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Lockheed Confident About F-35 Contract Before Year-End

By Reuters

Hewson will become Lockheed’s CEO in January, succeeding Christopher Kubasik, who was forced out after admitting to having an affair with a subordinate.

Lockheed, the Pentagon’s largest contractor, and its suppliers are already building the fifth batch of F-35 planes under a preliminary contract, but the two sides have been struggling since last December to finalize the terms of the deal.

Hewson’s increased engagement in the F-35 negotiations has helped defuse tensions that had mounted between the company and the Pentagon over the past year, said Loren Thompson, a defense consultant with Virginia-based Lexington Institute who has close ties to Lockheed.

In September, Air Force Major General Christopher Bogdan, who is moving up to head the F-35 program next week, said ties between Lockheed and the U.S. government were “the worst” he had ever seen in his years working on big acquisition programs.

Hewson told analysts earlier this month that the F-35 program would be one of her top priorities in her new job. “We won’t miss a beat on F-35,” she said at the time.

Agreement on the terms of the fifth F-35 contract would free up additional funding for early work on a sixth set of planes, which the company has been funding on its own for some time.

Lockheed warned investors last month that it faced a potential termination liability of $1.1 billion on that sixth batch of planes, unless it received additional funding by year-end.

Lockheed received some initial “long-lead” funding for advanced procurement of materials for the planes, but that money ran out a while ago.

The Pentagon has refused to release any more money for the sixth batch of planes until the two sides resolve their differences and sign a contract for the fifth batch.

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