MONDAY 18TH FEBRUARY 2013

It's been billed as the smartest jet fighter on the planet, designed to strike enemies in the air and on the ground without being detected by radar. But after a decade of intensive development, the F-35 Joint Strike Fighter (JSF) is over budget, a long way behind schedule and described by one expert as "big, fat and draggy".

The JSF project could cost Australian taxpayers tens of billions of dollars. Is this plane a super fighter or a massive waste of money?

Next on Four Corners reporter Andrew Fowler travels to the United States in search of answers. He goes to Lockheed Martin's top secret factory in Texas. He also secured the first television interview with the Pentagon's new head man on the project, whose candid assessment of the JSF would chill many in the Defence Department:

"Well let's make no mistake about it. This program still has risks, technical risks, it has cost issues, it has problems we'll have to fix in the future."

The question is how and why did Australia lock itself into a project that both experts and senior US politicians say is dangerously flawed? Four Corners asks three crucial questions. Why was the plane chosen without an open and competitive tender? Why did the then head of the RAAF give the plane and the project his stamp of approval when it was barely off the drawing board? And will the aircraft's capabilities have to be downgraded before it gets into service?

Reflecting on the decision not to open the purchase of a new fighter jet to competition, one insider told the program:

"Now we were proposing that we buy something being developed for the US Air Force if you like, on a whim."

Last year the Canadian Government was rocked by revelations that it had severely under-estimated the cost of the 65 Joint Strike Fighters it had contracted to buy. As a result Canada has been forced to halt the purchase and re-assess it through an open tender process. This has major implications for Australia. It suggests we could be under-estimating the JSF's true cost and it means if the Canadians pull out of the program the price of each plane will rise yet again.

"Reach for the Sky", reported by Andrew Fowler and presented by Kerry O'Brien, goes to air on Monday 18th February at 8.30pm on ABC1. It is replayed on Tuesday 19th February at 11.35pm. It can also be seen on ABC News 24 at 8.00pm Saturday, on ABC iview and at abc.net.au/4corners.

Transcript

"Reach for the Sky" Monday 18 February 2013

(Fighter plane doing manoeuvres)

KERRY O'BRIEN, PRESENTER: The F-35 Joint Strike Fighter was billed as the most deadly of all fighter planes.

COLONEL ART TOMASSETTI, VICE COMMANDER, 33RD FIGHTER WING: You think of those F-35s as sort of a hunting pack of animals...

KERRY O'BRIEN: But the hunter has become the hunted.

PIERRE SPREY, FORMER PENTAGON ANALYST: Every aspect of that airplane is basically a failure waiting to happen.

(Plane loops the loop)

KERRY O'BRIEN: Is the JSF really worth the billions of dollars we're set to pay?

Welcome to Four Corners. There's nothing new for Australian tax payers in ordering up big weapons purchases and then seeing big budget blow outs, big delays and sometimes big disappointments.

The F-35 Joint Strike Fighter could be the granddaddy debacle of them all. John Howard as Prime Minister signed Australia up to the F-35 development program in a secret deal with the American manufacturer Lockheed Martin in a Washington hotel ten years ago.

On paper, the plane must have seemed irresistible. The plan was to buy 100 of them. Delivery was due to start flowing just about now.

In reality, cost and delivery have blown out dramatically and credible experts believe the plane will never do what its makers promised.

In Washington, doubts have been raised about the future of the whole project.

Air defence is Australia's number one priority. The JSF is the biggest weapons purchase in our history and tax payers might well end up paying $35 billion for a fleet of these so-called "stealth" fighters.

Yet surprisingly for a project of this scale, there has been very little public debate or scrutiny.

For tonight's report, Andrew Fowler went looking for answers.

(F-35 Joint Strike Fighters taxiing and taking off from a runway)

ANDREW FOWLER, REPORTER: High over the coast of Florida the United States Air Force is putting an extraordinary aircraft through its paces.

(Plane drops precipitately and flips, banks sideways and twists, leaving streams of vapour trail)

The concept of the F-35 Joint Strike Fighter is nothing short of breathtaking - a plane that's designed to strike first with an armoury of missiles and bombs and most importantly, never be seen - a deadly combination of stealth and firepower.

(Muffled speech over the plane's radio from the control tower)

Its sensors give the pilot all-round vision of enemy activity on the ground and in the air, both day and night, sharing that picture with every other F-35 in the sky.

(Black and white vision of the surrounding landscape seen from the F-35 plane)

COLONEL ART TOMASSETTI, VICE COMMANDER, 33RD FIGHTER WING: Airplane One can send targeting information to Airplane Four's weapons and that weapon can go off and hit something.

You think of those F-35s as sort of a hunting pack of animals, a wolf pack, whatever you want to call that. There aren't other airplanes that are doing it like F-35 does.

ANDREW FOWLER: And it's even got a weapon that's a closely guarded secret.

LT. GENERAL CHRIS BOGDAN, EXECUTIVE OFFICER, F-35 JOINT PROGRAM OFFICE: Those are the crown jewels of the program and that's what makes the F-35 special.

ANDREW FOWLER: So asserting that to the public, it's really saying 'trust us'?

LT. GENERAL CHRIS BOGDAN: Well, it ultimately comes down to trust on all of this, doesn't it?

ANDREW FOWLER: But there's little trust for the world's most expensive and controversial military program from a host of critics around the globe.

PIERRE SPREY, FORMER PENTAGON ANALYST: So we have an airplane that can't turn to escape fighters, can't turn to escape missiles, sluggish in acceleration because it's so big and fat and draggy and doesn't have enough motor for the weight.

My prediction is the airplane will become such an embarrassment that it will be cancelled before 500 airplanes are built.

