Pentagon toughens stance with Lockheed Martin over F-35

The Fort Worth Star-TelegramOctober 27, 2011 

After 10 years of paying for huge cost increases on the F-35 joint strike fighter, the Defense Department is taking a tougher line with Lockheed Martin, and company officials aren't happy about it.

Lockheed CEO Robert Stevens expressed consternation Wednesday over what he called the government's insistence on a "new and unprecedented contract condition."

Top defense officials are insisting that Lockheed and its partners share in the cost of fixing new problems that may arise in the development and testing of the jet.

The Pentagon is refusing to advance additional funds for work on the next batch of F-35s beyond the $500 million already spent unless Lockheed agrees to a "concurrency clause." Such a provision would provide for cost-sharing after the discovery of problems that require fixes to aircraft already built or in production.

Lockheed and Pentagon officials have been in discussions about the issue, but Pentagon spokeswoman Cheryl Irwin said that until a contract containing such a clause is signed, "the department is assuming no financial obligation" for aircraft work not already under contract.

Lockheed has spent or is obligated to pay for $750 million in costs incurred since February, Stevens said in a conference call with financial analysts. That total could swell to $1.2 billion by year's end as Lockheed buys parts and materials for 30 jets that the Pentagon is expected to order in the fifth lot of "low-rate, initial production" aircraft.

Stevens said the government expects Lockheed and other defense contractors "to stretch technological boundaries" to provide U.S. forces with superior weapons, but those expectations come with difficulties and costs that can't accurately be predicted.

"It's broadly recognized that neither industry nor government has the capability of evaluating how complex systems will perform," Stevens said.

Concurrency describes the common practice of building significant numbers of new aircraft or other weapons long before thorough testing is completed. As problems arise in testing, aircraft that are already built or in production have to be modified at considerable additional expense.

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