Lockheed Gets $1.3Bn Cash Advance for F-35 Production

On Thanksgiving eve at 5p.m., Lockheed Martin won a $7.2 billion contract to produce F-35 Lot 10 aircraft, and a minute later Bloomberg reported it had also received a $1.3 billion cash advance from the Pentagon for the same contract. (USMC file photo)

Lockheed Martin Corp. received a $1.28 billion Pentagon down payment to continue production of the F-35 jet while negotiations continue on a contract valued as much as $7.19 billion for 90 aircraft, the biggest order yet.

The $1.28 billion released Wednesday under what’s known as an “undefinitized contract action” will bankroll continued assembly for jets that won’t be delivered until 2018, pay hard-to-maintain suppliers and correct deficiencies found in testing on earlier jets, the Defense Department said in a statement.

“With a complex production line and a dynamic supply chain, it was important to obligate funds” using the down payment process to prevent major delays, said Joe DellaVedova, spokesman for the department’s F-35 program office. “We are confident that the finer terms” of the 10th contract “will be settled over the next few months.”

Lockheed spokesman Mark Johnson said in an e-mail that the company appreciates the actions taken to “ensure delivery of F-35’s to our warfighter customers.”
Earlier Anger

It was a contrast from the company’s angry response earlier this month when the Pentagon awarded a $6.1 billion final contract for the ninth production lot of 57 jets on its own terms after 18 months of inconclusive negotiations.

In a break from the praise that major contractors and the Pentagon usually lavish on each other, the company complained then that it was “not a mutually agreed-upon” contract and that “we are disappointed with the decision by the government to issue a unilateral contract action.” (end of excerpt)

Click here for the full story, on the Bloomberg news website.

(EDITOR’S NOTE: The above story was published at 5:01 p.m. EST on Nov. 23, the day before Thanksgiving, and one minute after the Pentagon separately announced that it had awarded Lockheed a $7.19 billion contract for the F-35’s low-rate initial production Lot 10.
The evening before a holiday week-end is a favorite time for the Pentagon to announce news that it wants to keep under the radar, but this time it has gone a step further by leaking, at the same time as the contract, news of the separate cash advance.
This is the second, or possibly the third, cash advance paid to Lockheed this year.
The first one, for $1 billion, was made in early August,
while a second one was authorized in early September, although it is not clear when it was actually paid as it was not the subject of an official statement.
Likewise, the two statements to which the above story refers have not been made public, released through normal channels or posted on the Lockheed or Pentagon websites.
The Pentagon statement remains unavailable, but Lockheed Martin F-35 spokesman Mike Rein on Nov. 24 provided the company’s statement on the interim payment:
“The Nov. 23, UCA awarded to Lockheed Martin provides additional funding for LRIP 10 jets. This is the first UCA for LRIP 10.
A UCA provides funding for a portion of the not-to-exceed price before definitization.
Once a final agreement on LRIP 10 is reached, the balance of the funding is provided.
We appreciate the actions taken by the JPO to ensure delivery of F35s to our warfighter customers.”)

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