Leaders Testify to House Committee on F-35 Joint Strike Fighter Program

Ellen M. Lord, undersecretary of defense for acquisition and sustainment; Air Force Lt. Gen Eric T. Fick, program executive officer for the F-35 Lightning II Joint Program Office; and Theresa Hull, the Defense Department’s assistant inspector general for acquisition, contracting and sustainment, testify at a House Oversight and Reform Committee hearing on the F-35 joint strike fighter program in Washington, D.C., July 22, 2020.

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One that pursuing to the latest guidance from the house attending position all individuals it’s sending this hearing in person must wear a face mask. This is something now that I believe very strongly in I’m from New York. We’ve lost over 30,000 souls. We still do not understand the virus. It’s terribly contagious, and it’s easy for us to go home and infect our families. So it really is a life and death issue. Uh, so we will not recognize anyone unless they are wearing a face mask. Just let me also make a few reminders for those members appearing in person. You will only see members and witnesses appearing remotely on the monitor in front of you. When you are speaking but is known in WebEx as active speaker view, a timer is visible in the room directly in front of you for members appearing remotely. I know you are all familiar with WebEx by now, but let me remind everyone of a few points. First, you will be able to see each person speaking during the hearing, whether there in person or remote, as long as you have your WebEx set toe active speaker view. If you have any questions about this, please contact staff immediately. Secondly, we have a timer that should be visible on your screen when you’re are in the act of speaker with thumbnail view. Members who wish to pin the timer to their screens should contact committee staff for assistance. Third, the house rules require that we see you, so please have your cameras turned on at all times. Fourth members appearing remotely who are not recognized should remain muted to minimize background noise and feedback. Fifth, I will recognize members verbally, but members retained the right to seek recognition verbally in regular order, members will be recognized in seniority. Order for questions. Lastly, if you want to be recognized outside of regular order, you may identify that in several ways. You may use the chat function to send a request you may send in email to the majority staff, or you may unused your mic to seek recognition of it is. Obviously we do not want people talking over each other. So my preferences that members use the chat function or email to facilitate formal verbal recognition committee staff will ensure that I am made aware of the request and I will recognize you. We will begin the hearing in just a few moments when they tell me they are ready to begin the life stream. Okay, the committee will come to order. First of all, I’d like to congratulate ranking member Comber. This is his first full committee hearing is ranking member and I’m pleased that it’s one that we can work in a by pad partisan manner. I believe we all want a strong military, a strong private sector and a strong government that is, ah, wisely tracking taxpayers money and spending it official efficiently for the purposes that it was meant for. I look forward to working with the ranking member in the future, and I am so pleased that he’s with us here today. But without objection, the chair is authorized to declare recess of the committee at any time that I now recognize myself for an opening statement. Good morning. Today’s hearing will focus on the F 35 Joint Strike Fighter AH, highly technical stealth fighter that is the Pentagon’s largest and most costly acquisition program. Since the F 35 program began more than 20 years ago, the Department of Events has spent more than 350 billion on its development. Total cost to sustain the program are estimated at more than one trillion. Unfortunately, this expensive program has been plagued by challenges for years, including major problems with maintenance of the aircraft. This hearing will address the money, time and manpower our military is being forced to spend to address problems with equipment logs for spare parts from the primary contractor, Lockheed Martin. In June 2019 the D. O D Inspector general found that over a three year period, more than 15,000 spare parts for the F 35 lacked and electronic equipment log that maintains important information on the history of the spare part and the hours flown. This information is critical for the military to determine the age of apart and whether it is safe to keep using. In late 2019 and early 2020 committee staff from the majority and the minority visited multiple military bases and interviewed personnel who maintained the 35 F 35 feet. During these visits, staff confirmed that the problems identified by the I G still have not been resolved. This is unacceptable as a result of Lockheed Martin’s failure to provide spare parts that meet contract requirements. The military has been forced to divert personnel to troubleshoot these issues and use extensive workarounds to keep F 35 planes flying. And this costs American taxpayers millions of dollars. They should not have to pay. For example, last year the I G estimated that more than 300 million was spent on additional labor costs between 2015 and 2018. As a result of Lockheed Martin’s failure to provide spare parts with the luck electronic logs, the inspector general estimates the taxpayers will have to continue pain up to 55 year. If we do not fix these problems. That does not even include an additional 10 million an unwarranted, insensitive payments Lockheed Martin received in 2017 and 2018. Since then, the Defense Contract Management Agency has refined this estimate to determine how many missing and delayed Elektronik logs can be attributed specifically, toe Lockheed Martin. After this process, the Defense Contract Management Agency determined that Lockheed Martin is responsible for it least 183 million in missing and delayed Elektronik logs from 2015 through early 2020. That’s 183 million that the American taxpayers were forced to pay because Lockheed Martin failed to meet the requirements of its contract. That is why today’s hearing is so important. This money belongs to the American people. These air funds that could have been used to train our war fighters, upgrade older airplanes or support service members and their families. In the 2020 National Defense Authorization Act, Congress required D O D to seek and I quote compensation for costs incurred by the Department of Defense as a result of the contractor’s failure to deliver compliant, ready for issue spare parts under the contract In Quick, I believe Lockheed Martin needs to pay this money back blood. Lockheed Martin is currently in negotiations with D o D to compensate the government for all the defective spare parts it provided. It is imperative that Lockheed acknowledge that it failed to meet contract requirements and pay back the American people for these failures. Lockheed is going to tell us that they have made improvements to ensure F 35 parts arrive on base with electronic logs. Improvements have been made, but parts are still being delivered without Elektronik logs and missing and corrupt Elektronik logs occur throughout a spare parts life cycle, not just when they’re delivered to a base, and documents provided to the committee D. O. D itself identified nine points of failure in the life cycle of a spare part. You’re also going to hear that missing that Elektronik logs have never resulted in an accident or a fatality, and that’s very good news so far. But the Government Accountability Office warned that every time D o. D disregards a warning about a missing Elektronik log, military personnel are at risk of ignoring riel problems with that aircraft. We cannot simply hope that these accidents never occur. These problems must be addressed for our military personnel, and we must address it now. The US government is a major client of Lockheed Martin. In 2019 alone, Lockheed expected to earn 41 billion in revenue from the U. S. Government business paid for by the American taxpayers. For that much money, we can expect Lockheed to deliver products that work and that keepers service members safe. Anything else is unacceptable. I also planned to look at whether legislation is needed to ensure that F 35 is meeting performance expectations. I want to thank our witnesses for testifying on this important issue. And I really want to, uh, thank ranking member calmer and his staff for their cooperation and assistance on this hearing and the numerous meetings that we had beforehand. This truly is a bipartisan investigation. I now yield to the distinguished ranking member from the great state of Kentucky for his opening statement. Well, good morning. And thank you, madam Chair for those bikes, words and for holding this important hearing. Appreciate each of our witnesses here today and want to extend my personal thank you to Lieutenant General Ficke for his continued service to this country and a Miss Ellen Lord. For all her hard work at the department, I want to note that Mr Omer wished to be