$614 Million Withheld From Lockheed Martin

Defense Secretary Robert M. Gates announced a restructuring in the F-35 Joint Strike Fighter office Monday to provide increased oversight of a program he conceded has fallen behind in meeting key benchmarks.

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Gates also announced that he has withheld $614 million in performance fees from the lead contractor, Lockheed-Martin, "since the taxpayers should not have to bear the entire burden of getting the JSF program on track."

"We have restructured the F-35 program and believe it is on track to become the backbone of U.S. air superiority for the next generation," Gates said during a Pentagon news conference. "Nonetheless, the progress and performance of F-35, over the last two years, has not been what it should, as a number of key goals and benchmarks were not met."

To fix the situation, the secretary announced a change in leadership at the Joint Strike Fighter program office, which had been headed by Marine Maj. Gen. David R. Heinz. A three-star officer yet to be named will replace him, Gates said, the higher rank reflecting the importance of the program to the future of military aviation.

Gates, who visited Lockheed Martin's F-35 production facility in Fort Worth, Texas, Aug. 31, said he has become concerned about the program's progress as Ashton Carter, undersecretary for acquisition, technology and logistics, became more involved in the program. "It was clear that there were more problems than we were aware of when I visited Fort Worth," Gates said. "And I think that the restructuring program that Dr. Carter has put in place will work. It is realistic. The cost estimates are now in accord with what the joint estimating teams are predicting, rather than what the program is predicting."

The problems facing the program aren't insurmountable, with proper steps taken, Gates said. "I believe that we are in a position to now move forward with this program in a realistic way," he said. "But by the same token, one cannot absorb the additional costs that we have in this program and the delays without people being held accountable."

Gates pointed to his track record since coming to the Defense Department of demanding accountability. "Accountability is not just about holding contractors responsible. The Department of Defense also bears responsibility for the JSF's troubling performance record," he said. "I think if I've set one tone here at the Department of Defense, it is that when things go wrong, people will be held accountable."

Visiting the Lockheed-Martin plant this summer, Gates said the importance of the F-35 program can't be overstated, citing the new aircraft as an example of new, innovative and more cost-effective ways to meet the country's current and future defense needs.

The F-35 is the first aircraft to be developed within the department to meet the needs of three services, with three variants being developed simultaneously. This brings cost savings and economies of scale not possible with separate aircraft because the F-35s will share common components and maintenance requirements, Gates noted. "We cannot afford, as a nation, not to have this airplane," he said, noting that every dollar saved in acquisition frees up a dollar to support other critical wartime requirements.

The Air Force will receive the F-35's "A" variant, which will provide conventional takeoff and landing capabilities. The Marine Corps is slated to receive the "B" variant that has a vertical-lift capability. The Navy will receive the "C" variant, designed for carrier launches.

The different F-35 variants will replace the legacy F-16 aircraft for the Air Force and the F/A-18 and AV-8 aircraft for the Navy and Marine Corps.

FMI: www.dod.mil