Pentagon withholds $47 million from Lockheed for F-35 glitches

WASHINGTON — The Pentagon is withholding $46.5 million from Lockheed Martin, its biggest contractor, because of continued flaws with a business system used to track costs and schedules for the F-35 fighter.

The money held back was assessed against two F-35 production contracts and a smaller development agreement with the Israeli Air Force that’s managed by the United States. The funds equal 5 percent of periodic billings against the contracts for reimbursement of money spent by the company performing the work.

The F-35 has been criticized by Pentagon officials and lawmakers for test-performance failings, delays and its ballooning cost. At an estimated $395.7 billion for eventual production of 2,443 planes, the cost is up 70 percent, adjusted for inflation, from the $233 billion projected when Lockheed Martin won the program from Boeing in late 2001.

The funds being withheld won’t be released until all the deficiencies in the system used by Lockheed Martin’s Fort Worth, Texas-based Aeronautics unit “are corrected and the system regains approval status” from the Defense Contract Management Agency, Pentagon spokeswoman Cheryl Irwin said in an e-mailed statement.

Chris Kubasik, Lockheed Martin’s president and chief operating officer, told reporters on a conference call Wednesday that the Bethesda, Md.-based company is making progress correcting deficiencies with the system.

The Pentagon agency first raised concerns in 2007 about the internal company data generated for Lockheed Martin’s fighter programs — the F-35, F-22 and F-16 jets. The contract management agency decertified the Pentagon-mandated Earned Value Management system for Lockheed Martin’s aircraft operations in October 2010.

A Pentagon rule that took effect in August 2011 requires all new contracts to include language spelling out the potential for withholding payments because of deficiencies such as those in the management system.

The maximum the Pentagon can withhold from the billings under the regulation is 5 percent.

The requirement, intended to protect taxpayers from overbilling, focuses on systems that companies use to estimate costs for bids, purchase goods from subcontractors, manage government property and materials and track costs and schedule progress.

The provision was included in all F-35 contracts negotiated after the fourth production pact. The largest payment being held back is $45 million on the fifth production contract, final details of which remain in negotiation.

Kubasik said he reviews the Earned Value Management system and progress toward complying with Pentagon requirements daily.

“We have a corrective action plan that has been approved, and we are executing to that,” Kubasik told reporters during the conference call on Lockheed’s third-quarter earnings.

“We are having status checks monthly, and by all accounts everybody is satisfied with the progress that we are making,” he said. “So we expect to have a certified” system “in due course and possibly have the withhold reduced here as we make progress.”

The Aeronautics unit’s sales in the third quarter fell 6.7 percent to $3.7 billion, and profit fell 6.5 percent to $415 million from the year-ago quarter, the company said in an earnings statement on Oct. 24.

Initial production orders of F-35 jets during the quarter valued at about $300 million partially offset lower sales volumes from C-130 transports and F-16 fighters in the Aeronautics unit, Lockheed said.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

Trader Joe’s customers walk in and out of the store on Monday, Nov. 20, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
New Trader Joe’s opens this week at Everett Mall

It’s a short move from a longtime location, essentially across the street, where parking was often an adventure.

Ian Bramel-Allen enters a guilty plea to second-degree murder during a plea and sentencing hearing on Wednesday, March 6, 2024, at Snohomish County Superior Court in Everett, Washington. (Ryan Berry / The Herald)
‘Deep remorse’: Man gets 17 years for friend’s fatal stabbing in Edmonds

Ian Bramel-Allen, 44, pleaded guilty Wednesday to second-degree murder for killing Bret Northcutt last year at a WinCo.

Firefighters respond to a small RV and a motorhome fire on Tuesday afternoon in Marysville. (Provided by Snohomish County Fire Distrct 22)
1 injured after RV fire, explosion near Marysville

The cause of the fire in the 11600 block of 81st Avenue NE had not been determined, fire officials said.

Ashton Dedmon appears in court during his sentencing hearing on Tuesday, March 5, 2024, at Snohomish County Superior Court in Everett, Washington. (Ryan Berry / The Herald)
Everett Navy sailor sentenced to 90 days for fatal hit and run

Ashton Dedmon crashed into Joshua Kollman and drove away. Dedmon, a petty officer on the USS Kidd, reported he had a panic attack.

A kindergarten student works on a computer at Emerson Elementary School on Wednesday, Feb. 28, 2024, in Everett, Washington. (Ryan Berry / The Herald)
‘¡Una erupción!’: Dual language programs expanding to 10 local schools

A new bill aims to support 10 new programs each year statewide. In Snohomish County, most follow a 90-10 model of Spanish and English.

Logo for news use featuring the Tulalip Indian Reservation in Snohomish County, Washington. 220118
Woman drives off cliff, dies on Tulalip Reservation

The woman fell 70 to 80 feet after driving off Priest Point Drive NW on Sunday afternoon.

Everett
Boy, 4, survives fall from Everett fourth-story apartment window

The child was being treated at Seattle Children’s. The city has a limited supply of window stops for low-income residents.

People head out to the water at low tide during an unseasonably warm day on Saturday, March 16, 2024, at Lighthouse Park in Mukilteo, Washington. (Ryan Berry / The Herald)
Everett shatters record high temperature by 11 degrees

On Saturday, it hit 73 degrees, breaking the previous record of 62 set in 2007.

Snohomish County Fire District #4 and Snohomish Regional Fire & Rescue respond to a motor vehicle collision for a car and pole. The driver was pronounced dead at the scene, near Triangle Bait & Tackle in Snohomish. (Snohomish County Sheriff’s Office)
Police: Troopers tried to stop driver before deadly crash in Snohomish

The man, 31, was driving at “a high rate of speed” when he crashed into a traffic light pole and died, investigators said.

Alan Dean, who is accused of the 1993 strangulation murder of 15-year-old Bothell girl Melissa Lee, appears in court during opening statements of his trial on Monday, March 18, 2024, at Snohomish County Superior Court in Everett, Washington. (Ryan Berry / The Herald)
31 years later, trial opens in Bothell teen’s brutal killing

In April 1993, Melissa Lee’s body was found below Edgewater Creek Bridge. It would take 27 years to arrest Alan Dean in her death.

Logo for news use featuring the municipality of Snohomish in Snohomish County, Washington. 220118
Man dies after crashing into pole in Snohomish

Just before 1 a.m., the driver crashed into a traffic light pole at the intersection of 2nd Street and Maple Avenue.

Bodies of two men recovered after falling into Eagle Falls near Index

Two men fell into the falls and did not resurface Saturday, authorities said. After a recovery effort, two bodies were found.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.