Lockheed, Pentagon agree on $70.6M settlement over F-35 parts problems

Lockheed Martin will invest nearly $71 million to correct an ongoing problem with spare parts for the F-35 fighter plane, an agreement the Pentagon states.

The agreement, announced on Tuesday, will be formalized within two weeks, a Defense Contract Management Agency spokesman said.

The deal refers to over 15,000 F-35 spare parts delivered to the U.S. military without "electric equipment logs," which permit the parts to the identified and absorbed into logistics systems.

Incorrect or unavailable information delays the uploading of data, and the dispute centered on at least $183 million in Defense Department expenses owing to the problem.

The parts in question were rejected for installation only because of the lack of tracking data -- no flaws in safety or manufacturing were inferred, officials said.

The action was initiated after the Pentagon's inspector general discovered the problem in a 2019 audit, and recommended that the Defense Department should seek $303 million in refunds.

Instead of a direct payment from Lockheed, the defense contractor will "compensate the government with Lockheed Martin investments" to ensure that future spare parts are delivered with accurate EELs, company spokesman Brett Ashworth said.

The House Oversight and Reform Committee was critical of Lockheed during a July hearing, but on Wednesday, committee members Rep. Carolyn Mahoney, D-N.Y., and Rep. Stephen Lynch, D-Mass., applauded the resolution of the dispute.

"We applaud the Department of Defense for its efforts to hold Lockheed Martin accountable for failing to meet its F-35contract requirements," Mahoney and Lynch said in a joint statement.

"While we believe Lockheed should have reimbursed American taxpayers for a greater share of the funds DOD spent to address the inefficiencies uncovered by our committee's investigation, this is a step in the right direction. We look forward to seeing the final signed agreement that codifies Lockheed Martin's commitment to improving the F-35 program," they said in the joint statement.

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