ANDREW FOWLER: And with Australia one of the biggest potential customers for the Joint Strike Fighter, it's drawing plenty of flak here as well.

PETER GOON, CO-FOUNDER, AIR POWER AUSTRALIA: They've produced an aircraft that is not going to do the job.

Clearly it's not competitive even with aircraft that are in our region today, let alone those that are coming down the pipe,

ANDREW FOWLER: On the Gulf of Mexico at Florida's Eglin Air Force base, the next generation of pilots is being taught to fly the Joint Strike Fighter.

The US Air Force has plans for more than a thousand F-35 Joint Strike Fighters to take over its front line combat duties, replacing its ageing F-16 strike aircraft.

(Pilot lands an F-35 and opens the cockpit)

It's been said that all pilots love new planes, and Lieutenant Colonel Lee Kloos is no different, singing the F-35's praises even before he left the cockpit.

ANDREW FOWLER (speaking up to the cockpit): So what's it like to fly? How do you describe it?

LT. COLONEL LEE KLOOS, COMMANDER, 58TH FIGHTER SQUADRON: A thrill a minute.

ANDREW FOWLER: Down on the ground, Colonel Kloos is only too pleased to talk about the F-35.

ANDREW FOWLER: Thanks for the flying.

LT COLONEL LEE KLOOS: Yeah sure.

ANDREW FOWLER: How do you describe it? How is it to fly?

LT. COLONEL LEE KLOOS: I think the feeling that many of us will describe is powerful - particularly again, coming from an F-16, you get this race car kind of feel. You know, you're strapped in an F-16, it feels like this little rocket.

But you feel this thing, you feel much bigger - the size of it, but the thrust that comes out of this engine and the acceleration you get from it, the rumble, is just ah... it's quite a different feel.

ANDREW FOWLER: But it's also top secret. Some parts of this aircraft can't be filmed, as the defence department PR who chaperoned us around the base was quick to point out.

(Woman's hand comes up in front of the camera)

US DEFENCE DEPARTMENT PR: Uh uh, we got this thing again...

CAMERAMAN: Oh sorry. Yep, okay.

LT. COLONEL LEE KLOOS: We can probably just stay away from the back end and probably get an angle that way.

ANDREW FOWLER: Okay.

(Speech bleeped out)

LT. COLONEL LEE KLOOS: (to Andrew Fowler on the runway) The nice thing about it is every aircraft...

ANDREW FOWLER: The F-35 has other things to hide and they've got nothing to do with national security. Colonel Kloos gives a hint of what some see as serious design flaws in the aircraft as he compares the F-35 with the F-16, one of the planes it's due to replace.

LT. COLONEL LEE KLOOS: Right now it's very stable. I... again, we're somewhat limited so it's almost...

ANDREW FOWLER: Yeah.

LT COLONEL LEE KLOOS: ...it's not ah fair to directly compare but it's very smooth. It's what you'd expect. There are no surprises when we do it.

ANDREW FOWLER: Because there are a few things to sort out, right, along the way?

LT. COLONEL LEE KLOOS: Oh absolutely and I think that as the envelope increases and operational test is up and running, those are things that they'll sort out.

ANDREW FOWLER: That's pilot speak for an undeniable truth: Even though pilots are being trained to fly it, after nearly two decades in development the F-35 is a multibillion dollar, high tech war machine that's not ready for war.

You'd never know it out here but the plane is riddled with bugs. It's not flying supersonic, its computers are operating at nowhere near full capacity, and it's restricted on how tightly it can turn because of g-force pressures.

PIERRE SPREY: We haven't even scratched the surface of the failures because we've done all the easy flight testing so far. The hard flight testing, you know, that's all in front of us, that hasn't been done yet.

ANDREW FOWLER: Pierre Sprey was part of the Pentagon's so-called "fighter mafia" who challenged orthodox aircraft design to produce the F-16.

PIERRE SPREY: If the secretary of the Air Force had known we were sitting in his office, he'd have thrown our ass out! (laughter)

We were Public Enemy Number One in the Air Force for having inflicted this little cheap airplane on them.

ANDREW FOWLER: Despite those misgivings, the F-16 went on to be the backbone of the US Air Force for 30 years.

ANDREW FOWLER: How would the F-35 go up against the plane it's supposed to replace, the F-16?

PIERRE SPREY: (laughs) It's an almost ludicrous comparison, and it's sad. I'm terrifically saddened that an airplane that we started working on in 1968 is so much better than an airplane that we won't have in service until 2018 or 2020.

The F-16 would shred the F-35 on any mission you care to mention.

ALAN NORMAN, F-35 CHIEF TEST PILOT, LOCKHEED MARTIN: So this is the A model version of the F-35. We have the...

ANDREW FOWLER: It's not a view shared by Lockheed Martin's chief test pilot for the F-35. He's flown more than 3,000 hours in the F16 and knows both planes well.

ALAN NORMAN: It's an incredibly nimble airplane and incredibly responsive - almost tight, if you will, to my commands to the airplane.

So from that perspective, it's a very, very good handling airplane.

ANDREW FOWLER: How the plane performs is one thing but how much it costs is certainly a big problem.

In Washington, frustration in the Congress has become palpable as the price of the program has skyrocketed.

(Excerpts from Congress debate)

GEORGE LEMIEUX, FORMER REPUBLICAN SENATOR: So we started this program in 1995 and we're going to get a plane delivered in 2012. It occurs to me that we went to the moon faster than developing this plane.

JOHN MCCAIN, US SENATOR: In a nutshell the Joint Strike Fighter program has been both a scandal and a tragedy...

