Wednesday, July 20, 2016

Something weird is going on with the F-35.

Thanks to Joe for the link!

via Defense News.
Drawn out contractual negotiations for lots 9 and 10 of the F-35 have left Lockheed Martin paying out of pocket for joint strike fighter costs, the company disclosed July 19.
Lockheed has spent nearly $1 billion to pay out suppliers who have already started doing work on F-35 low rate initial production (LRIP) lots 9 and 10, the company’s chief financial officer Bruce Tanner said Tuesday during a quarterly earnings call.
The defense prime is banking on the government to either finalize a contract — worth approximately $14 billion for more than 140 aircraft, according to the Pentagon — or to authorize a undefinitized contractual action, or UCA.
“If we don't either get funding through a funding mechanism such as a UCA funding item or we definitize the contracts, we will not be able to continue and have that level of cash outflow as a corporation,” Tanner said. “We simply don't have that capacity. The Pentagon clearly knows that situation, and I'm optimistic that we're going to get cash soon.”
Because a definitized LRIP 9 and 10 contract would likely include incentives for performance, it would likely generate greater amounts of funding than a UCA, he said.
“We don’t care, frankly, how we get the cash,” Tanner added.
How long have they been arguing about lots 9 and 10?  How many stories have you read that they were close to award?  How many times have we been told about price reduction efforts on the part of Lockheed Martin?

Now we hear that due to drawn out negotiations Lockheed Martin is paying out of pocket?

This is interesting!

I wonder what the real story is here.  Something is not adding up....F-35 fan boys are chest thumping about the airplane coming down in price but they can't get the freaking deal done?

I'm betting that its not as rosy as the club house kids want us to believe and I'm betting that the Pentagon is finally asking Lockheed Martin to take a haircut.

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