By Calvin Biesecker
Contract negotiations between Lockheed Martin [LMT] and the Defense Department for the fourth low-rate production lot of F-35 Joint Strike Fighters should be finalized in weeks, possibly just a “couple of weeks,” Lockheed Martin Chairman and CEO Bob Stevens said yesterday.
While the production awards have typically occurred in the spring, Stevens said the fact that the contract is transitioning to a fixed-price, incentive-fee type award away from cost-plus has generated more discussion from both his company and the government to make sure “all the details are right.”
As of earlier this year, the transition to a fixed-price contract wasn’t expected until Lot V low-rate initial production but a program restructuring led to the modification of the contract type sooner. Lot IV will be for 32 aircraft.
There isn’t any “distress” in the program over the Lot IV negotiations and even though they “have gone a little longer…I would not characterize it as getting off track in some way,” Stevens said during yesterday’s analyst call to discuss the company’s second quarter financial results.
“I will tell you, from my point of view, as we will take a fixed price incentive fee contract here we certainly want to get this right so that we understand the risks and expectations,” Stevens said. “I think there’s a corollary for the people on the government’s team to get it right from their point of view.”
Stevens provided a relatively lengthy update of the F-35 program at the outset of yesterday’s call. Lockheed Martin is still developing the aircraft, which will replace the Air Force’s F-16 multi-role fighter, the Navy’s F/A-18 fighter and attack jet, and the Marine Corps AV-8B Harrier vertical take-off and landing jet. In addition, a number of foreign countries have signed up to purchase the aircraft, primarily the CTOL version.
Flight-testing through June overall is ahead of plan, although this is being driven by the conventional take-off and landing (CTOL) and aircraft carrier-based variants of the aircraft, which are ahead of schedule, while the short take-off and landing variant for the Marines is behind plan, Stevens said. So far, the CTOL aircraft have made 56 flights versus the plan of 22 and the carrier aircraft six versus the planned one, he said.
“So we’re getting solid early performance here, performance on flights that was better than planned, and we’re getting good feedback on the airplanes, and all this is very positive,” Stevens said.
However, the short take-off and landing (STOVL) variant being developed for the Marines remains behind its flight-test schedule, having flown 74 times versus the plan of 95 through June, Stevens said. “Here we wanted to accomplish more vertical landings, satisfy more test points and get more information sooner, but we thus far have been unable to do so.”
Stevens said the reason that the STOVL is behind in flight-testing is due to the “early reliability of selected components…where we’re seeing failure rates that are higher than predicted.”
The failures are not with major components such as the engine, which Stevens said is performing well, and the lift fan. Rather, the failing components are items that are “smaller or more ordinary, like thermal cooling fans, door actuators, selected valves or switches, or components of the power system.” When any of these components aren’t working, that means a flight-test gets scratched in the interests of safety, he said. Moreover, fixing the components often takes a while because it might mean removing an engine to get to the part, he added. This then typically requires additional ground testing given the early nature of the flight-test program out of “an abundance of caution,” he said.
Various fixes to the flight test program are being worked out such as identifying the problem parts to improve their reliability, reviewing supplier manufacturing processes, and increasing parts availability. Component reliability can be fixed, Stevens said.
Lockheed Martin and the government are also reviewing the efficiency of the flight-test program in order to improve the pace of testing, Stevens said. For example, rephasing activities, adding “selective resources,” more aircraft instrumentation and even new concepts of test operations, are all either being done or reviewed, he said.
On the test operations, the F-35 team is considering “hot pitting” the aircraft, which refers to refueling the aircraft after landing while keeping the engines running to get right back into flight, Stevens said. This reduces the turnaround time of the aircraft and also would mean fewer actual flights since a flight is terminated when the engines are turned off, he noted.
As for the restructuring of the ongoing System Design and Development program for the F-35, Stevens said he expects this effort to take a “bit more time” given the need to go through a series of reviews such as the Technical Baseline Review. This process may be complete by October or November, but this will be determined by the government, he said.