ANDREW FOWLER: Winslow Wheeler is a veteran military analyst who's charted the soaring cost of the JSF.

WINSLOW WHEELER, DIRECTOR, STRAUS MILITARY REFORM PROJECT: Anybody paying attention to this airplane knew it was going to be a disaster from the very beginning. From the early 1990s we started seeing public warnings, in the mid 1990s.

This airplane has high cost and low performance in its DNA. It was designed into the airplane. It's going to die a slow agonising death in this country.

(Shot across the river of the Capitol Building in Washington DC)

ANDREW FOWLER: There's a growing feeling in Washington that the future of the Joint Strike Fighter is as gloomy as the weather. With the axe about to fall on defence spending, the world's most expensive military contract has become a big target.

According to US government figures, over the past decade the estimated cost of developing the Joint Strike Fighter rocketed from US$34.4 billion to US$55.2 billion - a jump of more than 60 per cent.

And the cost of the JSF program as a whole jumped from US$233 billion to US$395.7 billion - a whopping 70 per cent rise.

On the banks of Washington's Potomac River is the headquarters of the Pentagon's Joint Strike Fighter project team.

Right now because of the F-35's technical problems it's more than five years late and way over budget.

(Andrew Fowler walking down a corridor with Lieutenant General Chris Bogdan)

LT. GENERAL CHRIS BOGDAN: I'll be bringing you in to the front office of the Joint Strike Fighter where my office is and my deputy's office is.

ANDREW FOWLER: Lieutenant General Chris Bogdan is in charge.

We're the first television crew to be granted such open access to the inner workings of the Joint Strike Fighter team. And it's the first television interview Lieutenant General Bogdan has given since he took over the job last year.

He doesn't hold back about what's wrong.

LT. GENERAL CHRIS BOGDAN: Well let's make no mistake about it - this program still has risks, technical risks, it has cost issues, it has problems that we have to in future fix.

The good news there is that each and every lot of airplanes has cost less than the previous lot, and I expect and will demand that the future lots will continue on that trend to cost less and less.

We are coming into the Joint Strike Fighter war room...

ANDREW FOWLER: General Bogdan has a reputation as a Mr Fix-it. He's made difficult US defence programs work in the past. This one has come with added complexity.

The F-35 isn't a simple aircraft built for a single task - it's a three in one fighter.

(Footage of the F-35 performing the various tasks required of it)

For the Marines it needs to vertically take off and land, the Air Force requires a conventional plane, and the Navy a version that can operate from an aircraft carrier.

General Bogdan admits with such a high degree of complexity there were always bound to be problems.

LT. GENERAL CHRIS BOGDAN: Nothing is easy in the acquisition world and the airplanes we're building today are incredibly sophisticated.

(Describing the plane with a model)

The back end of the airplane, the exhaust nozzle, tilts downward...

ANDREW FOWLER: But just as big a problem which has dogged the program has an ugly name. It's called concurrency and it means the aircraft is flown and in production well before being properly tested.

LT. GENERAL CHRIS BOGDAN: Concurrency has created a complexity in this program that we have to deal with today. And while I would not dare to go back and criticise the decisions that were made in the past, what I probably would've thought about was how much development work and how much testing was really done to solidify the design of the airplane before we started producing airplanes.

A large amount of concurrency - i.e. beginning in production long before your design is stable and long before you've found problems in test, creates downstream issues where now you have to go back and retrofit airplanes and make sure that the production line has those fixes in them. And that drives complexity and cost.

ANDREW FOWLER: And has that- Well, that has happened to you.

CHRIS BOGDAN: Oh without a...

ANDREW FOWLER: Concurrency has caused a problem?

CHRIS BOGDAN: Without a doubt.

PIERRE SPREY: All airplanes built under this rubric of concurrency wind up way short of their goals.

What people say to themselves, Air Force people who are, you know, looking to buy them or to fly them, say 'Well, even if it falls somewhat short, it'll be so much better than anything else. We still want it'.

(F-35 components being assembled inside a factory)

ANDREW FOWLER: Lockheed Martin recognise that this technically ambitious aircraft would only be profitable if enough were sold to keep the price down. Its sales machine went into overdrive.

(Lockheed Martin promotional video with dramatic shots of the F-35)

VOICEOVER: The F-35 Joint Strike Fighter is a highly diversified, fifth generation technical aircraft designed to excel in the air interdiction environment...

ANDREW FOWLER: By early 2000 Lockheed Martin had guaranteed commitments from the US and British governments. There was growing interest from Norway, Italy, Denmark, Turkey, the Netherlands and Canada.

But Lockheed Martin need to sell more planes, many more. Australia was a prime target.

HUGH WHITE, DEPUTY SECRETARY OF DEFENCE 1995-2000: The air combat capability is the single most important capability for the defence of Australia and the reason for that is very straightforward...

ANDREW FOWLER: In Australia Hugh White, then Deputy Secretary of Defence, had just written a White Paper which mapped out Australia's future air defences.

HUGH WHITE: Well, we what knew was that the aircraft we had were going to run out of life.

The problem is that replacing those aircraft required us to make a choice from a very limited range of options. There are not many frontline combat aircraft on the market.

And we didn't at that stage have to decide what aircraft to buy but we did have to decide what kind of range of aircraft we needed to consider.

ANDREW FOWLER: Tasked with finding a replacement for the fabled F-1111 fighter bomber, Australian Defence officials began assessing aircraft on offer from manufacturers around the world.

HUGH WHITE: The Joint Strike Fighter was still a... it was a developed project but it was still a gleam in the eye as far as actual delivered capability was concerned and we were much less clear about how much it was going to cost and so on.

