Lockheed Martin willing to settle over Pentagon fees incurred managing poor F-35 spare parts

Prime contractor Lockheed Martin is willing to settle with the Pentagon over hundreds of millions of US dollars in labour costs that the armed services incurred in managing non-ready-for-issue (RFI), or installation, spare parts for its fleet of F-35 Lightning II Joint Strike Fighters (JSFs).

In a 22 July House Oversight and Reform Committee hearing; Theresa Hull, Pentagon assistant inspector general for audit acquisition, contracting, and sustainment, testified that the Pentagon spent up to USD303 million from 2015 to 2018 on labour costs for Department of Defense (DoD) personnel to bring the spare parts up to RFI condition. According to the contract between Lockheed Martin and the Pentagon, RFI means that spare parts are ready to install and have an electronic equipment logbook (EEL) assigned, which includes information such as part history and remaining life. Spare parts, such as wheel, seat, and window assemblies, without an EEL are considered non-RFI.

Hull, in her prepared testimony, said that the Pentagon would continue to pay an estimated cost of up to USD55 million annually to resolve issues related to non-RFI parts. Additionally, Hull said that the DoD had potentially overpaid USD10.6 million in performance-incentive fees by not independently collecting and verifying aircraft availability hours. This is because the F-35 Joint Program Office (JPO) did not conduct adequate oversight of Lockheed Martin’s performance related to receiving F-35 spare parts and verifying aircraft availability hours.