Lockheed Martin Corp., Lockheed Martin Aeronautics Co., Fort Worth, Texas, was awarded a $1,926,811,724 cost-plus-incentive-fee, firm-fixed-price, cost-plus-fixed-fee, and cost reimbursable contract.
This contract procures recurring logistics services for delivered (Emphasis added—Ed.) F-35 Lightning II Joint Strike Fighter Air Systems in support of the Air Force, Marine Corps, Navy, non-Department of Defense (DOD) participants and foreign military sales (FMS) customers.
Services to be provided include ground maintenance activities, action request resolution, depot activation activities, automatic logistics information system operations and maintenance, reliability, maintainability and health management implementation and support, supply chain management and activities to provide and support pilot and maintainer initial training.
Work will be performed in Fort Worth, Texas (61%); Orlando, Florida (25%); Greenville, South Carolina (5%); Warton, United Kingdom (6%) and Redondo Beach, California (3%); and is expected to be completed in December 2020.
Fiscal 2020 operation and maintenance (Air Force, Marine Corps and Navy), non-DOD participant and FMS funds in the amount of $1,014,338,012 will be obligated at time of award, $671,022,784 of which will expire at the end of the current fiscal year.
This contract combines purchase for the Air Force ($392,321,076; 38%), Marine Corps ($191,048,520; 19%), Navy ($87,653,188; 9%), non-DoD participants ($231,962,860; 23%) and FMS customers ($111,352,368; 11%). This contract was not competitively procured pursuant to Federal Acquisition Regulation 6.302-1.
The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity (N00019-20-C-0006). Awarded Dec. 30, 2019.
(EDITOR’S NOTE: This contract, as well as four others for the F-35 program for a total amount of $2.36 billion, were announced at 17:00 on New Year’s Eve, a time when they were guaranteed to attract little attention.
Although it is not the first, it is undoubtedly the biggest-ever contract awarded to fix F-35 aircraft that have already been delivered.
Even assuming that it covers all 400 delivered aircraft, the cost works out to just under $5 million per aircraft, and it is not the only such “fix and upgrade” contract.
Even more questionable than the huge expense is why Lockheed, which has delivered sub-standard aircraft, should be paid again to fix them.
And the fixes are varied, and cover a wide range of actions described in the third paragraph above.
The real question, however, is why the Pentagon accepted sub-standard aircraft instead of sending them back to Lockheed to fix them before accepting them, and incurring these additional costs.
Finally, it is interesting to note that the contract is described using four terms that are usually mutually exclusive:
-- cost-plus-fixed-fee, and
-- cost reimbursable contract.
No guidance is provided as to which contract form applies to which part of the contract, making it impossible to understand how much is being paid for what.
The contract below is another anomaly.
It opens a funding envelope of $68M for Lockheed Martin to “identify and correct potential process issues and implement and validate corrective actions.”
This is another task that Lockheed should finance on its own, because the Pentagon is paying it to deliver functional aircraft, and it is the company’s contractual responsibility – unless the laws of commerce have changed – to do whatever it takes to deliver compliant aircraft.
There is no reason, unless secret contract clauses allow it, for the Pentagon to pay Lockheed to identify what it’s doing wrong.)