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Trump takes aim at Pentagon’s ‘revolving door’ and Lockheed Martin’s $400 billion F-35 program

Trump takes aim at Pentagon’s ‘revolving door’ and Lockheed Martin’s $400 billion F-35 program

Postby smix » Mon Dec 12, 2016 7:37 pm

Trump takes aim at Pentagon’s ‘revolving door’ and Lockheed Martin’s $400 billion F-35 program
The Washington Post

URL: https://www.washingtonpost.com/news/che ... 5-program/
Category: Military
Published: December 12, 2016

Description: Just over a year after Northrop Grumman won the multibillion dollar contract to build a next-generation stealth bomber, the company appointed Mark Welsh, who was serving as Air Force chief of staff at the time of the contract award, to its board. The appointment, announced Friday, is not unusual in Washington, where former high-ranking Pentagon officials often go to work for the defense industry after their military service. But it comes as President-elect Donald Trump is highlighting the potential conflicts of interests in the “revolving door” between the Pentagon and industry, as he vows to clean up Washington. On Monday, Trump also took a shot at Lockheed Martin’s $400 billion F-35 Joint Strike Fighter program, the most expensive in the history of the Pentagon, saying the “cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th.” In an interview on Fox News Sunday, Trump said there should be a “lifetime restriction” of top defense officials going to work for defense contractors. “The people that are making these deals for the government, they should never be allowed to go to work for these companies,” he said. “You know, they make a deal like that and then a year later, or two years later, or three years later you see them working for these big companies that made the deal.” As Air Force chief of staff, Welsh, a former four-star general, had “no involvement in the [bomber] source selection process and provided no input into the decision to award the bomber contract to Northrop Grumman,” Air Force spokeswoman Ann Stefanek said in a statement. She said that all “departing federal employees are subject to post-government employment conflict of interest restrictions.” Those rules “do not prohibit General Welsh from joining Northrop Grumman. However, those rules may limit what he can do as a member of the board.” She added that the “facts of each former employee’s circumstances impact how these rules will apply,” and that departing Air Force senior leaders “receive detailed guidance on the various post-government employment restrictions they may encounter.” In announcing Welsh’s appointment, Wes Bush, Northrop’s chief executive, said “his extensive leadership experience and deep understanding of global security are a great fit to our board, and we are excited about the contributions he will make as Northrop Grumman employees around the globe work to create value for our customers and shareholders.” Former government employees frequently go to work in private industry, leveraging their experience and access to high-paying jobs in consulting, lobbying and contracting. In 2008, the Government Accountability Office found that 52 of the biggest defense contractors employed 2,435 former generals, senior executives and acquisition officers. Of those, 422 were in a position to work on defense contracts directly related to their former agencies and at least nine may have been working on the same contracts they previously oversaw. In addition to taking aim at the ties between the Pentagon and its suppliers, Trump has made it clear he intends to crack down on individual programs. Last week, he sent shock waves through the defense establishment when he called for the Air Force One program to be canceled, saying the costs were too high. He later softened his stance, after Boeing’s chief executive called him and vowed to keep the costs of the planes down. But Trump also promised that “if we don’t get the prices down, we’re not going to order them. We’re going to stay with what we have.” On Monday, it was Lockheed Martin’s turn, when Trump took to Twitter to blast the F-35 program. For years, the program had gone wildly off the rails, billions of dollars over budget and years behind schedule. But in the past couple of years, Pentagon and Lockheed Martin officials have said it has stabilized and that the costs are coming down. Speaking before a ceremony in which Lockheed was to deliver Israel with its first F-35 aircraft on Monday, Jeff Babione, Lockheed’s executive vice president and general manager, F-35 program, said the company welcomes “the opportunity to address any questions the president-elect has about the program. It’s an amazing program. Lockheed Martin and its industry partners understand the importance of affordability for the F-35 program.” He called the plane a “great value” with “amazing technology” and said the company has “invested hundreds of millions of dollars” to reduce the price of the airplane more than 60 percent. Earlier this year, Air Force Lt. Gen. Christopher Bogdan told a Senate hearing, that “our overall assessment is that the program is making solid progress across the board and shows improvement each day while continuing to manage emerging issues and mitigate programmatic risks. We are confident the F-35 team can overcome these challenges and deliver on our commitments.” At the hearing, however, J. Michael Gilmore, the Pentagon’s chief weapons tester, painted a different picture, saying, “there are still many unresolved significant deficiencies. The program continues to fall behind the planned software block development and testing goals, and sustainment of the fielded aircraft is very burdensome.” Lockheed’s stock fell by more than 4 percentage points at one point on Monday morning. But Byron Callan, a financial analyst at Capital Alpha Partners, said in a note to investors that Trump’s tweet was “more bark than bite.” “We strongly doubt that Trump has been fully informed of the F-35 program or alternatives to modernize U.S. tactical aircraft inventories,” he wrote. “As well, we strongly doubt that he has been informed of the unique international nature of the program.” He added: “We don’t believe investors should panic over the program’s prospects based on a single Trump tweet.”



