There is nothing that concentrates the mind like the prospect of a hanging. This quip came to mind for U.S. Deputy Secretary of Defense William Lynn when asked whether the Lockheed Martin F-35B was still on “probation.” Defense Secretary Robert Gates said in January that if performance of the short-takeoff-and-vertical-landing (Stovl) version of the F-35—the most expensive of the three variants—does not improve, he would propose terminating it in two years.

Gates also withheld $614 million in award fee on the development, and the Pentagon has restructured the contract to tie Lockheed Martin's future earnings to specific milestones, not subjective incentives.

Since then, senior Pentagon officials seem to be softening their rhetoric about the Joint Strike Fighter (JSF), with the top brass and administration officials highlighting a turnaround in the once-lagging flight-test program. The JSF program office and contractor are “paying great attention to achieving milestones,” Lynn said at Le Bourget last week. But Lockheed Martin has by no means earned its way off the gallows yet.

Five milestones—each carrying a financial incentive—are slated to be met in 2011. With the company earning $7 million of $35 million in available award fee in 2010, the pressure is on this year to regain credibility with customers and stockholders. The majority of these events culminate in the fall, USAF Maj. Gen. C.D. Moore, deputy F-35 program manager, tells Aviation Week. They are:

•Conducting F-35B shipboard trials.

•Executing catapult launch and trap landing testing.

• Start of training with the 1B software.

•Release of Block 2 software for flight testing.

•Static-model trials for the F-35C carrier version.

While these items will likely remain open until late in the year, groundwork is being laid now. “This [year] will be a better return” for the company, says Tom Burbage, executive vice president for JSF, although he describes the development margins as low.

In preparation for training readiness, program managers have set up an unconventional operational utility evaluation (OUE) using six F-35As (AFs 8-13). The outcome of this OUE, conducted by Air Force and Navy flight-test experts, will determine the willingness of the Air Education and Training Command (AETC) to approve the beginning of formal training operations, says Moore.

Service test experts typically conduct formal operational evaluations prior to the production phase. However, Moore says the JSF program office expects feedback on performance, maintenance and reliability during the two-month OUE. Four pilots are slated to participate.

Leading up to the OUE, AF-6 and -7—two production F-35As—will execute a series of “maturity” flights through August. They will operate with the Block 1A software, which includes the basic mission avionics suite.

Though not a “go-to-war” configuration, the 1A software will be used for initial training, says Moore. These maturity flights are crucial to obtaining the first of two flight clearances needed for the OUE.

In the meantime, deliveries of the F-35As to Eglin AFB, Fla., are near. AF-8 and -9 are ready to deliver to Eglin in “days,” Moore says. AF-10-13 will follow in the next few months. AF-10 and -11 may conduct their first flights this week, AF-12's is slated for later this month and AF-13 is expected to make its maiden flight in July, Moore says.

For the next roughly two months, while awaiting clearance to enter the OUE, officials at Eglin will be refining and verifying the technical data as well as conducting “day-in-the-life” exercises. This will also be a period for maintainers to work directly with the aircraft in advance of the OUE.

During the maturity flights for AF-6 and -7, testers at Edwards AFB, Calif., will be “putting them through the training syllabus” that will be taught at the base's schoolhouse.

In addition, the software path must continue in order for Lockheed Martin to perform financially on the program. The 1B package—which will include multi-level security for international partners to participate—is slated for release late this year; it also includes initial, subsonic maneuvering.

What was once Block 2 software has been broken into two increments. Block 2A is for “advanced training” and includes initial legacy data link operations, countermeasures and offboard data fusion; it is needed for the Wasp ship activities, say Lockheed Martin officials.

The Marine Corps hopes to declare initial operational capability with the next increment, 2B, in late 2014 or early 2015. It includes full operation of the legacy data link and the new advanced data link, subsonic ship deployment activities and limited use of some internal weapons.

Block 3 is also broken into two increments. The first, 3BI (for initial), will support international activities, “austere site” capabilities and initial shipboard Navy operations as well as the full suite of internal weapons. With the 3I, the aircraft can travel outside the U.S., says Burbage. The “advanced warfighting” Block 3 includes improved sensor fusion, embedded training, the external gun and automated countermeasures, as well as full ship and Navy operations.