The key decision we made in the 2000 White Paper process was to leave open the option of going for the Joint Strike Fighter as a fifth generation combat aircraft.

ANDREW FOWLER: But Four Corners can reveal that rather than just leaving the option open, the RAAF's top brass had already made up their minds.

A former Defence official closely involved in the oversight of the replacement program agreed to talk to us on condition that we protect his identity.

He says the decision to join the JSF program was taken without the aircraft ever being fully tested and that the then head of the RAAF, Air Marshal Angus Houston, was seemingly swayed by the enthusiasm of his US counterpart.

ANONYMOUS DEFENCE OFFICIAL: He told several people at the time that the Chief of the US Air Force had said this was the right aeroplane for Australia and so Angus thought that was the correct answer, that this was the right aircraft for us.

ANDREW FOWLER: What do you think of that thinking?

ANONYMOUS DEFENCE OFFICIAL: Well it was an interesting approach. Um, it certainly, ah... speeded up the decision making process.

As I said, normally we would have gone through a competitive tendering process and worked out what the aeroplane could do, what its cost and its schedule was. Now we were proposing that we buy something being developed for the US Air Force, if you like, on a- on a whim.

ANDREW FOWLER: In a statement to Four Corners, Angus Houston said: "The System Design and Development phase was non-binding and the Australian Government could opt out if it so wished".

Armed with this recommendation from the head of the RAAF, on June the 11th 2002, then Prime Minister John Howard arrived in Washington on an official visit.

(Excerpt from video of John Howard's 2002 visit to Washington)

US GOVERNMENT OFFICIAL: We're delighted and honoured to have a delegation from Australia headed by the distinguished Prime Minister John Howard...

ANDREW FOWLER: But John Howard also had a far less public meeting to attend.

Just around the corner from the White House, at the Willard Hotel, he sat down with representatives of Lockheed Martin. At this secret meeting, John Howard signed up Australia to the JSF program.

In the meantime, other aircraft companies were preparing to go head to head for a lucrative Australian contract. The huge French aircraft manufacturer Dassault pitched its front line fighter, the Rafale.

In Paris, Dassault's representative Daniel Fremont prepared for the upheaval of moving to Australia for a five year campaign to sell the French plane.

DANIEL FREMONT, DASSAULT AVIATION: Australia had declared that they wanted a lot of aircraft, and that we were talking about 100 aircraft. So it's very likely that Australia will be the biggest, or one of the biggest customers. And I think this is why that was really a very important competition for everybody.

ANDREW FOWLER: On June the 27th, 2002, just 16 days after Howard's secret meeting in Washington, Fremont arrived in Canberra, unaware of the meeting between John Howard and Lockheed.

The Dassault representative had barely driven in from the airport when he received a call. The then Defence Minister Senator Robert Hill was giving a press conference.

SENATOR ROBERT HILL, DEFENCE MINISTER (speaking at press conference, Canberra, 27 June 2002): What we're announcing today is that we've decided to, as a government, to participate in the system development and demonstration phase of the Lockheed Martin Joint Strike Fighter, and ultimately this will be the largest military procurement in Australia's history.

DANIEL FREMONT: I was so shocked that I could not believe it. It's just as simple as that.

ANDREW FOWLER: The Howard Government had decided to completely abandon the decades-long practice of a considered tendering process and put its money on a paper plane.

HUGH WHITE: I think Howard himself was pretty keen on this. I think Howard was keen on it as a demonstration of Australia's support for the United States

ANDREW FOWLER: For Lockheed Martin it was a major win.

(to Orlando Carvalho) That must've surprised you, even with all your experience in plane making and plane selling that that was an extraordinary win?

ORLANDO CARVALHO, GENERAL MANAGER F-35 PROGRAM, LOCKHEED MARTIN: Andrew, our view was that the Australian Government made a very wise decision.

PETER GOON: The really scary part about the Lockheed Martin marketing strategy was that they were able to get people in the departments and ministries of defence around the western world, they actually got those people to do their marketing for them.

And by having people in the departments and ministries of defence doing the marketing was an easy way of getting a decision early, and that's what they achieved.

ANDREW FOWLER: Within weeks the then Defence Minister Senator Robert Hill visited the Lockheed plant in Texas.

The closest he got to understanding what the F-35 might be able to do was to sit in the cockpit of a plastic mock up.

(Footage of Robert Hill at the Lockheed Martin factory)

SENATOR ROBERT HILL (in the cockpit of the mock-up F-35): You'd better watch out...

ANDREW FOWLER: It was good advice - advice Hill could have taken himself. But it seems no one was being cautious, least of all the Australian Government.

Yet Canberra wasn't alone in the way it made its decision to choose the F-35.

(Canadian officials mount a stage in front of a mock up F-35, July 2010)

PETER MACKAY, DEFENCE MINISTER, CANADA: The government of Canada is committing today to acquire 65 Joint Strike Fighter F-35 Lightning 2 aircraft to meet the security challenges of the 21st Century. This...

(Applause)

Yes. Our investment is valued at approx $9 billion.

(Peter Mackay climbs into the cockpit of the plane)

ALAN WILLIAMS, FMR ASSISTANT DEPUTY DEFENCE MINISTER, CANADA: I remember quite vividly that Friday afternoon on July 16th when the government made the announcement that it was going to buy this jet without any competition.

And the word leaked beforehand but I was actually just shocked.

ANDREW FOWLER: Alan Williams lives in Canada but he's spending the winter here in Florida.

ALAN WILLIAMS: You know, when you live in a democracy you have to ensure that the democracy functions.

ANDREW FOWLER: He was the most senior civilian officer in Canadian Defence Procurement when the government was deciding which combat aircraft to buy to replace its ageing fleet.