here today. But the Democrat majority declined that request and forced him to testify virtually. I understand the current public health situation, but I truly believe it to be vitally important to hear from witnesses in person. Further since the majority began an investigation into Lockheed Martin, I feel it is inappropriate for the representative to be questioned virtually even though the minority did not invite a witness to this hearing. I fear that what we see today could be used to suppress future minority participation. We’ve seen denial of minority witnesses in the select subcommittee. It’s important at this committee operating a fair and equitable manner. And I asked the chairwoman to commit to give all future witnesses the choice to appear in person if they wish and not force their virtual testimony. But today we’re here to discuss the F 35 fighter jet, the most advanced weapons system in the world, which brings significant warfighting capabilities to our great military. The three variants are used by the Air Force, Marines and the Navy to fly missions without detection by enemy radar and are equipped with sophisticated electronic components that aid the pilot. In effectuating his or her mission, these jets let us gather information, engage targets at longer ranges with sophisticated precision guided munitions while avoiding detection. These planes will come cheap, and although the cost per plane is always decreasing, we must be diligent to ensure that the government is using all the tools and it’s felt to keep costs down while maintaining a mission ready of 35 fleet. Even though the cost of acquiring F 35 aircraft is significant, that is not the end of the story. Our military must keep that playing mission ready while performing routine maintenance and replacing parts when their life cycle is over. The cost of this sustainment are significant. The Department of Defense inspector general found that many spare parts were delivered to the military. Lacking or with a defective Elektronik equipment logbook were eel, meaning that the spare parts were not considered ready for issue even though these parts are genuine and ready for use on the aircraft. The inability to track the part with the deal means that flight crews have to manually track those parts for wearing terror, which can lead to increased calls, human error and potentially a threat to life and safety. Fortunately, the government and Lockheed Martin entered into a massive collaborative effort to reduce the incidence of non ready for issue spare parts. I am encouraged to hear progress is being made both in reducing the frequency of ill deficiencies and in identifying previous deficiencies. If there are institutes of unsatisfactory contract performance, those issues must be remedied. But we must also find the root cause. Government contracting can be burdensome and expensive, driving innovative companies away from the market. We must work together to ensure we get the best products quickly and, at the least, expenses to the taxpayer. Increasing commercial item acquisition, competition, transparency and in user input may all help with that. I look forward to hearing from our witnesses today about their hard work supporting the F 35 fleet and ways that Congress can help increase contracting efficiency. With that, I yield back Thank you now would like to introduce our witnesses. Our first witness today is the honorable Ellen Lord, who is the undersecretary for acquisitions and sustainment at the Department of Defense. Then then we will hear from Lieutenant General Eric T. Thick, who is the program executive officer of the F 35 joint Program office at the Department of Defense. Next we will go to Miss Diana Lower, who is the director of defense capabilities and management at the Government Accountability Office. We will also hear from Miss Teresa Hole, who is the assistant inspector general at the Department of Defense Office of Inspector General. And finally we will go to Gregory M. Omer who is the vice president and general manager of the F 35 Lightning to program at Lockheed Martin Corporation. The witnesses will be a muted so that they can be sworn in. Please raise your right hand. Do you swear or affirm that the testimony you’re about to give us the truth, the whole truth and nothing but the truth, so help you God? But the records show that the witness is answered in the affirmative. Thank you. And without objection, your written statements will be made part of the record. And with that, Undersecretary Lord, you are now recognized for your testimony. Good morning, Chairwoman Maloney, ranking member Colmer and other distinguished members of the committee. Thank you for the opportunity to update you on the department’s F 35 sustainment efforts to improve the F 35 ready for issue parts for the warfighter. And to ensure comprehensive oversight of our contractors support. I am pleased to be joined by my fellow witnesses today to brief the Committee on the progress the department has made on these issues. The F 35 program is a key enabler off all three pillars of the national defense strategy. First rebuilding military readiness as we build a more lethal joint force. Second, strengthening alliances as we attract the partners. And, third, reforming the departments business practices for greater performance and affordability. The fifth generation stealth and battlefield networking capabilities clearly delivers the locality needed to meet warfighter requirements. As such are international partner nations and foreign military sales. Customers have chosen the F 35 to be at the core of their future airpower planning. Lastly, the F 35 program is a focus of the department’s reform efforts to provide affordable warfighter capability. Today, I would like to focus my remarks on three main topics. Toe address. Congressional concerns, increasing accountability within the F 35 Sustainment Enterprise, the department’s management response to the D. O D. Instructor General’s Report on Ready for issue parts and my efforts to promote effective oversight within the F 35 program. Ah, core focus area of my tenure as undersecretary for acquisition and sustainment has been strengthening accountability within the acquisition system and particulate for the F 35 enterprise. The department has made significant improvements in fleet availability over the past year. The department currently uses two main measures. A fleet availability for the F 35 mission capable right and fully mission capable rate. The department has increased the overall mission capable fleet for the F 35 from roughly 60% at the beginning of the year to nearly 70% in June. The department has similarly improved the full mission capability fleet rate from below 35% at the beginning of the year to nearly 40% in June. While more work remains to be done to meet Warfighter needs. These improvements in fleet availability, driven primarily by improvements in maintain ability and supply chain efficiency, demonstrate the department’s efforts and are having a significant and measurable impact on the ready for issue parts concerns raised by the D. O D Inspector General there. July 2019 report found that the department did not ensure that the contractor was providing spare parts in a ready for issue state. The report also identified that the department did not ensure that payments to Lockheed Martin were properly tied to performance against ready for issue metrics. The department concurred with all of the Department of Defense’s inspector general’s recommendations and has aggressively implemented corrective actions based on a follow up status report provided todo d I G. In January 2020 and subsequent conversations with D. O. D. G representatives. The issues raised in the d. O D I G report are primarily issues of electronic records management related to known deficiencies in the ability of the F 35 autonomic logistics information systems or analysis ability to accurately and reliably track and transmit Elektronik equipment. Log e l files. The department has taken near term action to address key graders of ready for issue, or are if I rate. But the long term solution to the problem depends on the already underway effort to replace Alice with a more stable, capable system. As a result of those near term actions, the department has increased the or, if I rate at Hill Air Force Base, Luke Air Force Base and Marine Corps Air Station at Huma from 43% in February 2 exceeding the or if I threshold metric rate of 70% in every month since April, achieving a high of 83% in June. In May, this committee spoke to unit commanders from the three services about the effects that ready for issue parks issues were having on the units under their command. I have also spoken directly with these F 35 commanders to hear their feedback and suggestions for improvement. As a result, I will ensure that corrective actions will drive a system, architecture and capability that meets warfighter needs and enables our maintainers to spend their time keeping aircraft available rather than manually working around the flawed electronic records system. On January 14th 2020 I announced to the House Armed Services Committee members the transition from Alice to a new government owned system Operational data