(Bloomberg) -- Lockheed Martin Corp. has agreed to compensate the Pentagon over parts it provided for the F-35 jet that weren’t ready to install and is in negotiations with the Defense Department over how that reimbursement will be paid.
The nation’s No. 1 defense contractor and Pentagon contracting officers “are now negotiating appropriate consideration for parts delivered incomplete” and sorting out the amount of refunds or equivalent services the company should provide, the department’s F-35 program office said in a statement on Monday.
The parts were considered inadequate for installation not because of safety or manufacturing flaws but because they were delivered without the required inclusion of electronic data, such as a part’s history and its remaining useful life, needed by maintenance crews. Parts aren’t supposed to be installed without the data.
Air crews who maintain the next-generation stealth fighter had complained that they’ve been working extra hours to keep the Pentagon’s costliest aircraft flying because so many parts weren’t ready to be installed.
Lockheed Martin spokesman Brett Ashworth said in an emailed statement that the company “continues to work with” the Pentagon’s Defense Contract Management Agency,” the Pentagon’s contractor oversight agency, on resolving the parts issues.
Air Crews Balk at Lockheed F-35 Parts That Aren’t Ready to Use
In a June 2019 report, the Pentagon’s inspector general disclosed the problem and recommended that the Pentagon consider seeking refunds or services free of charge for the parts. This year’s defense policy law directed the Pentagon to “seek relief” for delivery of “non-compliant ready-for-issue spare parts pursuant to a contract under the F–35 aircraft program.”
The Pentagon watchdog’s original report disclosed that of 74 spare parts delivered in September 2018 to Hill Air Force Base in Utah, 59 of them, or 80%, weren’t ready to install. Of 263 parts delivered to Luke Air Force Base in Arizona in June 2018, 81% didn’t meet requirements.
Each F-35 has about 1,000 parts out of roughly 50,000 that require the electronic logs, according to the program office. The parts problems on the $398 billion program, the Pentagon’s largest, are occurring even after 500 of the stealthy aircraft have been delivered through March, 147 of them to other countries.
The parts issue and status of refund efforts will be a focus of a House Oversight and Reform Committee hearing on Wednesday. The program office said Lockheed’s 2021-2023 support contract requires that it deliver the required information for 99% of the special parts in order to receive its contract fees.
“As of June 2020, we’re at 83% and climbing” and “we expect 90% (or higher)” by Dec. 31, according to the statement.
Theresa Hull, the assistant inspector general who managed the parts report, said Monday in an email that her office hasn’t been provided any further specifics regarding the negotiations with the company but that her office believes the Pentagon “pursuing compensation on behalf of the America taxpayer is a positive first step toward safe-guarding taxpayer dollars.”
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