Pentagon to Withhold Lockheed F-35 Payments Over Tracking (excerpt)
(Source: Bloomberg news; published Feb 28, 2012)
Lockheed Martin Corp., the No. 1 U.S. defense contractor, is the first company to have payments withheld under a new Pentagon rule intended to correct deficiencies with internal systems that track cost, schedules, accounting and purchases, according to the Defense Department.

The Pentagon will withhold about $1 million a month in billings from Lockheed’s aeronautics division until the unit fixes longstanding shortcomings with its cost and schedule tracking system, Shay Assad, the Pentagon’s director of pricing, said today in an interview.

The money will be paid once the deficiencies are fixed, he said. The Pentagon today informed Lockheed’s Fort Worth, Texas-based aircraft unit that the withholding will start in March with billings made under a new production contract of about $4 billion for as many as 30 F-35 fighters, Assad said. The funds held back will amount to 2 percent of billings instead of the maximum 5 percent, he said.

That’s because Lockheed was deemed to have submitted an adequate corrective action plan, which is now under review by the Pentagon’s Defense Contract Management Agency, Assad said. The agency manages the new rule for Pentagon contracts.

“This is a step that’s available to the customer under the terms of the contract,” Joe Stout, a spokesman for Bethesda, Maryland-based Lockheed, said in an e-mailed statement. (end of excerpt)

Click here for the full story, on the Bloomberg website.


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