integrated network called Oden. The department will introduce the first raunch of Odin capability fleet wide by the end of 2021. In the interim, the department has been working to develop solutions to the Legacy Alice system to improve eels, accuracy, attracting and transmission performance to reduce maintenance work arounds and mitigate potential risks of the fleet. The D O D I. G report also identified that existing contract terms were not sufficient to hold the prime contractor accountable for the eels deficiencies. DCM has been working closely with the F 35 J PO to negotiate fair consideration to the government from the prime contractor for these deficiencies, D. C m. A. Notified Lockheed Martin of its intent to see consideration on April 2nd and formal discussions began on May 7. De CMAs task is to seek consideration for non horrify parts delivered between the beginning of 2015 and April 30th 2020 and to incorporate terms into the next annualized statement contract. The F 35 J Po has also been working to negotiate more comprehensive contract terms in future sustainment contracts to ensure the contract has defined eel and horrified metrics to measure performance. As we have work to negotiate contracts, the better align incentives with performance and accountability. The department recognizes the need to enable more robust and effective oversight on major issues that decrease availability and increased cost. My staff and I are personally engaged on these issues in a number of venues. I have been meeting weekly with that 35 J PO service and other stakeholder leadership to ensure management oversight. Furthermore, I’ve been meeting monthly with the vice chairman of the Joint Chiefs of Staff and military service leaders to drive performance improvements. I have also been meeting raid early with the CEO of Lockheed Martin to address key issues facing the F 35 enterprise. I am keenly aware of congressional interest in the F 35 program, and my staff has been working closely with the Congressional Defense Committees to ensure that they receive timely information on key issues of interest. My staff has provided quarterly updates to the Congressional Defense Committees on a range of F 35 development, production and sustainment issues, including the status of the Alice to Odin trends position. I appreciate the opportunity tohave these meaningful discussions with this committee as we work together to strengthen the F 35 enterprise and to continue to provide safe, reliable and capable F 35 for our warfighters. Thank you very much for your time. I look forward to answering your questions. We’ll now turn to Lieutenant General Thick Lieutenant General Thick. You are now recognized chairwoman, Bologna ranking member Komar and distinguished members of the committee. It is my distinct honor to serve as your F 35 program executive officer and program director, leading the F 35 enterprise through the development, production and sustainment of this amazing air system. On behalf of the 2100 men and women of the F 35 lighten to program. It is my privilege to update you on the hard work that continues daily across the F 35 global enterprise. I am encouraged by the real progress we’ve made is an air prize, but remain keenly aware that much work remains before us. In the past year, our program has matured rapidly. Annual production rates reached an all time high. We delivered our 500 aircraft unit. Costs continue to come down and mission capable rates continue to rise. We remain committed to delivering the capabilities. Are warfighters need at a price are taxpayers can afford? Over the past six months, we reshape the F 35 program office to a product aligned organisation with cross functional talent embedded within each project management team. I have seen the benefits of this change through improved communication. With that 35 stakeholders and rapid issue resolution across the organization, I have focused this team on four lines of effort to continue the positive momentum we’ve seen in readiness over the last year. Those four areas are reliability and maintain ability are keeping the part on the aircraft longer supply posture which insures parts are available repair capacity, which means that capability to repair the part and finally repair velocity, which means fixing parts quickly to get the jets flying again. My remarks today. Address ready for installation or art If I parts on electronic equipment. Logs are meals as requested in your invitation. And if 35 deal is similar to a digital medical record, it tells the story of the part from cradle to grave. Each part with an eel. Roughly 1000 of the 50,000 parts on F 35 is managed by the F 35 Autonomic Logistics Information System, or Alice. When apart arrives with an incorrect or missing eel, that part is not ready for installation or non, or if I, it takes a significant effort in time for maintainers to reconstruct the part history and create a digital record for that part. This activity diverts time from scheduled maintenance increases the probability of human error adding costs to the program. The bottom line is we must receive our parts on time and with all the required identification markings and electronic records. Aided by insights from the Government Accountability Office, the DEA, the inspector general. In my active dialogue with commanders in the field, we are aggressively targeting the root cause of hell and non out of high parts issues. We have improved contracting language to ensure that industry compensation is based upon delivery of parts that are ready to be installed. We work closely with Defense Contract Management Agency to assess the impacts from parts with missing or incomplete eels and are evaluating what, if any, excess incentive fee may have been paid to Lockheed Martin. When our warfighters compensated for non or if I parts, my team conducted site visits and quality inspections working side by side with maintainers on the ground. We developed corrective action plans with industry to address supply system to graders, and we’re monitoring to ensure that the supply chain is responsive to these corrective actions. We updated Alice to improve parts accountability, redesigned Alice modules to make data entry more intuitive and revamped training and quality oversight at F 35 locations to catalog discrepancies and reduce human error. These measures are paying off as Miss Lord, mentioned last month, are ill parts ready for install rate reached 83% with a target goal of 90% this year, beginning in 2021. The contract ID requirement for parts ready to issue will be 99%. To be clear, we heard the d o d i g We heard the g a o. We’re taking actions and these actions are making a difference. In the next two years, the program will also sunset the autonomic logistics information system and introduce them, or modern sustainment management tool called the Operational Data Integrated Network, or ODIN, led by the government. Voting starts with a new underlying integrated data environment and brings modern hardware and software to the F 35 sustainer and will leverage agile development practices and interactions in response to the evolving needs of our customers and global operations. Voting will decrease maintenance workload, improve readiness levels and be portable and easily deployable. My team of experts and I continue to work tirelessly to deal deliver the war fighting capability our nation needs. We will do it smartly, efficiently and as cost effectively as possible, and we will do it with the highest regard for those we serve and those who put their trust in us as the son of an airman and the father of two. Airman. Nothing is more important to me than giving our service members the tools they need to do their job in harm’s way and to bring them back home safely every time. I appreciate the opportunity to appear before you today and I look forward to your questions. Thank you. Next is Miss Mauer. Miss Miller, you’re now recognized. Thank you very much. Good morning. Sure. Well, way can’t hear you right now. You have to speak up louder. Good morning. Chairwoman Maloney, ranking member Komar and other members and staff. I’m pleased to be here. Pleased to testify today about Chios. Body of work on the autonomic logistics information system are Alice. Over the years, we found a number of significant problems and challenges for Alice, which are summarised in my head statement today. Most concerning is the lack of trust pilots maintainers and commanders having key aspects of the system. Getting Alice to work requires culture of workarounds and forces commanders to assume the risk of allowing planes to fly when analyst says they should stay on the ground. Over the past six years, we’ve issued a series of recommendations to vot help address these concerns. And we are encouraged that under silk, it’s very Lord and General Spit are taking a recommendations seriously as they chart a new path. The head transitioning from Palace to Odin. And as you heard Oden, is the fix for Alice. So rather than walk through the list of problems identified for Alice over the years, all instead focus on key questions stemming from those findings that can assist congressional oversight. Question one. What is Odin supposed to dio that was not clearly