Lessons learned from F-35: Air Force will now purchase IP rights of its weapon systems

By Vanessa Montalbano  / April 22, 2024

When the Air Force began buying the F-35 Joint Strike Fighter about 20 years ago, it took a total system approach, meaning prime contractor Lockheed Martin earned the rights to total control of the program, including the intellectual property of its technologies and mechanical parts.

The military, on the other hand, gave up the ability to put its own manpower behind sustainment or to solicit other vendors for support.

But that strategy has so far resulted in poor performance, lawmakers in the House and Senate said this week, with limited spares and depot capacity being available for repairs, significant delays pushing back deliveries of modernized capabilities and dramatic cost overruns.

Now, the Air Force is setting out to “acquire the intellectual property we need to control both upgrades and maintenance so that we have a lot more flexibility” in contract agreements for future aircraft, service Secretary Frank Kendall told the Senate Armed Services Committee Tuesday.

The new way of thinking is already being applied to requirements for the Next Generation Air Dominance family of systems, including for autonomous Collaborative Combat Aircraft, and the highly classified B-21 Raider bomber.

“It’s one of the lessons we’ve learned very painfully over our history in acquisition,” Kendall said.

The current F-35 deal “makes it very hard to upgrade and makes it very hard to make changes and do them in a cost-effective way and to take advantage of competition,” he added. Right now, the system is modernizing via concurrency, which means procurement and development are happening at the same time, leaving the prime contractor little room for errors in testing.

For Rep. Matt Gaetz (R-FL), that arrangement also means “the tail here is wagging the dog.”

“The government isn’t running this program, Lockheed Martin is running this program,” he said during a House Armed Services Committee hearing Wednesday held to assess the Air Force’s fiscal year 2025 budget request.

“It’s not going to get better unless there’s accountability for the fact their planes don’t fly,” Gaetz added.

The Air Force’s top acquisition chief Andrew Hunter confirmed the changing philosophy, which is now “to have the government be in charge.”

“The government has to have that critical technical data to understand all of the technical details of how the system operates, but not just the system itself but the system that builds the system,” including information about the software development process, he told reporters Tuesday amid a recess during a House Armed Services tactical air and land forces subcommittee hearing.

Asked by Inside Defense how the service plans to ensure it owns that data in the future, Hunter said “we write that into the initial contracts when industry is highly incentivized to be forthcoming because they’re looking to win something they don’t have.”

The IP problem comes in once companies have already built the product the Air Force is looking for, because then they are more likely to hang an expensive price tag on the technical data, Hunter explained.

On CCAs in particular, the new approach to IP will apply to each of the competitive increments the service is planning.

Their comments come after the F-35 Joint Program Office and Lockheed Martin late last month settled a five-year legal dispute over the IP rights for critical testing software, which is needed to evaluate aircraft within a virtual battlespace meant to imitate a higher threat than possible in an open-air range.

Under the agreement, the government now has the authority to integrate software dubbed “F-35 in a box” into service-operated experimental facilities, or the Joint Simulation Environment, to rapidly conduct operational testing, advanced tactics development and other training.

Software developers for the Air Force and Navy will also be able to “contribute to the sustainment of the F-35's onboard software” and build upon it for the first time, according to a news release.

F-35 Program Executive Officer Lt. Gen Michael Schmidt declined to talk to reporters about the specific details of the F-35 in a box deal with Lockheed but called it a “mutually beneficial solution” after the House panel on Tuesday.

“The agreement reached on F-35 In a Box in March has significant implications for organic software development and paves the way for users to begin integrating current F-35 operational software into the JSE, and to prepare for follow-on test and evaluation of Block 4 capabilities,” Schmidt said in his written testimony to the House subcommittee.

Other F-35 pitfalls

The fifth-generation platform is undergoing massive upgrades related to its core processor, called Technology Refresh 3, and Block 4 mission improvements to bring better sensors, munitions sets and other advanced capabilities.

Those programs are intimately tied together, with Schmidt saying on Tuesday the JPO will create a “reimagined” Block 4 plan that focuses on delivering “must-have” electronic warfare and communications capabilities now before rolling out a more advanced subset in the future, according to his written testimony.

That change-up follows several delivery setbacks for the TR-3 software as Lockheed has struggled with validating the technology in its labs. The earliest the plane maker can roll out a truncated, non-combat-ready version of TR-3 to the Air Force is July, Schmidt said, but August or September is probably more likely. It would take another 12 to 16 months to enable the jets with software completely coded for combat.

However, Schmidt confirmed to reporters for the first time on Tuesday that each of the program’s partners, both at home and abroad, have agreed on criteria for the truncation plan.

“When I get a stable, capable, maintainable software version, and terms and conditions on the contract of truncation with industry, then we can truncate it,” he said, adding that the decision process can take weeks and is not an exact science.

Meanwhile, the F135 engine is also slowly being overhauled by Pratt & Whitney via an Engine Core Upgrade to provide better cooling and extended range needed to handle more complex operations.

The JPO will restart negotiations for a Performance Based Logistics contract with Lockheed Martin once an annualized sustainment contract is finalized in July, a recent Government Accountability Office report stated.

This contract is intended to lower F-35 maintenance costs and improve the speed at which Lockheed can do repairs and other upgrades, but the prime must first prove it can boost performance and improve readiness at a reduced price.

The Pentagon in 2023 temporarily paused F-35 deliveries while Lockheed dealt with the compounding developmental challenges causing delays, arguing the plane maker should be held responsible for delivering the capabilities they were promised.

Since then, incomplete platforms have been held in storage in Lockheed Martin facilities. Schmidt wouldn’t say exactly how many F-35s are sitting on shelves while they await the upgrades, but that it is a “significant number.”

Lockheed is hosting a first-quarter earnings call for shareholders on April 23. Until then, the company said it is in a “quiet period” and would not provide further comment.