Lockheed Martin's F-35 fighter still faces major budget challenges, although the Fort Worth-built jet achieved seven of 10 key management goals last year and made progress on another, congressional auditors said Monday.In its annual assessment of the Pentagon's most expensive program, the U.S. Government Accountability Office said the "current outlook is improved but long-term affordability is a major concern." The total cost of the program's 2,443 Joint Strike Fighters is estimated at $395.7 billion, an increase of 70 percent since October 2001, when Lockheed Martin beat out Boeing to land the Pentagon contract.In a prepared statement, Lockheed said in response: "The F-35 program has made significant progress and we are singularly focused on executing on our commitments for the F-35 development, production and sustainment programs. We are partnering with the JSF Program Office, U.S. armed services, international partners and our suppliers to drive down costs, and we've made significant progress."About 6,000 of Lockheed's 14,200 workers at the big factory on Fort Worth's west side are directly involved in F-35 development, engineering and production, and many other jobs at the plant are tied to the program.The aircraft, being produced in different versions for the Air Force, Navy and Marines, made more developmental flight tests than planned last year and showed "considerable progress" in technical issues, such as a helmet-mounted pilot display, the GAO said. Manufacturing and supply chain improved, as did quality measures, but software testing lagged. The program has been troubled by technical problems, most recently a cracked engine blade that caused the fleet to be grounded for a week of inspections last month."While initial F-35 production overran target costs and delivered aircraft late, the latest data shows labor hours decreasing and deliveries accelerating," the report says. "Going forward, ensuring affordability -- the ability to acquire aircraft in quantity and to sustain them over the life cycle -- is of paramount concern."The F-35's current plan requires an average of $12.6 billion a year through 2037, in contrast to this year's request for $9.1 billion. The GAO called the $12.6 billion price tag "an unprecedented demand on the defense procurement budget" that "will be difficult in a period of declining or flat defense budgets."The report said 52 copies of the stealth aircraft were delivered in 2012. Besides the U.S. military, eight international partners are also in line to receive the Lightning II."Overall, the F-35 Joint Strike Fighter program is moving in the right direction after a long, expensive and arduous learning period," the GAO said. ''It still has tremendous challenges ahead."In its statement, Lockheed noted that "the cost of the F-35 has come down 50 percent since the procurement of the first production aircraft." The company said it trimmed costs by "an unprecedented 14 percent" in the plane's fifth production lot without boosting production, and negotiations on the sixth and seventh production lots should show "continued cost savings for the U.S. government and international partners."The Pentagon and Lockheed took a year to complete negotiations and award in December the final installment of a $3.8 billion, fifth production contract for 32 aircraft.Last week, the House of Representatives passed a stopgap spending measure that includes defense provisions that would ease the effects of the automatic spending cuts that kicked in as part of sequestration. The Senate plans to take up its version of the continuing resolution this week.Separately, lawmakers want the Pentagon to explain why negotiations with Lockheed for past F-35 contracts dragged on a year, according to language in the pending bill. Contract award delays may have "negative impacts" on the F-35 subcontractor workforce, lawmakers wrote.Staff writer Jim Fuquay contributed to this report, which includes material from Star-Telegram archives.