|
|
|
|
|
|
|
|
|
|
Pentagon Acquisition Woes: is Lockheed Next? |
|
|
|
(Source: defense-aerospace.com; published March 22, 2005)
|
|
|
|
By Giovanni de Briganti
defense-aerospace.com
PARIS --- The past three years have been tough ones for Boeing, the Pentagon’s second-largest contractor, and the breadth and scope of the company’s misdeeds make it very likely that acquisition authorities will continue to closely scrutinize it for some time yet.
However, it will likely not be alone for long. Similar scrutiny has begun to be extended to Lockheed-Martin, the Pentagon’s largest contractor, whose three major aircraft programs have recently been the subject of biting criticism.
Senator John McCain, who worked tirelessly to kill the Air Force’s tanker lease and to expose Boeing’s duplicity in this affair, is now focusing the Senate Air-Land Subcommittee, which he chairs, on weapons acquisition, and initially on the company’s C-130J contract. McCain now wields increased influence in Washington, after virtually single-handedly forcing the Pentagon to drop the tanker lease.
While Lockheed probably does not have secrets in its closet as dark as Boeing’s, its largest programs have been roundly criticized for their contractual terms, for their cost overruns and for their failure to meet requirements, most recently in reports published by public auditors and private watchdogs. And, in Washington’s present atmosphere of anti-corporate phobia, the final outcome may not be pretty.
Lockheed’s attempts to keep its troubled C-130J program alive may eventually backfire, for example. Two watchdog groups, Project On Government Oversight (POGO) and the National Legal and Policy Center (NLPC), have submitted testimony to McCain’s subcommittee arguing that Lockheed improperly obtained a commercial contract to sell C-130J to the US Air Force, even though it never sold a single plane to a private customer, and does not even have the required FAA certification to do so. Furthermore, the aircraft has never met its contractual performance: it is still not fully ready for combat, and according to the Pentagon’s Director of Operational Test and Evaluation (DOT&E) it is not operationally “effective” or “suitable.”
Cancellation of the C-130J, for which no funds are included in the Pentagon’s FY2006 budget request, would be a significant setback because it would force Lockheed out of the lucrative, 50-year monopoly it has enjoyed on tactical airlift. This may be averted, as US Defense Secretary is reconsidering the decision, but there is no guarantee that this would be allowed by Congress.
Potentially far blacker clouds hang over Lockheed’s two largest aircraft programs, the F/A-22 Raptor and the F-35 Joint Strike Fighter (JSF). Together, these two programs are currently priced at $310 billion in development and procurement costs alone.
The F/A-22 has been in development for 19 years, and cost increases and delays have reduced the number of aircraft planned for acquisition. The US Air Force is trying to justify the program by finding new, ground-attack and reconnaissance missions, but has so far not tested the aircraft in these new missions. Indeed, these tests will not take place “until after a decision is made to enter full-rate production,” according to the Government Accountability Office’s latest report, thereby risking further overruns and delays if the aircraft does not perform as billed.
The JSF program also is in trouble. According to the US Air Force’s latest estimates, total cost to develop and procure its fleet of aircraft will reach $245 billion, even though the total number of aircraft has been reduced by 535. Development costs have grown over 80 percent, from $25 billion to $45 billion, since the program started in 1996, according to the latest GAO report on the program.
JSF faces significant technical risks. One example is that the current plans call for nearly 20 percent of the planned JSF fleet to be built, at a cost of approximately $50 billion beginning in 2007, well before its development phase is completed in 2013.
Another issue is that of foreign participation. Foreign partners (the United Kingdom, Italy, Netherlands, Turkey, Canada, Denmark, Norway and Australia) have a role in the JSF’s development program and have said they might ultimately buy a total of about 700 aircraft. However, no binding purchasing agreements are due to be signed before 2008, and several countries, including Australia, Norway, and the Netherlands, have recently expressed concern at the JSF’s rising costs and delays.
This is because “current estimates for the program acquisition unit cost are about $100 million, and the total estimated cost to own an aircraft over its life cycle is $240 million,” says the GAO. This makes the JSF much less affordable than it appeared when foreign partners first signed up for it, and thus much less competitive compared to other combat aircraft on the market.
With its monopoly on tactical airlift threatened both by the C-130J’s problems and the A400M airlifter being developed by Airbus, and with its two largest aircraft programs under intensive scrutiny for their exploding costs, schedule slippages and latent technical and financial risks, Lockheed Martin’s long-term future in the aircraft business no longer looks as rosy as it once did.
-ends-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
