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Published: Thursday, Aug. 23, 2012 / Updated: Thursday, Aug. 23, 2012 07:50 AM

At celebration for Britain's first F-35, Pentagon official warns of budget cuts

Pentagon officials will not be able to protect the F-35 program if Congress doesn't roll back huge automatic budget cuts mandated to take effect in January, the Defense Department's chief weapons buyer said Thursday in Fort Worth.

Production and testing of the oft-delayed joint strike fighter would both have to be cut back, said Frank Kendall, undersecretary of defense for acquisition, unless Congress comes up with a plan to stave off sequestration - mandated across-the-board spending cuts.

"Nothing is protected in sequestration. Sequestration falls on every budget account," Kendall said in an interview at Lockheed Martin's Fort Worth plant after the United Kingdom's first F-35 test plane was delivered.

As dozens of officials from Lockheed, the U.S. and the British governments celebrated an important milestone, there was no gloom in the room.

Lockheed CEO Bob Stevens called the delivery of the U.K.'s first F-35 Lightning II "a shining moment of achievement." Larry Lawson, recently promoted to executive vice president of Lockheed's Fort Worth-based aeronautics division, said the F-35 development journey is "not finished ... but we take a few minutes to acknowledge our progress."

Philip Hammond, the British secretary of state for defense, said the U.K. remains "fully committed to the JSF program" despite delays and rising cost estimates. "The Lightning II will provide us with a flexible capability that will outperform anything we've been able to put in the field before."

Hammond, who was presented a model F-35 on Wednesday by U.S. Defense Secretary Leon Panetta, said he was eager to receive the real thing. "I felt a bit shortchanged for the cost," Hammond said jokingly, referring to Britain's $2 billion-plus investment in the program.

But the specter of sequestration looms over the F-35 program. Already years behind its overly ambitious original schedule and with costs estimated to be 70 percent higher than estimated at its 2001 launch, the F-35 has come under intense scrutiny and criticism.

Cuts of 8 to 12 percent would have to be made from the research and development and the production budgets. The cuts' effects would not be felt immediately, but Kendall said they would result in further delays in testing, slower production rates and still higher long-term costs.

"We have no latitude to make policy decisions and make cuts in a way that minimizes the damage," Kendall said.

The F-35 development effort, Kendall said, is on sounder footing now than at any other time in its 10-year history.

After scaling back planned purchases in each of the last three years, Kendall said he thinks that the development effort is on a sound pace.

"I was talking to one of the test pilots today. He's pretty confident of where the airplane is. There's still some risk elements," he said. "The reason we slowed down production is to get through more of the testing and to have more confidence before we ramp up [production]. I'm anxious to ramp up. I'd like to do it as quickly as we can. It's what's going to bring the cost down."

A recent Government Accountability Office report warned that the pace of engineering changes was still too high, raising the likelihood of additional delays and cost increases.

But Kendall said the changes that flight and ground testing have identified "are for the most part relatively minor."

"It's the risk of major problems that keep you up at night," he said. "I don't see the potential for that right now, but we still have a long ways to go."

After the ceremony, the U.K. delegation was ferried to the flight line to see its plane, an F-35B model that does short takeoffs and vertical landings, take off on a routine test flight. The aircraft will soon be ferried to Eglin Air Force Base, Fla., where it will be used in training pilots.