Oversight Committee Held Bipartisan Hearing to Hold Lockheed Martin Accountable
Washington, D.C. (July 23, 2020)—This week, Rep. Carolyn B. Maloney, Chairwoman of the Committee on Oversight and Reform, held a hybrid hearing to examine Lockheed Martin’s failure to deliver spare parts for the F-35 Joint Strike Fighter that were ready for installation.
At the hearing, the Committee heard testimony from Ellen Lord, Under Secretary for Acquisitions and Sustainment, Department of Defense; Lieutenant General Eric T. Fick, Program Executive Officer, F-35 Joint Program Office, Department of Defense; Diana Maurer, Director of Defense Capabilities and Management, Government Accountability Office; Theresa Hull, Assistant Inspector General, Office of Inspector General, Department of Defense; and Gregory M. Ulmer, Vice President and General Manager, F-35 Lightning II Program, Lockheed Martin.
Chairwoman Maloney emphasized the importance of Lockheed Martin fulfilling the contract with the Department of Defense (DOD):
“A contract is a contract. A contract says you deliver a plane, which you’ve done beautifully. It’s a beautiful plane, but it also says that the material needed to fly that plane has to be delivered too. Our military managers don’t want to be sending people up in the air when they don’t have everything perfectly there that is in that contract, that’s only fair.”
During the hearing, Members called for Lockheed Martin to be held accountable for failing to meet the contract and to pay DOD back for the faulty parts delivered.
Bipartisan Call to Hold Lockheed Martin Accountable
Rep. Lynch warned Lockheed Martin, “You’re on notice Mr. Ulmer.” He stated:
“I would highly recommend if you want to avoid reputational damage, you need to rethink the terms of that contract and come back to the table and work something out that’s fair for the American taxpayer. Lockheed Martin has had a long, strong history in the defense sector and we respect that, but I don’t think that based on the facts here the American people are being treated fairly.”
In response, Mr. Ulmer said: “We’re taking on several different approaches relative to problem solutions, we have seen marked improvement, we have more to go, we understand we have more to go and you have our resolve to fix this problem.”
Members Call for Lockheed Martin to Pay DOD Back For Faulty Parts
Mr. Ulmer highlighted Lockheed Martin’s second quarter earnings for 2020, saying that the company received $1.6 billion in net earnings, has $2.2 billion in cash, and profit is up 15%. Mr. Ulmer admitted that Lockheed Martin asked for money under the CARES Act for what he said was “the disruption of COVID 19.” In response, Rep. Porter stated:
“Maybe making gobs of money is a disruption for you but I think for most everyday Americans if they’d seen their income go up 15% this year if they were making $3.5 billion in profit in 2020 they wouldn’t call that a disruption they would call that a miracle and they wouldn’t be coming to the government trying to take more taxpayer dollars at the same time that you are failing to pay U.S. taxpayers back for what you owe for breaching your contract with regard to the F-35 Joint Strike Fighter.”
Rep. Speier stated, “I want to know when you’re going to pay the $183 million and stop nickel and diming the United States government and the taxpayers.”
Electronic Logs on F-35 Spare Parts are Critical to Safety and Capability
Lieutenant General Fick testified that “parts with EELs [electronic equipment logs] are, in broad terms, associated with the most critical or complex maintenance relative to F-35 safety and capability.”
Lockheed Martin’s F-35 Information Technology System is Underperforming
In response to Rep. Speier’s question regarding whether ALIS—the information technology system that supports F-35—is underperforming. Lieutenant General Fick and Ms. Lord stated “Yes” and “Absolutely.” Mr. Ulmer admitted, “It’s not meeting our customer or warfighting requirement.”
In response to Rep. Norton, Mr. Ulmer acknowledged that ALIS is “an antiquated hardware-software system.”
In June 2019, the Department of Defense (DOD) Inspector General (IG) estimated that DOD spent more than $300 million on additional labor costs between 2015 and 2018 as a result of Lockheed Martin’s failure to provide F-35 spare parts with logs and that DOD will continue to pay $55 million a year if issues are not resolved.
In March 2020, the Government Accountability Office (GAO) reported that, at one location, F-35 maintenance personnel warned that during a six-month period in 2019, they experienced up to 400 issues per week of inaccurate or missing electronic logs.
On June 18, 2020, Chairwoman Maloney, Chairman Lynch, Rep. Speier, and Rep. Khanna, sent a letter to Lockheed Martin requesting documents related to the F-35 program.