October 08, 2013
Credit: Lockheed Martin
The Pentagon is withholding 5% of F-35 engine maker Pratt & Whitney’s billings on key contracts because of the company’s inability to comply with the department’s auditing standards.
The Defense Contract Management Agency (DCMA) implemented the withholding following an audit of the company’s compliance with the Pentagon’s Earned Value Management System (EVMS) in April. EVMS is the system by which the Pentagon tracks cost, schedule and performance of programs at contractors’ facilities.
Pratt & Whitney, manufacturer of the F135 engine used on the F-35, was decertified and found to have “inadequate compliance with four of 32” EVMS guidelines, according to Matthew Bates, a company spokesman. DCMA’s withholding covers 5% of future billings against the company’s low-rate, initial-production lots 5-8 for the F135 engine and the Navy’s Fuel Burn Reduction (FBR) program. Under the FBR program, the Navy is looking at ways to improve efficiency in the F-35’s engine.
DCMA notified the company of the move on Sept. 30. Five percent is the maximum amount the Pentagon can withhold from billings, according to Joe Dellavedova, spokesman for the F-35 Joint Program Office. The JPO “fully supports” the decision to impose a withholding, he adds.
All new contracts since 2012 contain clauses that allow for such a withhold in the event of EVMS problems.
U.S. Air Force Lt. Gen. Christopher Bogdan, the F-35 Program Executive Officer, met with senior Pratt & Whitney executives on Oct. 4 to discuss corrections for the deficiencies in the company’s EVMS compliance, Dellavedova said.
“Although we have room for improvement, we have demonstrated our commitment to the success of the F135 engine program by taking on 100% of overrun risk on production engines in our last LRIP award (LRIP 5), and did so voluntarily ahead of the government’s requirement to do so,” Bates said in a statement to Aviation Week.
LRIP 5 is valued at $1.12 billion for 35 F135 engines, including three spares. The company has a handshake agreement with the F-35 Joint Program Office for LRIP 6, including 38 engines, but has not signed the deal; the price has not been released. Pratt has delivered 107 F135 engines to date.