Wednesday, November 02, 2016

Lockheed Martin threatens to sue the Pentagon over the F-35 contract!

Thanks to William for the link!

via Wall Street Journal.
By Doug Cameron
The Pentagon on Wednesday awarded Lockheed Martin Corp. a $6.1 billion deal for the next batch of F-35 fighter jets, triggering an unusual rebuke from the defense contractor over the terms and timing. The deal for the ninth batch of the stealthy fighters covers 57 jets for the U.S. and some foreign air forces, with talks continuing on another contract involving more than 100 planes.
Lockheed has been in negotiations with the Pentagon for 18 months about a combined deal for 160 jets covering two years of production, and the two sides had hoped to reach agreement in early 2016.
But negotiations over price and other issues dragged on longer than
expected as the Pentagon tries to cut the cost of the F-35A model used by the U.S. Air Force to around $80 million by the end of the decade, and The Wall Street Journal reported last week that the order would be split. Lockheed said in a statement Wednesday that the new deal was imposed on it, and a spokesman said the company is considering a court appeal so that talks could be reopened.
"We are disappointed with the decision by the Government to issue a unilateral contract action on the F-35 [latest] contract," the company said.
 Negotiating F-35 deals in bigger batches was intended to cut the Pentagon's price and help Lockheed and its partners negotiate better deals with their suppliers. The F-35 accounts for 23% of Lockheed's revenue and is an important contributor to sales and earnings at other companies including Northrop Grumman Corp. and BAE Systems PLC, as well as dozens of smaller contractors.
Wow!  This is awesome!  I wonder how LM stock will do when this news gets out!  If you bought the stock after the last Investors Call you better sell it quick.  The assumptions made for future earnings are about to take a haircut!

No comments :

Post a Comment

Note: Only a member of this blog may post a comment.