ALAN WILLIAMS: At the beginning they quoted a figure of about nine billion to buy these jets and seven billion to... to maintain or operate, so a total of sixteen.

Now anybody involved in the business knows going in that the cost to operate and sustain is usually two to three times the cost to buy. So right away anybody in the business knows that made no sense whatsoever.

ANDREW FOWLER: Williams decided to speak out publicly because he was angry that the JSF had been chosen without any detailed comparison with other aircraft.

ALAN WILLIAMS: I couldn't believe that the government was going to spend money on an aircraft that was in the embryonic stages of development and its costs were unknown.

I was even more surprised to hear them go on, um, spinning the information 'Best jet at the best price' um... 'We're going to get great industrial benefits', 'We need it for interoperability' - all these reasons that I knew factually were not true.

(News footage from April, 2012)

MICHAEL FERGUSON, AUDITOR GENERAL, CANADA: National Defence did not exercise diligence that would be expected in managing a 25 billion dollar commitment.

ANDREW FOWLER: Amid a growing political storm over its JSF deal, last year Canada's Auditor General concluded that the true cost of buying 65 Joint Strike Fighters was actually $25 billion, not the $16 billion figure cited by the government.

ALAN WILLIAMS: Governments shouldn't make, you know, these kind of nonsensical decisions without hard facts when they're going to be spending your or my hard earned money.

ANDREW FOWLER: It's still not clear how much each aircraft will cost if Australia goes ahead and orders 100 Joint Strike Fighters. Back in 2002 Defence Minister Robert Hill gave his own estimate.

(Footage of press conference, 2002)

REPORTER: What are these things going to cost taxpayers? The Australian taxpayer is going to pay how much for these things?

ROBERT HILL: Per aircraft?

REPORTER: Yes.

ROBERT HILL: Well, that's not known at the moment but it is believed to be in the vicinity of about 40 million - 40 million US per aircraft.

ANDREW FOWLER: That's $54 million in today's figures, allowing for inflation.

According to the Australian Auditor General, the price of the planes has doubled. They are now estimated to cost $130 million each

HUGH WHITE: There're lots of uncertainties built into the price.

But having said that, um you know - take a stab. These things are going to cost us 150 million bucks each and they're going to cost us another 200 million bucks each to operate through their lives.

So that means fleet of a hundred, that'll cost you 15 billion bucks to buy and 20 billion bucks to operate - 35 billion bucks is an awful lot of money.

One of the really significant mistakes the Government has made in the way its managed the Joint Strike Fighter question, really going back a decade when the decision was made, has been their reluctance to talk about how much the aircraft is going to cost.

ANDREW FOWLER: At Fort Worth in Texas, where the planes are being built, there's still a hint of the Wild West - and the cowboys who went with it.

(Bikers and cowboys milling about on a Fort Worth street)

Just up the road at Lockheed Martin's plant, they have the flags out for those who have faith in the company. Last year Lockheed Martin appointed a new general manager for the F-35 program, Orlando Carvalho.

ORLANDO CARVALHO: Our key objective, Andrew, is to perform. Our key objective is to deliver this airplane, this F-35 airplane, with the full capability...

ANDREW FOWLER: Just a week before this interview, a US Defence Department review of the aircraft found further flaws, including the fact that the F-35 - which Lockheed Martin has named the Lightning II - is restricted from flying too close to electrical storms.

ORLANDO CARVALHO, GENERAL MANAGER F-35 PROGRAM, LOCKHEED MARTIN: So Andrew, lightning protection is a good example of the type of normal discovery that you're going to find as you execute a development and test program.

ANDREW FOWLER (to Chris Bogdan): Now if you call the plane the F-35 Lightning II. The report says the plane can't fly within 25 miles of a lightning storm because of the possibility it might ignite the oxygen in the fuel tanks.

LT. GENERAL CHRIS BOGDAN: True statement. But let's put the context on-on that scenario.

I have airplanes in the field that we know should not be flying around lightning. Will this problem occur in the future?

No, because we have the known fixes for it and we will fix it. But today, you're absolutely right, the airplane cannot fly in lightning.

Um in the future will it be able to? Absolutely.

ANDREW FOWLER: The Pentagon has been forced to lower the bar for the aircraft's performance, including a slower acceleration and turning rate, so that it can meet its specifications.

Former RAAF flight test engineer Peter Goon says such problems are symptomatic of a whole host of potentially serious defects in the F-35.

PETER GOON: The aircraft is not coming to within a bull's roar of its specification. It's also riddled with what we call 'single points of failure' where if something fails, there's a high probability you lose the aircraft.

MAN: (to Andrew Fowler in the cockpit of an F-35): This is out electrical optimal targetting system...

ANDREW FOWLER: The heart of the Joint Strike Fighter is its hi-tech computerised cockpit. There's not a dial or knob anywhere to be seen.

MAN: (indicating the computerised dashboard): I've already set up a target for air to air and air to surface...

ANDREW FOWLER: They've all been replaced by iPhone-style touch screens - a digital aircraft for a new generation of flyers.

MAN: There you go - excellent. So we're going to go ahead and drop a bomb on the edge of the hangar.

ANDREW FOWLER: Mm hmm...

MAN: Press that red bomb switch right there, our pickle switch.

ANDREW FOWLER: Behind these video displays lies millions of lines of computer software code.

It's here that the latest US Defence Department report points to ongoing problems.

LT. GENERAL CHRIS BOGDAN: This is a very software-intensive airplane. There's over 10,000 lines of software code just on the airplane itself and there's another 10 million lines of code for all the off-board systems, the maintenance systems and the mission planning systems that go with it.

