble For F-22

Posted on: Jun. 27th, 2006 || Source: money.aol.com | E-mail Article | Print Article

DoD Cost Estimate Questions Could Cause Trouble For F-22

WASHINGTON -(Dow Jones)- New questions about Air Force cost estimates could cause trouble for Lockheed Martin Corp.'s (LMT) F-22 stealth fighter, even though the plane won broad support for a long-term purchase contract in a defense budget bill recently passed by the Senate.

The Air Force says it will save about $250 million over three years if it is allowed to sign a bulk contract for the fighters, which cost more than $130 million each. But that estimate could face new scrutiny because of a Defense Department Inspector General's report criticizing other Pentagon cost estimates.

The IG report says the Pentagon couldn't justify estimates for what it would cost to cancel another Lockheed Martin airplane contract, for the C-130J cargo plane. The Pentagon sought to cancel its $4 billion multi-year contract last year. But defense officials withdrew the proposal in May after a debate on C- 130J termination costs, which were estimated at up to $1.78 billion.

Of that estimate, "$1.1 billion was not supported," said the report, posted on the Defense Department Inspector General's Web site. The report noted that if the higher cost estimate had been supported, there would not have been enough money in the proposed budget to cover those costs.

Sen. John McCain, R-Ariz., a frequent critic of weapons buying practices, pressed the Inspector General on ties between the C-130J and the F-22, in correspondence obtained by Dow Jones Newswires. The Air Force confirmed that information used in the termination cost estimates came from both the C-130J and the F-22 program offices.

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