Lockheed Martin [LMT] on Wednesday announced it has moved more F-35 suppliers to longer term contracts and agreements to reduce sustainment cost and enhance supply availability.
The company was able to move several contracts with BAE Systems, Northrop Grumman [NOC], and Collins Elbit Vision Systems (CEVS) to Performance Based Logistics (PBL) contracts. CEVS is a joint venture between United Technologies‘ [UTX] Collins Aerospace segment and Elbit Systems [ESLT].
In moving from annual to multi-year PBL contracts, each company will be allowed “to make longer term investments and actions to reduce costs and improve efficiencies,” Lockheed Martin said.
The company also established 12 master Repair Agreements (MRAs) with suppliers like Honeywell [HON], General Electric [GE], and Eaton [ETN] “to enhance repair capacity and speed.”
According to Lockheed Martin, one example of the utility of the multi-year agreements is how a 2017 PBL contract awarded to BAE for electronic warfare subsystem “is helping deliver a 25 percent improvement in the system’s availability throughout global operations.”
Greg Ulmer, Lockheed Martin vice president and general manager of the F-35 program explained that “as the F-35 fleet expands, we are partnering with our customers and taking aggressive actions to enhance F-35 readiness and reduce sustainment costs.”
“The F-35 global supply chain is a key enabler to success, and we’re restructuring and streamlining several contracts with key industry partners to provide the long-term stability that will allow them to make investments, improve efficiencies and optimize their performance,” he added.