Lockheed Martin Corp.’s system for tracking costs and schedules has generated “useless” or “suspect” data on the F-35 Joint Strike Fighter since the program started in 2001, according to a Pentagon review.
The system at Lockheed’s plant in Ft. Worth was deficient in 19 of 32 criteria that the Pentagon requires contractors use to track their programs, according to the Pentagon’s Defense Contract Management Agency. This system tracks costs for the $298.8 billion F-35 stealth fighter jet, the Pentagon’s most expensive weapons program, as well as Lockheed’s $65.2 billion F-22 fighter program.
The review covers the period from October 2001, when Lockheed beat Chicago-based Boeing Co. for the F-35 program, through June 2007. Lockheed spokesman John Smith said the Bethesda, Md.-based company has “worked closely” since November with the contract management agency and “an approved corrective action plan” is in place.
The 48-page report was prepared for the Pentagon’s top weapons buyer, Undersecretary for Acquisition and Technology John Young. It was delivered in November and hasn’t been released. A copy of the report was obtained by Bloomberg News.
The deficient cost-tracking system was responsible for generating overbilling of $260 million in 2002 that Lockheed discovered only last August, the report said.
The report cites the management at Lockheed’s Ft. Worth plant for making “inappropriate adjustments to data” in some cases, shifting money from management reserves and those projects meeting their budgets to those with overruns. These changes sometimes “misrepresented” program performance.
“A vast majority” of Lockheed Martin’s account managers “could not explain or substantiate” the cost-completion estimates for their respective projects, the review said.
Major U.S. military suppliers are required to track spending on all contracts, comparing actual costs and work performed against projected costs and performance so the Pentagon can spot problems before costs balloon.
At Lockheed’s Ft. Worth plant there has been “a serious deterioration of system discipline” that “will ultimately jeopardize the long-term stability” of Lockheed’s programs, the report said. “Early identification of overruns will not be possible” and “unexpected cost ‘surprises’ will be the norm.”
Agency spokeswoman Ann Jensis-Dale said no payments have been withheld from Lockheed Martin because the agency is satisfied with the company’s progress in implementing its corrective plan. “The reduction or suspension” of payments “remains an option” if Lockheed’s system doesn’t improve this year, she said.
Congress has grown more concerned about cost growth in major weapons programs. Defense Department Comptroller Tina Jonas in April called the growth since 2000 — to $1.7 trillion from $800 million — a “stunner.”
The Senate Armed Services Committee plans a hearing.
