Lockheed Martin could be financially liable to DoD for unmet F-35 SDD requirements

06 February 2020

The Pentagon could require F-35 prime contractor Lockheed Martin to financially compensate it for SDD requirements that are written off as never met, although this is subject to negotiation. Source: US Air Force

Key Points

  • The Pentagon could require Lockheed Martin to provide financial compensation for unmet F-35 SDD requirements
  • This is subject to negotiation as the two parties could, instead, agree to overperformance on a requirement in exchange

Lockheed Martin, the F-35 Lightning II Joint Strike Fighter (JSF) prime contractor, could be required to financially compensate the Pentagon for unmet requirements in the programme’s system development and demonstration (SDD) phase, a former programme official tells Jane’s .

The F-35 programme had closed out 493 of the 536 SDD capability requirements as of 17 September, the Pentagon’s Department of Operational Test and Evaluation (DOT&E) said in its fiscal year 2019 (FY 2019) report released on 3 February. The 43 remaining represent either unmet requirements that will never be met, also known as written off, or those requiring additional development and testing to evaluate performance, also known as written down. An example of those requiring more development and testing would be third life durability testing or capabilities planned for the platform’s Autonomic Logistics Information System (ALIS) 3.5.

The former programme official said on 4 February that when the Pentagon and Lockheed Martin negotiate these remaining 43 requirements, the Pentagon will either reduce the requirement or will take it off the books. In either case, the Pentagon has the right to go back to Lockheed Martin and receive some kind of consideration for not meeting the requirement.

This could be money or it could be additional services or capabilities that it did not ask for in the original contract. For example, Lockheed Martin could exceed a requirement that it met in exchange for writing off a requirement that it could not meet.

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