Lockheed, Pentagon settle F-35 cost-sharing dispute
07 Dec 2011
The Pentagon and Lockheed Martin have finally agreed to share the cost of modifications for roughly 30 aircraft to be procured in the next lot, or LRIP 5, of F-35 production. LRIP refers to low rate initial production.
The question of who was liable for the so-called 'concurrency costs'-the cost of retrofitting solutions to problems discovered during the programme's testing on already-built aircraft-had proved to be a contentious affair between the US Department of Defence and Lockheed Martin, the contractor for the programme.
Lockheed executives now say the amount of cost-sharing on concurrency devised in the low-rate initial production (LRIP) Lot 5 deal is precedent-setting for industry.
According to the F-35 Joint Program Office, ''the key terms include agreement on a fixed-price type contract vehicle and a concurrency clause where [the Defense Department] and Lockheed Martin will share responsibility on costs for concurrency changes.''
Both sides have declined to reveal how they intend to share the costs.
CEO Robert Stevens said last month that the government was potentially exposing the company to ''unbounded risk'' when it initially asked for Lockheed to pay the full tab for concurrency costs found in LRIP 5.
