The Pentagon has suspended contract negotiations with Lockheed Martin [LMT] on a Performance-Based Logistics (PBL) contract for the F-35 fighter, but DoD acquisition chief William LaPlante suggested on Dec. 12 that those talks may resume.
The suspension means that the F-35 program’s goal of awarding a multi-year PBL contract to Lockheed Martin this year will not happen. Through the PBL, DoD has looked to incentivize the meeting of goals for the F-35 for Gross Issue Effectiveness (GIE) and Supplier Response Time.
GIE measures the delivery of the correct parts to the right place at the right time, or, more specifically, the total number of part demands filled at an F-35 base with onsite inventory divided by total part demands.
The fiscal 2022 National Defense Authorization Act required the Secretary of Defense to certify to Congress that an F-35 PBL would reduce sustainment costs or increase readiness before awarding such a contract.
More than two decades ago, the Pentagon Joint Requirements Oversight Council (JROC) approved key performance parameters (KPPs) for the Joint Strike Fighter (JSF) that set the availability rate at more than 90 percent, but the F-35 has not come close to that percentage. Availability rates are calculated by dividing the number of hours that aircraft are both mission capable and in the possession of operational squadrons by the total number of aircraft hours for the entire fleet, including aircraft undergoing depot-level maintenance.
A Lockheed Martin official at the F-35 plant in Fort Worth said earlier this year that PBL could help increase
mission capable and availability rates of the plane (Defense Daily, Apr. 17).
The F-35 non-mission capable rate “due to lack of parts is currently at 42.5 percent–absolutely unacceptable,” Rep. Robert Wittman (R-Va.), the chairman of the HASC tactical air and land forces panel, said during the Dec. 12 hearing.
“We have not made the decision to walk away from Performance-Based Logistics at the system level,” LaPlante testified in response to a question from Wittman on PBL. “We had to pause because of the manpower we had during the negotiations to extend the current contract.”
“In the proposals that we have received from industry, there were not sufficient cost savings, if any, and not performance savings,” LaPlante said. “We knew we wanted to wrap up the negotiations by about February to be able to switch to the new [PBL] contract, and we just didn’t have the time so we put pause on the PBL to focus on extending the current [sustainment] contract.”
Last year, availability rates ranged from 54 percent for the F-35A and F-35B to 58 percent for the F-35C, according to the Congressional Budget Office.
“I find it puzzling that a multi-year [PBL] sustainment contract compared to the annual sustainment contract could not drive down costs or increase readiness,” Rep. Donald Norcross (D-N.J.), the ranking member of the HASC tactical air and land forces panel, said during the Dec. 12 hearing. LaPlante said he “completely” concurred with Norcross’ assessment.