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F-35 office sees improved relations with contractor

Apr. 26, 2013 - 09:24AM   |  
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WASHINGTON — The head of the F-35 Joint Program Office told Congress that the program is continuing to improve, in part because of turnover at primary contractor Lockheed Martin.

Lt. Gen. Christopher Bogdan was testifying in front of the Senate Armed Services Committee Airland subcommittee when he was asked by Sen. John McCain, R-Ariz., to elaborate on previous statements the general had made about the relationship between his office and contractors Lockheed and Pratt & Whitney.

“My intention was to put [the contractors] on notice,” Bogdan told McCain. “I needed to make sure that they were committed in the long term to reducing costs in this program, and at the time when I made that comment I was not so sure. Doing business with both companies has been difficult and is getting better. I was seeing behaviors in which I thought over the next 30 or 40 years were not sustainable for us or either one of those industry partners.

“There are some things I can tell you, not necessarily directly related to my comments but over the last nine months, that have seemed to have taken ahold of the program that I am appreciative of,” Bogdan continued.

“First and foremost, there have been significant leadership changes at Lockheed Martin over the last few months, all the way up and down the F-35 chain. The deputy program manager, the program manager, the president of Lockheed Martin aero and the CEO have all changed out.

New CEO Marillyn Hewson took control of the company at the start of 2013 after a sex scandal forced out CEO-in-waiting Christopher Kubasik, who in turn was supposed to replace longtime CEO Bob Stevens from the role. Aeronautics head Larry Lawson left in April and was replaced by Orlando Carvalho; that same month, Lorraine Martin replaced longtime F-35 chief Tom Burbage, who decided to retire, and Jeff Babione was named deputy program manager.

(Page 2 of 5)

“I will tell you that those four individuals in those positions now have a different culture and a different attitude then when I first walked into this program nine months ago,” Bogdan said. “That is a good thing.”

In response to Bogdan’s comments, Michael Rein, Lockheed’s F-35 spokesman, said the company values its “relationship with the JPO and are committed to improving all aspects of the F-35 program.

“We are eager to build upon the progress Lt. Gen. Bogdan highlighted today as we continue to work together to deliver the F-35’s unprecedented 5th Generation capabilities to our U.S. services and International Partners,” Rein told Defense News in an email.

Another reason relations between the JPO and the contractors have improved is because of increased risk-sharing from the contractors. When McCain interjected to say that was partly due to congressional mandate, Bogdan agreed, and thanked Congress for it, but said there are still gaps to bridge before he feels the contractors will be on the same page as his office.

“The jury’s still out. There’s a long way to go,” he said. “I will continue to monitor this.”

An example of how Bogdan is dealing with Lockheed was raised earlier in the hearing, when Sen. Joe Manchin, D-WVa., the subcommittee chair, asked about $614 million in awards for Lockheed that were withheld by former Defense Secretary Robert Gates in 2010.

Bogdan said that Gates took $190 million of that total and removed it from the table, leaving $424 million the company could still earn. From 2010-2012, the company had the chance to earn $101 million of that, but only earned $34 million.

The remaining money is tied to incentives. If the company delivers the block 2B capability on time, they get $40 million; if they deliver block 3I on time, they get $25 million; and the delivery of block 3F capability nets them $35 million.

That would leave $237 million that Bogdan said he has put it at the end of the contract.

“I’ve said to Lockheed Martin you must deliver me a weapons system that meets each and every one of the system spec requirements on time, and you must do it within the budget I have remaining. If you don’t meet those criteria, you will not earn any of that $237 million, ” he said.

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Foreign Sales, Security, Key

During a question and answer session, Bogdan identified communications between his office and foreign partners on the plane as key to moving the program forward.

Each of the eight partner nations has a deputy national director, located in the program office, that take part in joint meetings at 8:15 every morning, Bogdan said. Israel and Japan, two non-partner nations that will purchase the plane through foreign military sales deals, receive weekly briefings.

While communications are not a problem, Bogdan said, the amount of data that can be shared with partners is restricted, in some cases unnecessarily.

“Probably the greatest challenge with our partners is, as we begin to produce and deliver airplanes to them, they need the information about the airplane that we in the US have,” Bogdan said. Transferring that data is difficult, both because of ITAR restrictions and because some files have been marked as U.S.-only “when it probably should have been marked differently.”

