Lockheed Martin Aeronautics has agreed to pay the Pentagon $34.3 million in recompense for F-35 spare parts that were not ready for installation when they were first delivered, resulting in additional costs for the stealthy fighter program. 

The U.S. Defense Contract Management Agency (DCMA) put Lockheed Martin on notice when the government identified missing or defective electronic equipment logbooks (EELs).

The agreement between the Pentagon and Lockheed covers $70.6 million in total restitution, but “DCMA acknowledged $36.3 million in internal investments already executed by LM Aero to improve Non-[Ready-for-Issue (RFI)] spare parts as part of the consideration,” according to a May 28 letter providing an update to Congress on parts reimbursement signed by F-35 Program Executive Officer Lt. Gen. Eric Fick. Aerospace DAILY viewed a copy of the not highly circulated letter.

The remaining $34.3 million in investments will be made in two categories over a five-year period: $10 million for logistics data and $24.3 million in future private investments. Fick explained the aircraft procurement justification books accompanying the fiscal 2022 budget contain a footnote annotating this information.

Lockheed Martin delivered F-35 spare parts that were not ready for installation between 2015 and April 30, 2020. In a Defense Department inspector-general program audit released in 2019, the oversight arm recommended the F-35 Joint Program Office request payment for the additional labor hours required to address issues with these spare parts.

The initial estimate for labor costs related to the non-RFI spare parts was $305 million, according to the report. However, the DCMA revised the estimate to $183 million.

The House Oversight and Reform Committee held a hearing July 22, 2020, on the government’s trillion-dollar investment in the stealthy fighter. There was bipartisan consensus that the company must make this right with the Pentagon. “With all of this profit, why is Lockheed failing to fulfill the contract and deliver EELs intact and on time?” Ranking Member James Comer (R-Ky.) asked.

Another committee member, Stephen Lynch (D-Mass.), said it was unfair for Lockheed to accept incentive payments when the F-35 program has problems. Lockheed said in July 2020 the company spent $30 million to resolve the EEL problem and promised lawmakers it will be fixed.

Lockheed delivered spare parts with incomplete or inaccurate EELs, which prevented F-35 maintainers from registering the parts in the Autonomic Logistics Information System (ALIS). This forced maintainers and Lockheed support personnel to spend hours troubleshooting the problem. The F-35 is the only program to link an aircraft part to an EEL, which serves as an electronic record for its lifespan. This is supposed to help the military make informed buying and maintenance decisions.

Not every F-35 part has an EEL; the aircraft features 65,000 unique parts and about 1,000 have EELs. Lockheed sends each spare part with paperwork that includes information about the item and how it integrates with ALIS, a defense official told Aerospace DAILY. However, if the paperwork does not arrive or contains inaccurate information,  a 66-step process is launched. If done correctly, this would only require 6-8 steps, the official said.

The government decided to reduce the number of parts that have EELs. They will remain for spares that are critical to safety of flight or have limited lifespans.

“I think when you have the ability to start collecting all kinds of data, maybe we were too aggressive on how many parts we assigned EELs to,” the official said.