So it is unprecedented to have an airplane with that much software, and software is a very, very tricky thing.

PIERRE SPREY: Because of the enormous complexity, every aspect of that airplane is basically a failure waiting to happen and super hard to fix. The computer system is a nightmare and they're so behind schedule. They're more behind schedule on software than on anything else.

ANDREW FOWLER: In nearby Dallas, Lockheed Martin is facing legal claims that the JSF's vital computer systems were fundamentally flawed right from the start.

SAM BOYD, ATTORNEY: The biggest problem I think from all I've looked at through these years is getting the truth to percolate to the top.

ANDREW FOWLER: Sam Boyd is a former special forces Green Beret. Now he's involved in a legal battle over serious allegations of software failure on the F-35. He's got Lockheed Martin in his sights.

SAM BOYD: I'm not a software expert but I'm expert enough to understand that if the system is not communicating, like in this instance, you have a crash, a software crash, that's really bad when it's an airplane that depends on active digital communications in the software system - it crashes.

ANDREW FOWLER: The case involves Sylvester Davis, a computer software manager recruited by Lockheed Martin to work on the F-35 in the early stages of development.

SYLVESTER DAVIS, FORMER SOFTWARE ENGINEER, LOCKHEED MARTIN: The best way I would describe that is if you have an automobile, if your tail light doesn't work, then there is some potential safety impact to that not working.

If your brakes don't work at all, then that's what we would call Safety Evidence Assurance Level 1 because there is a safety impact to that failure.

All the software being developed in the flight control application environment is the highest level of safety criticality, which is called Safety Evidence Assurance Level 1.

ANDREW FOWLER: And is that the area that you found problems in?

SYLVESTER DAVIS: Yes sir, that is correct

ANDREW FOWLER: Davis says that during lab testing in November 2004 the flight control software crashed completely - a failure which would have had a catastrophic impact during an actual flight.

ANDREW FOWLER: So what effect would that have for the pilot flying the plane?

SYLVESTER DAVIS: Since this is the flight control software which you're talking about, if the system goes down, there is no control of the aircraft. So you might as well be a rock in space. You can't do anything.

ANDREW FOWLER: Davis says that when he reported the issue he received an award for his diligence, but there was a catch.

(Shot of Special Recognition Award for Employee Engagement from Lockheed Martin)

SYLVESTER DAVIS: They give me this award, the award was $10,000. As they're giving me this award, it was said to me in that meeting 'We would like you to accept an immediate transfer to this other department'.

ANDREW FOWLER: What did you think of that?

SYLVESTER DAVIS: I viewed that as a way to move me out of the way because I was a problem.

ANDREW FOWLER: In the end Davis left Lockheed Martin, concerned that the computer problem was never properly fixed. Now he wants compensation from the company for what happened to him.

ANDREW FOWLER: One of your computer managers has a current court case with you, with Lockheed Martin. His name is Sylvester Davis...

ORLANDO CARVALHO: Yeah, Andrew, um I'm not gonna- I'm not gonna comment on-on uh... on that item.

ANDREW FOWLER: But you are aware of of the case.

ORLANDO CARVALHO: Yes, but I'm not going to comment on the item.

ANDREW FOWLER: Why not?

ORLANDO CARVALHO: It's not appropriate.

ANDREW FOWLER: We're discussing computer software programming. He's someone who's saying that you got it wrong in the beginning and that's why you're having problems now. I think it's a relevant question to ask you.

ORLANDO CARVALHO: Andrew, if you want to ask me, are we having problems in the software development, that I can answer. And the answer is that our software development is proceeding along our expectations, along what we had planned to do.

ANDREW FOWLER: Others argue that if it ever goes into battle, the Joint Strike Fighter will face even bigger problems than computer software.

WING COMMANDER CHRIS MILLS (RET'D), REPSIM (speaking in front of a projection screen): If you watch the screen anytime you see a flash, it's a missile going off. You'll see a star.

ANDREW FOWLER: Retired Wing Commander Chris Mills is a former air warfare strategist in the Australian Defence Department.

Using computer simulations, he demonstrates how the F-35 would fare in combat against its likely foes, Russian built Sukhois, also known as Flankers.

(Footage of fast paced air battle simulations)

WING COMMANDER CHRIS MILLS (RET'D): This is an example of the endgame. The JSFs are out of ammunition, they're out of fuel, they're headed for home. They've got no choice but to present their rear ends to the Flankers.

The Flankers can see them on infra-red, they can see them on radar, they've got fuel, they've got weapons - so they just run them down and kill them.

ANDREW FOWLER: Now he's war-gaming the plane for his own company as a private consultant. But he says the outcome is the same.

WING COMMANDER CHRIS MILLS (RET'D) (indicating the projection): Here we see another JSF has just died...

ANDREW FOWLER: In this scenario involving an air battle against the Chinese version of the Sukhois, only one of the 24 JSFs survive.

WING COMMANDER CHRIS MILLS (RET'D) (indicating a chart of losses and expenditures for the simulated battle): Okay, what have we got here? This is the loss for the USA - both of AWAC Sentries, all of the tankers, and 23 of the 24 JSFs.

So this is particularly bad day at the office. They don't usually lose quite that many.

ANDREW FOWLER: Mills has repeated the war game exercise several times. Each time it's a similar story.

WING COMMANDER CHRIS MILLS (RET'D): Two hundred and forty Joint Strike Fighters went out over those ten missions and 35 came home - so that's not quite annihilation but it's a very savage defeat.

ANDREW FOWLER: But both the US and Australian air forces argue that without access to the F-35's secrets, Mills does not have the full picture.