defined for Alice. There was general agreement that it should diagnosis maintenance problems. Informa Global logistics chain produced statement costs and help keep aircraft put warrior craft in the year. Years ago, the OD gave Lockheed essentially no specific requirements beyond create logistics information system and then did not adequately build uses into the development process. As a system evolved over time, there were often gatch and what users heated and what was delivered. For example, having a deployable system meant one things a lot. He has something very different form or further, to avoid similar disconnects in the future. It’s important to clearly define and agree on what Odin Ismet Sidhu informed by user needs which leads to the second question after defining what Odin should do, How will you know it’s done it? Six years ago, you recommended the OD develop ways to determine whether analysts was performing as intended, that never happened and stay over the years. We’ve heard consistently that Alice has a lot of problems, but it’s getting better. However, lacking some kind of measures, it was never clear what success looks like or powerful or off it. Waas The F 35 program could learn from this history by developing a clear understanding of our voting impacts. Mission. Execution. Is it help you put in plants in the air or keeping them on the ground? But how well is owed meeting the needs of pilots, banks, handers and founders? That leads to the third question. I was going to make this topper years ago. Todo handed responsibility for after Teapot statement, including Alice Milwaukee. That’s not inherently bad and have done properly. You can save money and make it better. But at the time, Beauty did not think through down string implications of giving nearly complete control of software are rare and intellectual property. It’s the contractors and this deity If it’s now from Alistair Oden, there is an opportunity to reconsider who will do what that includes. Two. Udi’s access to technical data whether maintainers will be able to correct missing or incorrect information without having a contractor and how Lockheed, a joint program office, US Military Services International Partners we’ll work together to implement used maintain that upgrade. 15. Oden fixing Alice by transitioning own will now be quick and will not be easy. Fully implemented. Geos recommendations will help beauties efforts in the beauty and its on going efforts proper. His transition from Palestine owners only one item on a much longer list of 35 sustained challenges. The F 35 is a perceivable future of competitive used for this country and many of our allies, but not achieve its full, essential uncivil program. That address statement challenges associated with Alice spare parts operating costs by Chan, Mission Capability, German, Maloney and other members. Your continued focus and action on sustainment issues not just production and help ensure the F 35 is able to get our national security goals for decades to come. Thank you for the opportunity. It’s testified this morning, and I look forward to your questions. Thank you. And next is Miss Whole, this whole you’re now recognized Chairwoman Maloney, ranking member comer and distinguished members of the committee. Thank you for inviting me to appear before you today to discuss the Department of Defense Office of Inspector General Report on F 35 Ready for issue Spare parts and sustainment performance Incentive fees. I am the assistant inspector general for audit acquisition. Contracting in Sustainment, the D. O D I. G directorate that conducted the audit of the F 35 are if I spare parts and sustainment performance incentive fees with the D. O. D. Expecting to spend over one trillion to operate and maintain the fleet for 66 years. Our report findings highlight the importance of ensuring that F 35 program costs are affordable and sustainable. Long term Lockheed Martin is required to deliver or, if I f 35 spare parts or if I spare parts, should be ready for aircraft maintenance personnel to install on the aircraft and should be a sign in Elektronik equipment logbook or ill. During the audit, we found that Lockheed Martin has been providing a significant number of non or if I spare parts to F 35 sites since 2015 when sustainment efforts began. Despite being aware of this problem, the Joint program office did not resolve the issue or required D o D personnel to track the number of non or if I spare parts received. Duty personnel submitted more than 15,000 action requests from December of 2015 to June of 2018 to correct the non or if I issues to maintain the volume of non are if I parts that Lockheed Martin provided at 35 sites reassigned D o D personnel to focus full time on informally resolving feel issues. In some cases, this preempted the need to create inaction request and therefore created an inaccurate impression that the issue of locking Martin delivering the parts without heels was improving. If reassigned duty personnel were unable to resolve the problem, they still had to contact Lockheed Martin representatives or submit inaction request incurring additional charges. As a result, the D o. D received non or if I spare parts and has spent up to 303 million between 2015 and 2018 on labor costs for D o d personnel to bring the spare parts you are if I condition and will continue to pay an estimated 55 million annually until locking, Martin consistently delivers. Or if I spare parts that meet the contract requirements. The duty paid performance incentive fees on the sustainment contracts based on inflated and unverifiable of 35 aircraft availability hours due to the number of non or if I spare parts that Lockheed Martin provided to F 35 sites. The J PO issued guidance in October of 2018 allowing aircraft to be flown with spare parts. The head he’ll issues. Contradicting previous J PO guidance that required spare parts with eel issues to be quarantined and not used until the issues were resolved. Personnel at the F 35 sites resorted to using whiteboards and spreadsheets to track flight hours when non are. If I spare parts were used on aircraft, the duties use of local guidance, an ad hoc manual processes allowed aircraft to fly and complete missions instead of the D O D. Grounding aircraft due to receiving non or if I parts this practice inadvertently inflated aircraft availability hours, according to Jay Po, officials on any given day, 50% of the F 35 fleet is flying with non or if I spare parts. However, the Joint program office does not require of 35 site personnel to collect aircraft availability hours and track the hours that aircraft fly with non are buy spare parts installed. Therefore, the duty has no way to determine the total number of hours the F 35 has flown with non or if I spare parts blocking. Martin is receiving incentive fee payments that were earned through the use of duty labour rather than the contractor’s ability to meet its performance metrics. As a result, the J Po potentially overpaid performance incentive fees on the 2017 and 2018 sustainment contracts. Furthermore, the J. Paul relied solely on contractor reported information on availability hours to pay Lockheed Martin performance incentive fees for 2017 and 2018. The J PO compared availability hours on one. Lockheed Martin generated reports to another Lockheed Martin generated report because the J. Poe did not track or collect aircraft availability hours as the world’s result, the D. O. D has potentially overpaid 10.6 million in performance incentive fees. F 35 aircraft are already proving to be more expensive to sustain than originally planned if the duty and Lockheed Martin do not address the concerns. Discussed issues related to non or if I spare parts will continue to compound as the fleet expands. Escalating sustainment costs, reducing mission capable rates and increasing the life and safety risks that occur when life limited non or if I spare parts are installed and flown without an eel. Additionally, until the J PO independently collects data to verify contractor performance, the duty may continue to over pay performance incentive fees on the 2018 and future sustainment contracts. Thank you for the opportunity to testify this morning, and I look forward to your questions. We will now conclude with Mr Palmer and Mr Omar. You are now recognized. Thank you, Chairwoman Chairwoman Maloney, Chairman Lynch, ranking member Comber ranking member Grothman, distinguished members of the committee. I appreciate the opportunity testify on behalf of Lockheed Martin and our industry teammates to provide you with an update on the F 35 program. My preference would be to testify in person, but as you know, I’ve been asked to speak to you virtually due to Kobe. I want to thank you for your interest in the program and commitment to ensuring it delivers the best value to the taxpayer. But more importantly to our war fighters. As the F 35 vice president and general manager, I appreciate the opportunity to meet with Congress and engage in meaningful dialogue concerning the program. At this time, I would like to submit my full written statement and asked that it be made part of the hearing record. Now I would like to provide a brief update on the state of the F 35 program. The