Ellen Lord, a former defense executive who is now the Pentagon’s top weapons-buyer, admitted that the complicated IT system supporting the fleet’s maintenance infrastructure still falls far short of expectations. Lockheed and the Pentagon’s Joint Program Office are still embroiled in a long-running dispute over who owns the F-35’s complicated algorithms, a debate that could chart the future of the program.
And some lawmakers criticized the terms of Lockheed’s arrangement with the government, saying overly generous intellectual property agreements threaten to lock Lockheed into a wasteful long-term profit machine with limited accountability.
Rep. John Garamendi (D-Calif.) threatened to hold up a multibillion-dollar contract if fundamental questions aren’t resolved, suggesting there should be a broader sea change in how military agencies work with weapons builders.
“Heretofore, the contractors have had the ‘long end’ of the lever, and the government has been on the ‘short end’ of the lever. ... That is going to change,” Garamendi told Lockheed Martin executives assembled at the hearing. “The power is shifting ... with the fulcrum moving closer to the government’s side."
Greg Kuntz, a Defense Department spokesman, said the department’s Joint Program Office “remains committed to aggressively reducing sustainment costs and improving mission capability rates,” adding: “We will continue to partner with Congress and Congressman Garamendi moving forward.”
Carolyn Nelson, a Lockheed Martin spokeswoman, said the government is working on a new technical data package that was not a part of the initial F-35 contract, as well as a separate “performance-based” contract for logistics support. The logistics contract “shifts risks to industry and opens longer term investments,” Nelson wrote in an email.
The hearing was the latest skirmish in a long-running fight over who should own the U.S. military’s advanced weaponry. Defense spending watchdogs are concerned that manufacturers such as Lockheed have too much ownership over those systems, something that could give them leverage to drive up costs. Government agencies generally prefer the flexibility that comes with owning the systems themselves.
There is a lot of money at stake. The Air Force estimates that most of a given aircraft’s long-term cost actually comes from keeping it flight worthy. Manufacturers are keenly aware of this, with companies such as Boeing launching whole business units focused on maintenance and repair.
In recent years the Pentagon has been buying jets in greater quantities in order to get the average price down. They recently finalized a $34 billion agreement that defense officials described as “the largest procurement in the Department’s history.” The deal brought the F-35’s price per plane below $80 million ahead of schedule.
However, the program is having trouble keeping the F-35s mission-capable, an odd problem for a brand-new fleet. The overall F-35 fleet was capable of performing all of its tasked missions only about a third of the time, said Diana Maurer, defense capabilities and management director for the Government Accountability Office, on Wednesday.
The problem could threaten the military’s ability to respond to threats.
“As you well know, if we are missing parts and can’t get our jets airborne, our ability to deliver combat effects on this aircraft is significantly diminished,” said Lt. Gen. Eric Fick, the Pentagon’s F-35 program executive.
Some have suggested the problem is made worse by a lack of transparency in Lockheed’s supply chain. A recent audit by the Defense Department inspector general concluded that a lack of visibility into Lockheed’s supply chain “restricts the DOD’s ability to conduct the necessary checks and balances that ensure the prime contractor is managing and spending F-35 Program funds in the government’s best interests."
The Defense Department and Lockheed have often disagreed over how much of the supply chain data should be considered proprietary. Under the original concept for the F-35 program, Lockheed had extensive control over major aspects of the jet’s repair and maintenance costs. Over time the Defense Department has asserted greater control over that information.
The government challenged Lockheed Martin to prove that the plane’s algorithms had been developed at the contractor’s expense rather than with taxpayer funds, something that could determine ownership. The matter is currently under consideration, Fick said.
The Project on Government Oversight, a watchdog group, has pressed for the Defense Department to have full ownership over all of the F-35′s technical rights and related data.
“Doing so would prevent a future situation like the one now facing the F-35 program — and by extension, American service members and taxpayers," POGO executive director Danielle Brian wrote in a letter to members of Congress. "It would also allow the government to seek alternative suppliers should the original contractor fail to live up to expectations.”
Loren Thompson, a defense consultant who works with Lockheed Martin as well as other defense contractors at the nonprofit Lexington Institute, said: “The struggle over IP between the government and defense contractors is likely to go on indefinitely. If you own the information, you can largely shape the future of the system.”