It’s been a topsy-turvy few weeks for the F-35 program
The Washington Post

URL: https://www.washingtonpost.com/news/che ... 5-program/
Category: Military
Published: November 29, 2016

Description: It’s been a topsy-turvy month for the Pentagon’s most expensive weapons program. Last week, Canadian officials said they were in talks to buy 18 F/A-18 Super Hornets from Boeing as a stopgap measure while they conduct a review to determine what fighter jets the U.S. ally will buy en masse to replace its fleet. The decision dealt a blow to Lockheed Martin, the manufacturer of the F-35 Joint Strike Fighter, which now will have to compete for the business of a country that had once signed up to buy as many as 65 of the stealthy, next-generation aircraft. Then on Sunday, the F-35 program received a bit of good news when Israel approved the purchase of an additional 17 jets. While the United States intends to buy the majority of the F-35s, the program also has a number of key allies that have committed to purchasing the plane. The scale of their purchases is more than a symbol of their confidence in a program that for years had been beset by cost overruns and delays; it is important in helping keeping the cost of the plane down. The more F-35s that are produced, the less expensive they become. For years, the $400 billion F-35 program was one of the Pentagon’s most troubled. After cost overruns and delays, it has been more stable in the past few years. But as the last few weeks show, drama is inherent in such a high-stakes procurement that involves three of the Pentagon’s military services, several international partners and the world’s largest defense contractor. Over the past month, there were also twists and turns in the relationship between the Pentagon and Bethesda-based Lockheed, its biggest supplier. After the two sides had been unable to reach an agreement on the price of the latest batch of aircraft, the Pentagon invoked a provision that allowed it to unilaterally execute the contract, setting the price at its last offer. At $6.1 billion for 57 planes, the deal represented a 3.7 percent price decrease from the previous batch of planes purchased by the Pentagon. But the tension was almost immediately apparent. After the Pentagon proclaimed it was a “fair and reasonable deal,” Lockheed said that it was “disappointed” and that the contract was “not mutually agreed upon.” But last week, the Pentagon awarded Lockheed a nearly $1.3 billion payment to help the contractor continue production of the next batch of aircraft. That contract could be worth as much as $7.2 billion for 90 aircraft, the largest buy yet. The flurry of activity is emblematic of how the program “continues to grow and expand,” said Joe DellaVedova, a spokesman for the Pentagon’s F-35 Joint Program Office. Preparations are being made to ramp up production. The Pentagon has declared that two of the three versions of the planes — the Air Force and Marine Corps variants — are ready for combat. The aircraft recently completed tests on the West Coast. And early next year, the Marine Corps plans to deploy its version of the F-35, which can land vertically and take off on a short runway, to Japan. Israel’s decision to buy 17 more is a boon, and Lockheed is expected to deliver the first two of its fighter jets early next year. The news from Canada, however, was a setback. The country had planned to purchase the F-35 but changed course after an auditor general’s report suggested that the Canadian government misled Parliament, saying the costs would be higher than had been stated. During his campaign, Prime Minister Justin Trudeau said the country could find an aircraft that was more affordable. Now Canada plans to hold a competition to replace its fleet. Boeing has waged an intense lobbying campaign in the country to convince it to buy more Super Hornets. But Lockheed isn’t giving up. “Although disappointed with this decision, we remain confident the F-35 is the best solution to meet Canada’s operational requirements at the most affordable price,” the company said in a statement. “The F-35 has proven in all competitions to be lower in cost than 4th generation competitors. The F-35 is combat ready and available today to meet Canada’s needs for the next 40 years.”
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