Pentagon Sees Lockheed F-35 Deliveries Falling Behind

Sixteen years into its development, Lockheed Martin still is not in control of the F-35 program, which the GAO reports continues to add delays and cost overruns while the DCMA says deliveries continue to lag behind contractual dates. (USAF photo)

The Pentagon’s contract management agency forecasts Lockheed Martin Corp. will deliver 57 of its F-35 jets this year, nine fewer than the company plans.

The No. 1 defense contractor “did not meet contract requirements in 2014, 2015 or 2016,” and the Defense Contract Management Agency “forecasts that Lockheed Martin will not meet contract requirements again in 2017,” agency spokesman Mark Woodbury said in a statement. Company performance “has, however, improved from the 2014-2016 timeframe.”

Meeting planned deliveries would be a confidence-building measure for investors and analysts who follow Lockheed, which reports its quarterly earnings on Tuesday, and for Pentagon officials who want to accelerate the pace of production starting in fiscal 2018. It also would help bolster the argument that the F-35 has moved past its worst days of delays and cost overruns.

The delays aren’t a major revenue issue for the contractor. The accounting method used by Lockheed lets it book revenue on the F-35 program closer to when costs are incurred rather than upon delivery.

‘Factory’s Running’

“Am I going to guarantee we can do 66 this year?” Jeff Babione, the company’s F-35 program manager, said in an interview last month. “No, but I think everything I see is the factory’s running” and Lockheed will hit the goal, unless “we have some big problem.”

The Government Accountability Office said in its annual F-35 report Monday that Lockheed “is improving aircraft efficiency and product quality” as production is scheduled to more than double over the next five years. Still, the congressional watchdog agency said that flight testing of the F-35 will take about a year to complete and require at least $1 billion more than planned.

The Defense Contract Management Agency said it based its prediction that Lockheed will fall behind this year on “historical performance” and predicted the company will continue to deliver aircraft “an average one to two months later than contractually required.” But it also acknowledged that the Bethesda, Maryland-based company “continues to identify issues driving late aircraft deliveries.” (end of excerpt)

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

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