(Air Vice Marshal Kym Osley before the Parliamentary Defence Committee March 16, 2012)

AIR VICE-MARSHAL KYM OSLEY, RAAF: I think that the Airpower Australia and RepSim analysis is basically flawed through incorrect assumptions and a lack of knowledge of the classified F-35 performance information.

PIERRE SPREY: It's a lame excuse for a very bad airplane.

And by the way, if you were building a good airplane and you had super secret stuff that really worked, you could put it on a good airplane. Why would you want to put it on a bad airplane?

And you've got a terrible airplane here.

LT. GENERAL CHRIS BOGDAN: I tell you, it is a formidable airplane. I have no doubt if you went head to head with this airplane with any other airplane in the world with the capabilities that I know it has, it will do very, very well.

ANDREW FOWLER: You can argue endlessly about the capability of the aircraft but the fact is, it is very late and Australia has already spent billions of dollars to plug the gap.

(Air footage of Super Hornet planes flying in formation)

In 2007 the Government spent more than $6 billion buying 24 Super Hornets. Now it's considering buying another 24.

Defence Minister Stephen Smith declined to be interviewed for this program but at a media conference late last year he hinted that Australia was close to abandoning the idea of a fleet consisting solely of JSFs.

(Press conference December, 2012)

STEPHEN SMITH, DEFENCE MINISTER: I think it's now become clear to all that the Super Hornets are potentially much more than simply a transition fleet. If you then have a combination or a mix of fleets, then one implication is potentially the acquisition of a smaller number of Joint Strike Fighters because...

ANDREW FOWLER: A mixed fleet is exactly what was recommended to the RAAF hierarchy a decade ago, an idea it resisted.

ANONYMOUS DEFENCE OFFICIAL: We'd get the Super Hornets early on and then the JSFs later when the aircraft actually was suitable and entered service.

ANDREW FOWLER: And what was the response to that?

ANONYMOUS DEFENCE OFFICIAL: Oh Angus was, uh... was not pleased about that idea at all. His comment or something was, uh... 'The Government would not like that'.

So he was very keen...

ANDREW FOWLER: What do you think he meant by that?

ANONYMOUS DEFENCE OFFICIAL: Well he's very keen to have a single aircraft type only, and he had a belief perhaps that the aeroplane type was lower cost to operate but he was just enamoured of the idea of having the Joint Strike Fighter only.

He did not wish to have a mixed fleet again.

ANDREW FOWLER: In a statement to Four Corners, Angus Houston did not specifically address this claim.

But he did state: "I am still convinced that the JSF is the right air combat aircraft to meet Australia's future security needs".

It's not just Australia pulling back from its original plans.

Canada is now reconsidering whether to buy the F-35 at all. So is the Netherlands. Cash-strapped Italy has cut back its order.

In response, Lockheed Martin is pushing its plane harder than ever, stressing its "interoperability" with coalition partners.

PETER GOON: Lockheed Martin's marketing strategy is basically designed to enable Lockheed Martin to rape, plunder and pillage taxpayers around the western world for the next 40 to 50 years.

The way the aircraft's designed requires people to go back to Lockheed Martin, go back to the contractors if they want to do any changes.

LT. GENERAL CHRIS BOGDAN: I'd like to point your attention to our production wall...

ANDREW FOWLER: General Bogdan is in a bind. It's a high risk strategy. He promises there will be no more delays and the price will come down. But he doesn't rule out that some of the aircraft's capability may have to be sacrificed - and that will affect sales.

LT. GENERAL CHRIS BOGDAN: If you promise that you're getting a Ferrari and you deliver a Chevy - um, no offence to the Chevy company - you're not going to sell as many. It's as simple as that.

ANDREW FOWLER: And if you don't sell as many, then the price goes up.

LT. GENERAL CHRIS BOGDAN: Sure. It's-it's a, it's a death spiral.

It's a very interesting economic model, in that if you have problems on the airplane it costs you more; if it costs you more, you won't sell more airplanes; if you don't sell more airplanes the cost goes up, so you can't buy as many airplanes - and it's-it's sort of a circular, perpetual kind of thing. It's kind of a death spiral.

I don't think that's the case on this program.

ANDREW FOWLER: It's said by General Bogdan that... he describes it as the orders going down, the price going up, it being a "death spiral".

ORLANDO CARVALHO: Yeah, I think we would agree with that. If that- if those circumstances were to happen, if all of a sudden the demand for the airplane were to drop off and the price were to go up, then it become v- it would be very difficult to be affordable.

(Eglin USAF footage of the F-35)

ANDREW FOWLER: More than 10 years after the F-35 Joint Strike Fighter appeared as a paper plane, and billions of dollars of development money later, the aircraft is still not fit to fight a war.

It's bad enough that so much money has been wasted.

What is just as bad for countries like Australia is that the plane that the western allies placed so much faith in has so far failed to deliver. There are serious questions about whether it ever will.

KERRY O'BRIEN: Just one year ago, senior Lockheed Martin executive Tom Burbage came to Australia and assured the Parliamentary Defence Committee that the F-35 was meeting or exceeding its performance requirements.

What's that assurance worth now?

As mentioned, neither the Minister for Defence, nor his department would speak to Four Corners, but you can read the full statement from the former head of the Armed Forces Air Chief Marshal Angus Houston on our website.

Next week on Four Corners, the terrible cost of alcohol-fueled violence that police, paramedics and doctors are saying has reached crisis point.

Until then, good night.

