(Bloomberg) -- Lockheed Martin Corp.’s F-35 stealth fighter won’t be able to fly its most advanced missions until 2025 because of delays to a problem-plagued $1.8 billion upgrade, Congress’s audit agency said.

The delays are the result of unstable software and tardy hardware for the upgrade package, known as TR-3, the Government Accountability Office said in its annual F-35 assessment released Thursday. The upgrade is supposed to increase processing power 37 times and memory 20 times over the F-35’s current capabilities. 

The first fully capable TR-3 jets were supposed to be delivered in July 2023, but the program has been dogged by problems with the new software and a new integrated core processor for combat missions. The plane needs the full upgrade before it can carry more long-range precision weapons, gather more information on enemy aircraft and air defenses and operate more effectively with other aircraft.

The GAO’s findings may embolden lawmakers to follow the House Armed Services Committee’s move in its draft of the fiscal 2025 defense policy bill to cut 10 F-35s from the Pentagon’s request for 68 planes.

The report also may complicate a proposal by Lieutenant General Michael Schmidt, the Defense Department’s F-35 program manager, for a two-phase approach for delivery of the planes: accepting more jets with hardware and software that don’t meet all warfighting requirements but can be upgraded later. No decisions have been made, however.

Among the issues: problems with software supporting the F-35’s radar and electronic warfare systems “have been especially prevalent, with some test pilots reporting that they had to reboot their entire radar and electronic warfare systems mid-flight to get them back online,” the GAO said.

Of importance to Lockheed’s projections of free cash flow, the Pentagon hasn’t accepted any jets with TR-3 upgrades, and they have remained parked at Lockheed facilities. The Pentagon is withholding a final payment of about $7 million a jet for each TR-3 jet.

The upgrades would be added later to the F-35s that are already deployed. Lockheed has delivered almost 1,000 of the jets, about a third of the total to be built, with about 650 for the US military and the rest to partners including the UK, Norway, the Netherlands, Israel, South Korea and Japan. Most recently, Singapore announced that it will purchase additional F-35s.

Crowded Tarmac

Representative Rob Wittman, the Virginia Republican who leads the House Armed Services Tactical Air and Land panel, told reporters Wednesday that “we know one thing for certain: It’s going to be at least over 100 aircraft stacked up on the tarmac” by July. 

Read More: F-35 Planes ‘Stacking Up’ on Tarmac With Delays in Key Upgrades

The GAO didn’t include an estimate of how many planes are being held up because “DOD deemed reporting the specific quantity of aircraft to be unsuitable for public release.” The agency said Lockheed is running out of space to park the planes and it will need “to develop a plan to accommodate more.”

Lockheed said in a statement that “we have the necessary secure infrastructure and capacity to park all aircraft until they are ready for delivery.” The TR-3 upgrade “is a top priority,” the company said, even as it continues full-rate production of the F-35 “to meet continued global demand.” 

“We continue to partner with the Joint Program Office and our F-35 industry partners to address GAO recommendations as appropriate,” Lockheed said. 

Even after the TR-3 software has been completed and certified, delivering all the parked aircraft will take about a year to complete, according to the GAO report.

Lockheed isn’t the only party facing financial risk. The GAO disclosed that “according to Defense Contract Management Agency officials, the government will have significant liability for the loss or damage to the parked aircraft” as “it is unique for so many critical DOD aircraft to be waiting for acceptance, instead of stored at lower densities across many military locations throughout the world.”

The Pentagon’s F-35 program office said in a statement that “the next iteration of TR-3 software is planned for release to flight test” by May 31. It said it may be able to accept upgraded planes to use in combat training as soon as late July.

 

(Updates with Lockheed Martin and Pentagon comments starting in 11th paragraph)

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