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.
3 comments:
So, they government bought a new product, the LRIP F-35, from LMT at 15o mill/piece plus development costs it already had to cough up. The product has major engineering flaws built into the 100 F-35s built so far including structural flaws affecting its lifespan which will take 45 days per airplane to fix. But LMTs expectation is that the tax payer again should pay for those fixes, about 30 mill/plane. If that's really LMTs logic, it's only goal financially would be to produce many faulty planes as this would be rewarded financially. That's not capitalism. Folks, we may have to kiss the F-35 goodbye if LMT does not commit itself to delivering a good product. We may have to start over, maybe even team up with Sukhoi and India and build the next PAKFA72 air dominance fighter while the new upgraded more powerful F-18SH is the stopgap measure for the USAF, Navy, USMC, Australia, Canada, Norway, Holland, Israel. As long as the JDRAM comes online quickly, we may be ok. Wouldn't surprise me if there is a major policy announcement re the F-35 program within next 12 months.
"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."
What a bunch of BS from Thompson! What changes has the gvt asked for? All the changes I see in the article are related to problems discovered during testing that LMT HAS to FIX!!! Isn't that the purpose of testing or is it just to make sure LMT just makes a ton of money providing USAF with untested/broken jets that LMT then turns around and fixes at a huge profit? Talk about a nice little scam there Mr Thompson! Where are all these so called changes forced by the big bad gvt on poor LMT????
Nico has appropriately called it and we can distill the Lockmart position down to one simple word, BULLSHIT.
The comments by Dr. Feelgood of course are as always driven by his need to continue to get BIG money from the JSF gravy train. This latest nonsense can only be equaled by his previous comments that the problems slowing down F-35 were a direct result of the DoD requiring "too much testing" of the F-35.
So along with requiring Lockmart to PAY from this point forward, I propose that the Justice Department open a criminal investigation due to the fact that the most expensive fighter program in history has yet to produce a single aircraft capable of warfighting after more then a decade of development.
Dr. Feelgood should think about not making so much noise considering that they might decide to include him in the investigation!
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