END TRANSCRIPT

Background Information

STATEMENT

Statement from ACM Angus Houston | 13 Feb 2013 - Read a written response from Air Chief Marshal Angus Houston, AC, AFC (Retired), to questions from Four Corners relating to the F-35 program. [PDF 176Kb]

REPORTS

Expert advice on whether the JSF program is viable | DoD | Aug 2002 - This document was released in response to a Freedom of Information application which Four Corners first lodged back in December 2013, but which wasn't released until two weeks after the the report "Reach for the Sky" went to air. The document shows that the Australian Government ignored expert advice that it would not be viable to join the development stage of the Joint Strike Fighter program, back in 2002. Read the document. [PDF 2Mb]

F-35 Joint Strike Fighter (JSF) | DOT&E | 2012 - Read the 2012 Annual Report on the F-35 JSF program, from the Office of the Director, Operational Test and Evaluation. [PDF 477Kb]

F-35: Joint Strike Fighter: DOD Actions Needed to Further Enhance Restructuring and Address Affordability Risks | GAO | June 2012 - An oversight report from the US Goverment Accountability Office on the F-35: Joint Strike Fighter. [PDF 1.42Mb]

RELATED NEWS AND MEDIA

Pentagon general issues warning on JSF blow-outs | ABC News | 18 Feb 2013 - The US general in charge of the multi-billion-dollar Joint Strike Fighter project tells Four Corners the project still faces technical risks which must be fixed. By Andrew Fowler and Clay Hichens for Four Corners.

The Most Expensive Weapon Ever Built | Time | 15 Feb 2013 - The F-35, designed as the U.S. military's lethal hunter for 21st century skies, has become the hunted, a poster child for Pentagon profligacy in a new era of tightening budgets. By Mark Thompson.

Lightning will ground F35 fighter jet known as the Lightning II | The Telegraph UK | 20 Jan 2013 - Britain's GBP150 million new combat jet has been banned from flying in bad weather amid fears that it could explode.

Canada Reviews Plans to Buy F-35 Fighter Jets | New York Times | 13 Dec 2012 - After an estimate found that the sophisticated stealth planes would cost substantially more than the government had promised, the government said it would reconsider its plans.

Costliest Jet, Years in Making, Sees the Enemy: Budget Cuts | New York Times | 28 Nov 2012 - The Marine version of the F-35 Joint Strike Fighter, already more than a decade in the making, was facing a crucial question: Could the jet, which can soar well past the speed of sound, land at sea like a helicopter?

Joint strike fighter stalled by technical problems | The Guardian | 9 May 2012 - Each F35-B aircraft could cost more than 7m as cost overruns and design delays stall production.

Austerity drives cutbacks in military spending, here and abroad | Crikey.com | 4 May 2012 - Yesterday's defence spending cutbacks won't have much impact from the critical perspective of industry policy.

Opinion: Reverse thrust | The Economist | 21 Apr 2012 - The prime minister is set to announce another embarrassing U-turn ...the British government is reversing its decision to buy the aircraft-carrier version of the Joint Strike Fighter, the F-35C.

First RAAF Joint Strike Fighters to cost $130m each, new estimates reveal | The Australian | 30 Mar 2012 - Australia can expect to pay about $130 million each for its first two Joint Strike Fighter (JSF) aircraft and an average of about $85 million if it opts to buy 100.

F-35 Joint Strike Fighter delays could force Australia to revert to Super Hornet | The Australian | 6 Jan 2012 - Australia may be forced to purchase more Super Hornet fighter-bombers to prevent a capability gap in the nation's air defences if work on the Joint Strike Fighter is further delayed due to a new US military strategy and budget plan.

BACKGROUND READING

Inside the F-35, the world's most futuristic fighter jet | The Telegraph UK | 16 Jan 2013 - An aviation fantasy from the realms of Star Wars, the F-35 is the most sophisticated, expensive and controversial jet fighter ever produced. Jonathan Glancey takes its flight simulator for a spin

INTERACTIVE: Inside the Lockheed Martin F-35B | The Telegraph UK | 13 Jan 2013 - Interactive graphic showing the internal workings of the RAF and Royal Navy's latest fighter/bomber, the Lockheed Martin F-35B Lightning II.

Joint Strike Fighter Aircraft - AIR 6000 Phase 2A/B | Defence Materiel Organisation | October 2012 - The New Air Combat Capability (NACC) Project aims to introduce a new air combat capability that will meet Australia's air combat needs out to 2030 and beyond. The F-35 is a fifth-generation, stealthy, multi-role fighter being developed for the US and eight international partner nations, including Australia. Read more about the project from DMO.

How the F-35 Nearly Doubled In Price (And Why You Didn't Know) | Time | 9 July 2012 - Fresh bad news on the F-35 has apparently become so routine that the fundamental problems in the program are plowed right over.

The F-35: A Weapon That Costs More Than Australia | The Atlantic | 15 Mar 2011 - The U.S. will ultimately spend $1 trillion for these fighter planes. Where's the outrage over Washington's culture of waste? By Dominic Tierney.

The Costly F-35: The Saga of America's Next Fighter Jet | Time Magazine | 25 Mar 2010 - On a test flight over Maryland last week, the Pentagon's F-35 jet fighter landed vertically for the first time - like a helicopter - as it was vaunted to do. But at just about the same time, its price tag was climbing in the other direction. By Mark Thompson.

LINKS

Air Power Australia is a non-profit entity established with the primary aim of air power research and analysis, especially in the context of a modern integrated joint national force structure. Not affiliated with the Department of Defence, or the ADF. www.ausairpower.net/

Australian Government Department of Defence - www.defence.gov.au/

The Department of Defence is currently undertaking an Environmental Impact Statement (EIS) process for the flying operations of the F-35. Visit this website to learn more about the EIS process. www.f35evolution.com.au/

Joint Strike Fighter (JSF) Program - The Australian Government's Joint Strike Fighter (JSF) Program pages.