committee has asked specifically that I address that 35 sustainment focusing on electronic equipment, logbooks or eels as well as ready for issue are if I parts. These are important issues for the maintainers on the flight line who keep the F 35 flying, and we remain steadfast in our commitment to make it their job. Seamless and without issue, The F 35 stealth technology, supersonic speed, advanced sensor suite, weapons capacity and increased range make it the most lethal, survivable and connected aircraft operating in the world. Today we have delivered more than 540 aircraft trained more than 1000 pilots and 9000 maintainers and flown nearly 300,000 flight hours. Currently, the F 35 operates from 20 bases and four ships, with nine nations operating the jets from their own home soil. Five countries have flown operational missions, including the United States Air Force, which has been in continuous deployment overseas for more than a year. Warfighters tell us the aircraft provides game changing capabilities, providing unprecedented situational awareness, maneuverability and connectivity. The F 35 program is also a powerful economic driver. The program currently has 1900 suppliers, 1800 of which are in 48 states plus Puerto Rico, generating 254,000 jobs, which results in a U. S. Economic impact of $49 billion annually. The F 35 program continues to make great strides in the area of sustainment. We quickly scale from development to production to fielding at an unprecedented rate. In the last three years, Lockheed Martin has delivered more than 300 aircraft and invested over $270 million improving our supply chain through data analytics and automation, along with leveraging both production and sustainment, elements to improve performance at reduced cost. Lockheed Martin and the J PO have been working diligently to improve sustaining performance with an emphasis on affordability. Within the last 24 months, the mission capable rate for the fleet has increased from the low 50 percentile to the mid seventies. Additional sustainment metrics that measure the health of maintenance due to supply and other associated maintenance activities have also significantly improved. Over the past five years, Lockheed Martin has reduced the cost per flying hour that we controlled by approximately 40%. And we project that with our further investments, probably able to drive that down, drive down our cost per flying hour aspect another 50% over the next five years. We acknowledge deals have been a challenge, but significant improvements have been realized. Lockheed Martin has applied diagnostic and engineering resource is to resolve the issue. These challenges do not indicate that apart is flawed, nor are real issues exclude caused exclusively by industry alone. US. Services have confirmed a market improvement and ready for issue parts in 2020. Thes gains are a direct result of the concerted joint government industry effort to identify root cause and implement corrective actions. Substantial progress has been achieved since the release of the D. O. D I G report more than a year ago. Since then, Lockheed Martin has demonstrated a 45% point improvement in hell performance while simultaneously growing the fleet by more than 1/3. This year, our if I parts have improved to approximately 83%. We will accelerate to more rounds of improvements this year, which we expect will result in the 90% or if I threshold target specified by our customer. Lockheed Martin is committed to transparency and partnership in the resolution of the challenges associated with deals and will continue to be compliant with our contractual obligations on the program and look forward to a continued partnership with committee, the D. O. D. And the Joint Program Office to resolve this issue. In conclusion, the F 35 is performing and operating as we envisioned from an operational sustaining perspective, the F 35 has proven itself in combat and is quickly becoming the centrepiece of the U. S. Military fighter fleet and that of our allies is a privilege to lead the F 35 industry team and on behalf of Laki Martin, I think the men and women of our U. S. Services and their families for their selfless service to our nation again Thank you for this opportunity to update you on the F 35 program. I am happy to answer any questions you may have. Thank you. I want to thank all the Panelists and you want toe respond. Teoh items that my my friend were represented Comer raised up. And we’re in person today because Theo de insisted on testifying person. So the witnesses and person were all from D o D. And we could only have three to conduct the hearing safely. We did try to work with your staff and the medical staff of the Capitals to have in person hearings as you requested. It was very difficult to make this happen and meet the health standards to ensure people don’t get infected on. One thing I know from New York is we don’t know enough about this virus. I talked to friends and they seem fine. The next day they’re dead. They told us it doesn’t affect Children. One day, 35 Children came down with it. One of them died and you hear the heart breaking stories of medical professionals who believe they are are decontaminated. They come home and they infect their entire families. So it is a deadly deadly disease, and we have to put health first. But the next hearing we could have Lockheed in person and have d o d remotely. I’m going to instruct the staff to work even harder with your staff to make the accommodations and the concerns that you have. I deeply respect the position you hold and want to work with you. I think we are united in wanting to have a strong military, a strong private sector, a strong government, all getting a quality product at and protecting taxpayers money. So I sincerely would like to try to accommodate and and next time we’ll have Lockheed testify in person and others will be remotely so right now. I’d like to recognize myself for five minutes. Miss Hall according to the D. O D I. G report issued last year, they said that D O. D. Incurred more than 300 staggering amount in excess labor costs between 2015 and 2018 due to Lockheed Martin not delivering spare parts that met the requirements of the contract. The I G also estimated at thes problems go unaddressed that it will continue to pay uh, the department d o d. 55 million each year, an extra labor cost. Your office recommended that the Defense Department seek compensation from Lucky Martin dating back to 2015. Why did your office recommend that d o d seek to be reimbursed for these parts? Chairwoman. We recommended that DTB seek reimbursement for that because by definition, in the contract, the parts should have arrived, arrived ready for issue. Which means they should have been ready to go on the aircraft along with an electronic equipment logbook. So to keep in in terms with the contract, our recommendation speaks to the need for compensation. Okay. And according to the idea report, the Defense Department previously sought payment from Lockheed Martin for these Elect Elektronik log defects in November of 2018. But lucky Martin and I quote refused to sign the proposed modification on the sustainment contract. Miss Hold, is that right? Based on the information that we had at a time, that is true. And according to the I G s report. Based on a similar contract modification. The proposed change would have cost Lockheed Martin 7000 for each problem identified with a spare part. And according to D o D. Lockheed Martin refused to sign the modification because it would cost less to fix each individual problem that it would to reimburse the government. Is that correct? The range of cost per meal issue is in 7000 to 11,000 and guests according to what we found, is from our work. Lockheed Martin found that it would be cheaper to address this on the sustainment contract. Okay, Lieutenant General Thickness, turn our attentions. You Congress mandated the 2020 National Defense Authorization Act that the department’s follow the I. G s recommendation by seeking compensation for defective parts. And I understand that discussion between Lockheed Martin and the Defense Up Contract Management Agency began in April and that D o. D worked with Lucky to identify specific problems between 2015 and 2020 are that are attributable to Lockheed Martin. What is the current status of the negotiations with Lockheed Martin Now? Some of those discussions are ongoing. A sui speak. My understanding is that the team has come to a agreement relative to the magnitude of the issue and the problem, but that the consideration offered or or demanded has not yet been agreed to. Okay. And Mr Almer of Lockheed Martin, Lucky Martin is responsible for fully executing the contract that American taxpayers are paying for, and that our military is counting on your company to safely and effectively deliver. We don’t need further delays or excuses from Lucky Martin about these problems. Will you commit to paying the Defense Department back for every defective Elektronik log in the defense Contract Management Agency that has been identified, Mr Almer? They lost the audio from us, so you may have to repeat. Okay. Is Mr Mr Olmert Can you hear me now? Isn’t that he’s left? I guess he’s on. He’s on. Are they had