One of my favorite and most reliable sources:
Shay Assad, the Pentagon's director of defense pricing, told Reuters in a recent interview that he was braced for resistance from industry to some reforms. "We're going to be breaking some glass here," he said.
Assad and a team of more than two dozen pricing experts are finishing a review of what the fifth batch of F-35 production jets should cost this month, which will pave the way for Lockheed and the Pentagon to begin formal contract talks.
But defense officials have already told Lockheed that they expect it to share in the costs of "concurrency" or changes that must be made to the new warplane, which has already entered production as developmental testing continues.
The extent of the "share line" would be determined during contract negotiations, said one source familiar with the issue.
A second source said the government wanted the company to shoulder all those costs.
The last F-35 production contract already included a switch to fixed price terms with an incentive fee, abandoning the cost-plus type contracts usually signed early in the life of a new weapons program and compelling the company to share the costs if the program exceeded its budget.
MOVE COULD WIPE OUT PROFITS, ANALYST SAYS
Thompson said most changes to the weapons program resulted from government decisions, not contractor error. Forcing Lockheed to pay for such changes could reduce the company's ability to make any profit on the program, and would likely result in strong opposition from shareholders.
"If the government succeeds in shifting the ultimate risk to Lockheed Martin, then it could easily wipe out any profit on the program and leave the company unprotected against future liability," Thompson said.
Emphasis mine; with a snort and guffaw.