The Block 3 software sensors fusion was tested in a virtual environment onboard the BAC-111 surrogate platform during recent Northern Edge exercises in Alaska, Moore says. He characterizes the performance as “good,” although work on the software is in its early stages. The tests included the use of the electro-optical/infrared capability and the distributed aperture system that provides the pilot with a 360-deg. view around the aircraft.

Before beginning the OUE, ground personnel at Eglin will be refining and verifying the technical data and procedures.

Pratt & Whitney, meanwhile, is working on fixes to Stovl thermal management problems; these were among the issues that prompted Gates to declare a probationary period for the variant.

The final low-rate initial-production (LRIP) Lot 4 aircraft will receive an interim fix to lengthen the lift-fan driveshaft, says Bennett Crosswell, president of Pratt & Whitney Military Engines. A new bellows coupling is needed to accommodate variations in length resulting from build tolerances, thermal and pressure growth, and maneuver deflection. Interim shim-spacers are being fitted to the shafts. The next lot will have a new production shaft with redesigned couplings. Mission tests begin this summer, says Crosswell. Deliveries are set for the second quarter of 2012.

Lockheed Martin is also adding extra insulation around the roll-post nozzle actuators for thermal management owing to leaky seals heating the actuator. Until this fix is on the aircraft, Stovl flight time is limited. The long-term fix will involve developing a redesigned actuator, which will be in production in 2012, says Crosswell.

Pratt is also addressing clutch drag and heating that occurs outside the Stovl envelope. Development of a clutch temperature sensor and passive cooling circuit will provide cooling air to the clutch in up-and-away flight when the forced-cooling fan used in Stovl mode is switched off. As a result, the temperature limit and baseline for flight tests will be increased by roughly 100F, or roughly 20%, says Crosswell, although the clutch temperature sensor remains a long-term solution.

Lt. Gen. Terry Robling, aviation commandant for the U.S. Marine Corps—the first customer—emphasizes that the test program is on track and a once-disjointed production approach is improving. “We are getting there,” he tells Aviation Week. “This [probation] is a time for us to get these fixes done.”

Despite its troubles, Burbage says, “we expect to complete that contract with a profit.” Last year, Lockheed Martin pushed hard against implementing a fixed-price contract in LRIP 4. Under the agreement, the Pentagon and Lockheed share the cost of an overrun up to 120% of the target price.

Lawmakers, meanwhile, are aggressively targeting the F-35's cost with two measures offered last week to limit the Pentagon's financial exposure. John McCain (R-Ariz.), the top Republican on the Senate Armed Services Committee, proposed imposing a probation on the program if LRIP 4 overruns target more than 10%. Under his plan, if overruns continue to the end of 2012, funding would be dedicated only to cancelation costs. His language was narrowly defeated in the committee.

In contrast, the panel endorsed language offered by Chairman Sen. Carl Levin (D-Mich.) that makes Lockheed Martin responsible for 100% of any overruns in LRIP 5, which has yet to be negotiated.

It is against this backdrop that Vice Adm. David Venlet, the Pentagon's F-35 program manager, and Lockheed Martin are negotiating Lot 5. A major issue of contention is how to account for the Pentagon's decision to cut F-35B builds to three from 17 in Lot 5.

Burbage argues that although many components are unique among the three F-35 variants, long-lead items for “B unique” parts have been bought and the line has been prepared for the higher rate. “The Pentagon looks at this, as it is our problem to deal with,” Burbage says, adding that the company is renegotiating with suppliers to minimize the financial impact.

The JSF program office, however, has little tolerance for a price increase. “LRIP 5 will be challenging in that we have . . . clear expectations of reduced cost,” says Moore. “We have a long ways ahead of us to negotiate.”

This spring, reports surfaced that Lockheed Martin's initial LRIP 5 exceeded the price of LRIP 4, sparking consternation in government circles. “Whether it was higher or lower than the settlement on LRIP 4 is really immaterial, because the real issue is where do we settle on LRIP 5,” Burbage declares.