problems with our Okay, uh, with the next question. Okay. Um all right. Uh, we’re gonna go to another question, but my questions are of Mr Almer. So I now yield to the ranking member for his questioning. Thank you, Miss Lord. Understand. Deals or major issue, but what are some other issues in the program and how are you in the department responding to them. From a sustainment point of view, you’re trying to look at Lockheed Martin’s performance, particularly in terms of earning incentive fee, by implementing some of the measures we took on the production program, where we very clearly link what is goodness for the warfighter to what are those incentives that are paid? So that’s contractually what we’re doing. Secondly, eels are a significant issue, but we do have a challenge with visibility in parts being transferred also in terms of maintaining warehouses and making sure that obsolete equipment is moved out. So there are a variety of other things as well. You don’t fake in this Lord. We’ve heard from servicemen on the ground that they’re following Deal D and J PO directives to fly aircraft that may be missing and deal. I believe that well, I trust our commanders to make the proper decision regarding the health and safety of our pilots and their jets, but I believe that lucky it is incentivized to keep jets in the air and keep them at least partially mission capable. Notwithstanding the directors from D O. D and J Po. If a jet we’re missing a Neil would it be allowed to fly? Yes, sir, it could. And let me tell you the circumstances under which it yet that’s missing an eel could fly. Or the circumstances in which that deal does not contain a safety is not associated with the safety critical part nor a life limited part. So when I spoke with my maintenance group commanders five of them on the phone on Monday of this week, each of them confirmed to me that if the if the eel belong, I’m sorry if a part that is missing in the hell is safety critical or his life limited in any way, that part will not be installed on the aircraft, and that aircraft will not fly. So if a jet were not allowed to fly, would it count positively toward aircraft availability or the mission capable right? Who account negatively? Should a contractor be incentivized for performance that would otherwise not happen without the hard work of U. S. Government personnel, such as allowing a plane to fly without an eel? In general, I would say no, but at the end of the day, we put blue suitors and green suitors and brown suitors in the cockpit toe fly those missions so no aircraft takes off without some form of government assistance. The magic is finding where in the middle, where is the worst? What’s the right answer for responsibility? This Lord, our heels required by contract to be delivered by Lockheed to the government. Is Laki delivering heels intact? 100% of the time. Have they failed to deliver just a few parts? Are we talking thousands of parts? We’re talking significant numbers of parts. I believe general Thick and confirm it’s thousands. Okay. Is Mr Palmer back online yet? Mr. Hallmark, in your me, Mr Almer can be Kimmy. You ask you a question? Are you online, Mr Omer Degrees? She still had, like, Okay, I have two minutes left. All right, I’ll yield back till we getting back. Online ad questions as well? About I’m sure. Is he back online now? He’s on. Oh, he’s on. Okay. Sure. Right. Can you hear me? Yes, we can hear you. Now. We can hear you, but I can’t see you. All right, There we go. Good deal. Great back. Okay, okay. Okay. Finish Mr Calmer. Thank you, Mr Mr Roemer. When was your last quarterly earnings call that lucky yesterday, Congressman, Uh, how much revenue was reported? Leave $41 billion. So that’s, uh what about revenue for all of fiscal year 2019. I don’t have that figure out the top. My head Congressman, how much is how much of your revenues from government accounts? I’ll have to get that information for you and provide that congressman. Okay, I research into cake majorities, right Somewhere around 75%. Do you know roughly what percentage of your revenues came from the F 35 program? Approximately 30 to 40%. Okay. With all this profit, why’s Lockheed failing to fulfill the contract and deliver heels intact and on time? Congresswoman, those figures are borders and sales, not profit. And we are very engaged relative to resolving this problem concurrently with our customer. Good. Well, Miss Lord and general pick, I look forward to working with you all on this issue and continuing their efforts to make contracting less burdensome and safeguard the American taxpayer. I mean, it’s the taxpayers won’t and expect us to have the best military in the world. Congress is committed to ensuring that our troops and our military have the best and have everything they need and after one certainly want to work with the private sector to ensure that we have the best. But we also expect the private sector deliver on the contracts that the American taxpayer expect. So look forward to working with you and Lockheed through this process, and hopefully we’ll continue to see improvements. Chair. You’ll duck. Thank you. And I’d like to be associated with your comments about wanting to see improvements. We had a prior briefing with the military leaders that were running this program and working with the men and women who were flying the planes. And I’ve never seen a military person not in combat who was so frustrated, wanting to make have a product that was great for our country and not having the support or the technology or even the parts that worked for the plane. So this is a tremendous problem. So I really I want to ask you, is still where you commit to paying the Defense Department back For every effective Elektronik log, the Defense Contract Management Agency identified Congresswoman, it’s a it’s a complex problem. As we’ve discussed, it’s It’s not all associated with Lockheed Martin performance. There’s many aspects relative to not ready for issue. This is not simply a this Elektronik file we are making. We are innovating as we go through this process with our customer. This has been a concurrent program, so we concurrently have developed, produced and sustained this aircraft in the products that we utilize to do that, and electronic equipment logbook contains quite a bit of sophisticated engineering information. It doesn’t simply just track apart. It includes technical data, graphical data. I liked our data. It contains a lot of different information through the business process. There are there are elements that we can corrupt this data. It could be presented that way, or a customer can miss input information. And so there’s a lot of complexities relative to the Elektronik. He’ll book. We’ve been working wholeheartedly with the D. C. M. A and the J PO to resolve and understand these technical issues. We’ve seen significant improvement in the last six months, in particular as we’ve mentioned and improvement up Teoh, 83% ready for issue, and I’m fully committed to supporting that continued engagement to resolve those issues going forward. I’m also committed to meeting with the Defense Contract Management Agency as well as the J PO to sit down and reconcile the concerns and adjudicate the cost appropriately. Well, I appreciate your concern, but I come from a military family, and every time a pilot gets in those planes and flies up into the sky, they’re risking their life. And I know many widows and Children that have lost their their their father because of faulty equipment. And 85% isn’t good enough for the U. S military. It’s got to be 100% and a contract is a contract, and the contract says you will deliver a plane, which you’ve done beautifully. It’s a beautiful playing, but it also says that the material that is needed to fly that plane has to be delivered to. And, uh, 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. So, uh, I hope that you will change your mind and at the next hearing, have an update on how you’re now at 100% and how you have worked out the understanding of this equipment so that it is working for the military. One of the most heartbreaking things to me in the last meeting is that one of the manager said, he said, I can’t even repeat it. It’s too upsetting. I would now like to say, Mr Omer, I sent you a letter or like Lucky Martin a letter on June 18th 2020 and I appreciate Lucky Martin’s cooperation so far in producing documents and getting back to us with some answers. But many documents have not been provided. So do you commit that Lockheed Martin will produce all of the remaining documents before the end of the month? I must tell you, it’s just upsetting to me. If you can’t deliver a document, I have no trust that you can deliver a plane that’s gonna operate. And that and that has all of the equipment true, it’s a It’s a complicated plain. You have complicated equipment, but the contract, uh, for a trillion dollars to maintain it. Oh, the contract calls for the support of equipment to be delivered an operating, And how can you expect our military to respond? This is in peace time. I hate to think what would happen if we were in a war and our men and women had to fly a plane that didn’t have the technology working or the pieces working that is supposed to be