Part 2 of the General Heinz firing

More from Inside Defense on how in 2009, the DOD F-35 program manager, General Heinz, got fired.

At that time, the F-35's development was being executed under a cost-plus contract, a vehicle that allows a contractor to pass costs on to the government in addition to seeking an award fee. "I asked the program manager: 'Let me see your award fee history.' I look at the award fee history over 10 years, it is 85 percent a year," Carter said.

The former deputy defense secretary said he told the program manager the F-35 program was "a disaster," adding, "You're giving an 85 percent award fee every year, what's going on?"

"And," Carter continued, "he looked me in the eye . . . and said: 'I like the program manager on the Lockheed Martin side that I work with and he tells me that if he gets less than 85 percent award fee, he's going to get fired.'"

"So, this guy was fired," Carter said of Heinz. Then-Defense Secretary Robert Gates announced Heinz's dismissal during a Feb. 1, 2010, press conference.

Carter subsequently ordered a sweeping technical review of the JSF program and transitioned it to a fixed-price contract in an effort to force Lockheed to shoulder a portion of the costs associated with developmental risks.

"We began a process that was very difficult: to re-educate the Air Force-Navy team that managed this important aircraft so that they knew what the hell they were paying for," Carter said in the Harvard speech. "They had no idea."

This speaks also to the ability of General Davis, who was the DOD F-35 program boss before Heinz.

Historically, the JSF program has had a problem with accepting bad news. Six years ago, the Government Accountability Office warned that the program was likely to overrun its budget and schedule, which at the time called for full initial operational capability in 2012-14. Lockheed Martin countered that “the F-35 program is on schedule” and the Pentagon program manager, USAF Maj. Gen. Charles Davis, asserted: “We do not agree with that estimate, there is no basis for that estimate, and we do not support it.” Three years of drift went by before it was officially accepted that the GAO's fears had been conservative.