The Pentagon hasn't decided what will get Lockheed Martin to improve its management of the Joint Strike fighter program, but it has decided the largest defense company in the world is doing an inadequate job of managing cost controls in the biggest defense program in history.
"Most LM sites have made good progress in addressing the EVMS (Earned Value Management System) system deficiencies. However, LM, Ft Worth continues to make inadequate progress against its CAP. The Defense Contract Management Agency (DCMA) DCMA has determined that withdrawal of compliance of EVMS at Fort Worth is necessary due to lack of progress against the CAP," Pentagon spokeswoman Cheryl Irwin said in a statement.
This has its roots in a 2007 audit which found Lockheed was not meeting Pentagon standards for EVMS. Basically, EVMS audits are used to ensure that defense companies can accurately track where, when and how government funds are spent. John Young, former undersecretary of Defense for acquisition, technology and logistics, threatened to withhold $10 million from Lockheed several years ago but found he lacked the legal authority to do so. A pending rule published in the Federal Register Jan. 15 would give the Pentagon authority to withhold payments to contractors whose business systems don't meet certification standards. EVMS is considered part of a business system. It has not been approved yet.
Why is the Pentagon withholding certification? Withdrawing the EVMS compliance will help ensure that LM devotes the needed attention to complete the CAP actions in a timely manner. It also reinforces the responsibility the company has to deliver to the Government what it agreed to under the terms of the contract, and reinforces that accountability for the health of the contractor's EVMS business system that rests firmly with the contractor." The Pentagon is still considering what actions it should take to help Lockheed comply.
Here is Lockheed's statement about the withdrawal of certification: "The DCMA at our Fort Worth plant notified us yesterday of the government’s decision to withdraw EVMS certification for the Lockheed Martin Aeronautics Co., Fort Worth site. This action does not affect our ongoing work on the EVMS corrective action plan and it does not reflect any new findings.
"The U.S. government is conducting a Technical Baseline Review of the F-35 program which may affect the content and timing of the new F-35 baseline and thus the EVMS re-audit. The government will determine the schedule for a re-audit."