working with this plane. So this is really I I would say not just a money issue. I think it’s a life and death issue. And we have to get this plane. What good is a plane that the camp fly? According to some of the managers, because all the equipment is not working. So I look forward the following up with you on this request for the documents and, uh, and I and also in the request that Lockheed Martin live up to its contract. The American people have paid a lot of taxes to live up to our contract with producing this important plane. But Lockheed is is not responding to my request for documents. It’s not responding to the military’s requests for equipment that they feel that they need to fly this plane. So I now yield to the distinguished lady. I am Mrs Norton from the District of Columbia. Okay. And thank you, Madam Chair and I thank you for this hearing. I’m going to say Mr Omar of Lockheed and explaining constant morons in indicating of innovations and the rest I just want to say, for the record that Okay, okay. You hear me? Yes. We can hear you. Thank you. Describe, I want to say, for the record that, uh, we signed a contract way, didn’t sign the paper innovations we signed. Uh, we didn’t sign the paper call. So we’re runs, and that’s what’s happening. We’re paying for cost overruns, and that is something that it’s simply got to stop. I have a question beginning with Miss Morrow off the G A O. Because the committee staff also visited of the F 35 bases on. And they pointed at that time that Ellis was the root cause of the problems with the electronic logs and that, uh, that the they lose track. Uh, the logs do sometimes overnight after maintenance crews have already cleared the F 35 to fly the next day. Talking about dangerous is what the committee staff found, and it’s visit. I’m Miss Morrow, consistent with what the G a. O has found in its work. Thank you for the question and Yes, those findings are consistent. But what we found in our work re summarize the signings and our position packing large. It’s part of our audit work. Last year, our team visited five different installations within the United States, where they have not 35. I heard a great deal of frustration from pilots and from maintainers and from commanders, there was a grave amount of concern that the, uh and frustration frankly, with problems with heels and with the problems with the interface with Alice itself, these are long standing problems. We’ve noted them in our courts. Going as far back is 20 quarts mean many. Much of this is rooted in the fact that this is a this old system. And we, uh we hope that the d o. D. Fully implements are various recommendations as it towards implementing voting. I will be watching that, hopefully to make sure these problems do not concern you and your future. That’s definitely a problem with the past. Definitely. Probably. Thank you. Met Miss Morrow. Mr Elma of Laki. Uh, locket, of course, has acknowledged flaws in analysis. Ah, and it provided the committee with a presentation, uh, and its presentation you indicated that Alice is, uh, currently looking at its manpower hardware. Uh uh. Increased labor costs decrease readiness. Um, what steps when you consider all of these laws and Alice, what steps is Lockheed taking now? This is for Mr Omer. What steps is lock he taking now to improve Alice until that system can be replaced. Congresswoman, were we have gone to an agile software development process with the Alice system just to just to let everybody know Alice is an I T infrastructure that was developed in the early two thousands before the iPhone existed. So it’s an antiquated hardware software system. We have implemented agile software updates. We have improved processing times significantly on the order of 50% or more. We’ve we’ve gone to quarterly releases. It was taking us 12 to 18 months to provide software updates were now currently with the J PO Releasing software updates every three months were receiving positive feedback, reduced wait times, significant processing time. You can get all of the information in front of you significantly reduced button clicks to get the information to process data. So quite a bit of improvement has occurred on the Alice system recently. Um, I’m sure I hear concern even discussed on both sides of the aisle. I can only hope that this hearing moves us ahead to at least get a new system. So the taxpayers on continually to pay for these redundant floors. My time is out. And I thank you with chair now recognizes the gentleman from North Carolina, Mr Fox, for five minutes. Thank you. Mr Chairman. Mr. Almer and Lieutenant General FIC The D o d. Inspector General report notes that ready for issue means it’s fair parts supplied by the contractor are ready to install on the aircraft and having Elektronik equipment. Logger eel assigned. Can you explain in layman’s terms what electronic equipment log is? And it’s important to overall maintenance and sustainment of an aircraft such as the F 35. Yes, ma’am, I can. So on electronic equipment log I like to think of as a personal health record associated with that specific part. It follows the part digitally or electronically. And some of the functions we ask of that of that deal are to track life limits. Associate with that part to track implementation of TC TDs, toe look, a part number and tail number compatibility manage complex assemblies like an ejection seat that may have an eel at the top level and then lower invented or indentured eels. Below that, we look at the eel also for export control. A swell as inspection requirements for those parts. Thank you, Mr Omer. Would you like to respond? Yes, ma’am, I concur with general fix review of, ah, description of a Neil to be clear, man, it’s on electronic file. We in 2016. We we implemented quarantine such that when we release material that we ensure the eel is in fact in place inappropriate. So here in Fort Worth, where we produce the aircraft in late 2016 early 2017 we implemented, we could not deliver aircraft without heels being compliant as the aircraft delivers, and then that he’ll delivers on with the airplane, it is consumed within the Alice system. The information that General Thick described populates the information structure that informs the maintenance system how to operate and sustain the airplane. The business processes behind that transfer of that information. The communication of that information the input of that information is what’s resulting with the field issues today and That’s where we are very focused on creating solutions from on I t. Business process point of view to resolve these issues. And that’s where we have seen in the last six months in particular the significant increase of ready for issue parts. Thank you. This question is also from both Lieutenant General Fix and Mr Omer. What challenges are the F 35 program experiencing on Elektronik equipment logs and what is being done to identify and understand the root causes of sustainment issues with the F 35 program? I’ll speak to them in general terms, Man, I think there’s basically three problems one would be does it exist on? And Mr Omer addressed that in his comment relative to the initial existence of a kneel on delivery. That second would be both of those really have more to do in my mind with Alice and with the I T systems and how the eels air passed around. Then they do with the actual in Stan Shih ation of the eel itself, and that is, they may be corrupted or they may be removed or stripped inadvertently as the as the electronic footprint of that part works its way through the system, from Lockheed to a supply point in the country and then eventually to a squadron. Mr. Omer, if you think that Mr Fix, you know, fix answer is sufficient than if you just say so. My time is running out and I have one more question. Farce. Woman Fox. I concur with the Pio. Thank you, Mr Omer. What actions has Lucky Martin taken to address the non ready for issue parts and ensure accuracy of electronic equipment logs? Um, mawr than what you have already stated. If there’s something else you need to state and then Lieutenant General Fick, have you seen improvements in issue for ready for issue parts? If you’re placing yet yes or no? Then that would be easy, general thick. And we have we have seen an improvement associated with our if i parts that requiring meal and I remember heels are only required in about, um ah 1000 out of the overall 50,000 part count on an aircraft. So it’s a very small number of parts that actually require heels. And to that point and to my earlier point relative to whether on deal is truly required, were actively looking to reduce the number of parts that have us. So we reduce this problem. Mr. Elmer. Mr. Omar. Congressman Fox, We’ve invested 30 $30 million relative to improving the ready for issue parts. That improvement, as we have described the deal and the elect the engineering content associated with that, the complexity of that content. We’ve done a very formal systems engineering approach. When I say we I’m talking the Enterprise J Po, Lockheed Martin with our warfighter. We’ve conducted events where we’ve gone out to the warfighter. We’ve heard the concerns. We’ve witnessed the concerns, we document the concerns. And then we come back