The conference report on the fiscal 2022 omnibus spending bill directs the F-35 program to submit regular performance reports on the Continuous Capability Development and Delivery (C2D2) software updates for the Lockheed Martin [LMT] fighter.

The bill fully funds the nearly $2 billion fiscal year 2022 president’s budget request for C2D2–about $566 million more than the amounts appropriated last year.

“It is noted that per previous congressional direction, C2D2 efforts are delineated into no less than ten distinct projects to provide greater transparency of funds execution, and continued adherence to this budget structure is directed,” the conference report said.

“Concerns remain regarding the budgeting, contracting and contract performance for C2D2,” per the report. “Therefore, the program executive officer, F-35 Joint Program Office, is directed to submit to the congressional defense committees, beginning not later than with submission of the fiscal year 2023 President’s budget request, and bi-monthly thereafter, the following data: contract performance, verification results reporting, quality metrics, technical performance metrics, and process efficiency metrics. This data shall include detailed explanations of deviations from contracted plans and the president’s budget request, to include impact on spend plans for development efforts and award fees.”

Begun in 2018, C2D2 for the F-35 envisions software updates for the fighter every six months and has included the development of Block 4, Technology Refresh-3 to permit the Block 4 advancements and making F-35s capable of carrying conventional and nuclear ordnance. Cost estimates for C2D2, which the F-35 program is to pursue through fiscal 2025, have varied from $7 billion to more than $10 billion.

The F-35 program has been negotiating a Lot 15-17 contract with Lockheed Martin and awarded the company the first multi-year sustainment contract for the fighter last September–a contract potentially worth $6.6 billion. This week, the F-35 program said in response to a question that Lockheed Martin is to receive incentive bonuses on its sustainment contract for the F-35 fighter by achieving an “up to” 75 percent MC rate for the U.S. Air Force F-35A and a 61 percent MC rate by fiscal 2023 for the U.S. Marine Corps F-35B and U.S. Navy F-35C (Defense Daily, March 9).

The program had previously declined to release such targets.

The F-35 may fall under a fiscal 2022 omnibus spending bill conference report provision that directs the DoD acquisition chief’s office to deliver to the congressional defense committees a report on DoD’s “payment of fees and bonuses to contractors with documented performance issues” not later than 180 days after the enactment of the fiscal 2022 omnibus spending act.

Air Force Lt. Gen. Eric Fick, the F-35 program executive officer, said this week that although 2021 had seen a worrying fall in F-35 MC rates the MC rate last year was comparatively higher for combat-coded F-35As.

While past F-35 sustainment contracts evaluated Lockheed Martin on the aircraft’s MC rates, last September’s three-year sustainment contract is to judge the company on full mission capable (FMC) rates and the on-time availability of parts to ensure FMC rates improve. Overall, the Government Accountability Office has said that the F-35’s FMC rate is 54 percent–18 points below the goal.

The F-35 program has said in the past that FMC rates depend on sufficient investments by the Air Force, Navy and Marine Corps in spare parts and flying hours.

MC rates for the three F-35 variants have been below targets. In November last year, the F-35 program said that quarterly MC rates for the F-35A and the F-35B were 59 percent—31 points below the objective for the F-35A and 26 points below the goal for the F-35B, and that the quarterly MC rate for the F-35C was 54 percent—31 points below target (Defense Daily, Nov. 12, 2021).

In fiscal 2020, such rates were 71 percent for the F-35A, 68 percent for the F-35B, and 59 percent for the F-35C, per the Government Accountability Office (GAO). For fiscal 2020, the Air Force reported a higher 76 percent MC rate for the F-35A, which the service said had the highest MC rate for the service’s fighter models–above the second-ranked F-16C at nearly 74 percent.

For DoD, the MC rate is the percentage of unit-assigned aircraft capable of performing at least one defined mission, not including aircraft in depot status or undergoing major repairs. FMC planes are those capable of flying all unit-assigned missions.

“It has always been frustrating that [F-35] program officials have been using the lower mission capable metric to measure the fleet’s performance,” Dan Grazier, the Jack Shanahan military fellow at POGO’s Center for Defense Information and a retired U.S. Marine captain, wrote in a March 10 email. “The same people frequently tout the F-35’s abilities to perform multiple roles for the services, yet they try to hide or are dismissive of the program’s low full mission capable rates. I am pleased to see the future sustainment contracts will be tied to demonstrated FMC performance. Doing so should incentivize improvements in that category, but after so many years of disappointing results, I am skeptical that the F-35 fleet will ever be able to consistently meet the stated performance goals.”

Grazier is the author of a new POGO report, “F-35 Program Stagnated in 2021 but DoD Testing Office Hiding Full Extent of Problem,” that discloses a Pentagon Director of Operational Test and Evaluation “controlled unclassified information” report on the F-35–a designation created by former President Obama in 2010 under Executive Order 13556.

“One thing to note about so-called controlled unclassified information: It is not classified,” per the new POGO report. “The label is a tool that some in the federal government misuse to conceal information that could be embarrassing to them, but because the information does not damage national security, they can’t hide it under a classification label. The Project On Government Oversight obtained a copy of the non-public report, and what it clearly shows is that the F-35 program has made few fixes to many of the reliability and performance problems that have prevented the aircraft from meeting the needs of the services. This is information the public must have in order to pressure policymakers to correct the problems that, if uncorrected, could harm U.S. service members and the U.S. national defense mission.”