Bogdan said his office is systematically going back and fixing that issue.

The partners are key to avoiding a “death spiral” of increasing costs leading to orders being cut, which in turn raise the cost on each plane.

“It is vital for us to keep the partners in this program. Without their support, and without them buying the airplane, any one of those partners pulling out of the program will have a negative effect on how much it costs the services to buy the plane.”

Adding partners can help bring down costs, and both Singapore and South Korea have shown interest in purchasing the plane, which could lead to a boost in orders that will force down unit costs in the future.

Singapore has shown “tremendous interest” in the JSF, according to Bogdan. “They are quite enthused about the airplane. I believe by this summer we will hear” if they will be purchasing.

Similarly, South Korea should have a decision for their fighter replacement program by June , and said he is “cautiously optimistic” the country will pick the F-35.

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While those two Asian nations may join Japan in purchasing the JSF, America’s biggest threat in the region has made good use of espionage to develop what appears to be an F-35 copy.

“There’s no doubt a large amount of our classified data probably made it into” the designs for the J-20, a Chinese plane modeled on the F-22, and the J-31, a JSF equivalent, according to Lt. Gen. Charles Davis, USAF military deputy for acquisition, who appeared with Bogdan at the hearing.

Both planes were developed in the span of about 22 months, according to Davis, which shows China has achieved a level of acquisition ability that could be potentially dangerous to U.S. interests.

Senators asked the panel, which included Davis, Bogdan and Vice Adm. W. Mark Skinner, whether China has faced any repercussions over the apparent theft of data.

“If they’re going to go ahead and copy what we got, they at least have to pay a little bit for it,” Manchin said. “Has their government been put to the task? It’s very obvious what they have done. ... Have we prosecuted anybody? Are we on the tail of anybody?”

The panel gave noncommittal answers to Manchin’s question, but Bogdan expressed confidence in the Pentagon’s ability to protect key information.

“In the last few years we have implemented some fairly robust procedures to keep F-35 data within the confines of the department,” he said, adding that the partner nations are also doing a good job protecting information.

But, “I am a little less confident about our industry partners, to be quite honest with you,” Bogdan said. “I am not that confident outside the department.”

While he did not elaborate, both Lockheed Martin and Pratt & Whitney insist their cybersecurity is potent enough to protect sensitive information.

“Pratt & Whitney has an active information assurance program to address cyber threats to our business,” Matthew Bates, P&W spokesman, wrote in an email. “We do not discuss details of our cyber security initiatives, but we have a well established strategy in place to protect our intellectual property and company private data, as well as our customer’s information, against cyber threats.”

(Page 5 of 5)

“Lockheed Martin has made significant investment and progress in countering the Advanced Persistent Threat and the multi-layered defenses that threaten our and our customers’ systems,” Lockheed spokesman Rein wrote.

“We take this mission very seriously. We have placed special emphasis on intelligence analysis, characterization and prediction — an intelligence driven response in order to ensure agile response to attack and enhanced resilience of our systems. We routinely assist customers and partners with evaluating and strengthening their cyber defenses, and we will continue to partner with them to address these threats.”

Software Target Dates

In his opening remarks, Bogdan told the committee that the program will successfully finalize the Block 2B software by 2015, and has set a target date of 2016 for the Block 3I capabilities.

Block 2B, the initial combat capabilities, should allow the Marine Corps to declare initial operating capability on the F-35B jump-jet variant by 2015.

Bogdan said he was “moderately confident” that the initial war-fighting capability will be delivered in 2015. But “I’m less confident that the final capability of the airplanes, due to be delivered at the end of 2017, will happen with the full capability.”

He said the toughest years to predict are 2016, 2017 and 2018. He said he hopes to see Block 3F, which should have full war-fighting capability, by late 2017, but there is “some risk” there.

“What I see for 2013, 2014 and 2015 for 2B, the initial capability, is a software process that is improving,” Bogdan said. “That, in part, is what causes me to say I’m moderately confident up to 2015. I can honestly tell you beyond 2015 I don’t have a great answer right now, because there’s a lot of things that have to happen between now and 2015 to give me a lot of confidence in 2017.”

Bogdan expects to have more clarity on the delivery timeline at the end of this summer, after the program office has conducted a critical design review for Block 3 software and completed flight tests for Block 2B.

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