and go through a A very formal systems engineering process to determine root cause and corrective action. And those actions then play forward relative to the improvements we’re seeing. We still have two more formal initiatives this year. As we work. Teoh raise the bar relative to issue effectiveness. Thank you both, madam. Sure. Mr Cheer, are you back? Generally the yields. I’m gonna kill myself five minutes. Uh, Miss Hall, At the beginning of the testimony, you mentioned the term of the the kind of contract with point of order. It’s ah That’s the Republicans. Tired. Miss Fox just spoke over You. Still a Republican, Right? Okay. All right. That’s okay. Reclaiming my time. Uh, we’re going to stop the clock again. Five minutes. I respect the gentleman’s right. Miss Hall. At the beginning of your testimony, you mentioned the term all the length of the Lockheed Martin contract on the F 35. How long was that? The contracts. Their annual annual contract. Some. Some have gone beyond a year. Aziz, Part of our review. We looked at on the ile issue on the time period of 2015 till about April of 2019. The 2018 contract goes till April between 19 but our he’ll review covered a portion of 2015 through 2018. Okay. Is there are there problems? And I know, Miss Lord and Lieutenant General FIC, you’re both on board. Back in 2019 when we went with this larger contract, I think its is this lot 12 we’re doing now. Yes, sir. We’re delivering lot 12. Okay. And that’s 149. The aircraft. Is that correct? Roughly 147. Okay. All right. All right. I trust you. Close enough is there a problem with the way we have framed this contract that that makes Lockheed Martin less responsive to issues like this, Do you believe? But I don’t believe so. I know that on the sustainment contracts. Starting with. Okay, let me let me and I don’t have a whole lot of time. But they is. Lockheed Martin is still getting incentives despite the fact that they are delivering noncompliant, uh, parts. So So we assess locking Martin’s performance against the specific incentive fee criteria that we build into both the production contract. The system it isn’t at on flight time. So if if you fix if you fix a non compliant part and get that up in the year, does Lockheed get the bonus to get in it? Yeah, they get the incentive. So So that’s that’s what I’m getting at. Is there a way we could on Mr Almer? I would like you to consider this seriously that part of the contract the fact that you are getting an incentive bonus because D o. D personnel have spent approximately $300 million in ah, work around on your noncompliant parts to allow you to receive a bonus for work that, you know, you didn’t do correctly. So you need to You need to go back and figure that out. You can work with defense Contracting Management Agency that that portion of the benefits your receiving is not fair and just under the contract. And I would highly recommend if you if you want toe, 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 for the American taxpayer. Lockheed Martin’s had a long, strong history in the defense sector. We respect that. But I don’t believe based on the facts here, that the American people are being traded fairly and, uh, and that will, that will be to the detriment. If that continues, that will be to the detriment of Lockheed Martin. So we’re gonna look at that really hard. I do believe that the F 35 is probably one of the finest aircraft out there when, if lives when it flies. And that’s the problem that we’ve got this whole work around in terms of, you know, this this whole program. So you’re on notice. Uh, Mr Almer, Uh, and I’d like to ask you some questions. Do you believe, Mr Elmer? Do you believe that that we are? We are in the process off fixing this problem. I have a report right now That tells me that that the inspector General, uh, of D o D. In addition to the Government Accountability Office and the bipartisan committee of staff Delegation Republicans Democrat, we agree on this. This is not a partisan issue that because of pervasive problems with the F 35 spare parts missing Elektronik logs, military personnel must be reassigned to troubleshoot problems. Pilots must fly F 35 on a near deal a daily basis with defective spare parts and maintenance personnel are at risk of allowing fair aircraft to fly with potentially dangerous issues. So we got a problem. According to D o D. Are are unified staff and the Government Accountability Office. So what are you going to do about it? And how quickly do we get this thing fixed? Mr. Alma? Congressman, I think Congressman, I take this extremely serious. We’re very focused on manufacturing and sustaining the F 35 safety is at the forefront as well as airworthiness of the vehicle on. For the record, I would like to state to the chairwoman. To my knowledge, all documents have been provided. So I would like to connect with your staff to make sure that that occurs to your satisfaction. But my belief is we’re doing that. We will follow up. We’ll follow up on that. Thank you, sir. Sir, you asked me what have we done? So I indicated we have spent $30 million to resolve this issue to date. We continue to meet directly. We’ve had six direct meetings with the D. C m A since April 2nd. We were meeting with the D. C. May prior to April 2nd to work on this issue. Together, we continue tohave regular engagements with the Joint Program office. We continue to make adjustments to the Alice system to improve the system. That not just from an eels electronic equipment logbook, point of view, but from analysis. All up point of view. We’re participating with the J PO relative to taking the lessons learned from the Alice experience Emperor in and informing the Odin experience as we go forward. Eso We’re taking several different approaches relative to problem resolution. We have seen market improvement. We have more to go. We understand we have more to go, and we will continue to support. And you have our resolve to fix this problem. Okay. A zoo. You know, this is the largest single contract we’ve got. This is an important part of U S readiness. And, uh, you know, we’ve got unanimity here, Democrat and Republican, that we got to get this right to chair now. Recognizes the gentleman from Texas, Mr Cloud for five minutes. Thank you, Chairman. This is quite the ordeal. It’s it’s amazing to think that 20 years into this program, this is still where we’re at. Um, you know, no doubt the F 35 is an amazing piece of technology. We’re glad to have it in our force. And we certainly want to make sure that the United States stays preeminent when it comes to the race, but acknowledging and dominance. But when it comes to the battles, face the battle spaces, not just collateral. And especially today as we look to the threats from China, it’s also economic, its cyber. It’s, um, multifaceted on when nations have risen and fallen through history. It wasn’t just because they didn’t have the latest technology on the battlefield. It’s because they collapsed from internally through economic restraint. So it’s extremely important that we get this right. But it’s six is extremely important that we get it efficient as well. We spent one trillion dollars in the last five years on this and least the estimates that we have here, and it’s, you know, that’s that could have gone to a lot of different places. You know, we have China invading our cyber and doing other different things. Um, and so it’s It’s just important that we get this right, so we’re right now. It seems we have a shipping system that doesn’t work. I’ve talked to people in the boots of the ground, and they’ll say that when the parts come in, they’re not even labeled correctly, you know, sometimes up to 30% half of them aren’t even labeled correctly. Now I know that the systems complicated. It’s It’s not like Amazon where you’re just delivering the part, you’re trying to track it and all that other kind of stuff. But it seems like not being able to get the part to them correctly is a problem. As it has been mentioned. We have $300 million in excess labor costs just since 2015. That’s going in this when Lockheed was just mentioned by the chairman, when they they’re supposed they’re incentivized for having planes flying, it’s great idea. But when they don’t fly and then we have to fix them, they still get paid for incentives. And so it’s It’s hard to see how this keeps going on. Um, you know, it’s been said that insanity is doing the same thing over and over and expecting different results here. It just seems like another day in Washington, D. C. On DSO. I appreciate the works that that’s been done to move this four, but it seems like we still have a whole lot of work to do. 70% I don’t think is a benchmark for excellence in anyone’s. I know that’s not your and I know many of you. I came into this program. You haven’t been in in your positions for 20 years. Certainly, Um, and recently we paid $30 million Teoh store, uh, and maintain 6 35 originally distant for Turkey, which makes me wonder. What’s the general cost of not flying an F 35. So when in F 35 isn’t ready to fly, What what cost is associate with us? How much does it cost? That’s 30 30 million. To not flies Explain. Seems like a lot of money.

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