Transcripts For CSPAN Oversight Hearing On F-35 Joint Strike Fighter Program 20240712

Next, Defense Department officials testified at a House Oversight hearing on the f 35 joint star fighter jet program. They were asked about maintenance issues and concerns that prime contractor Lockheed Martin provided defective spare parts and Outdated Technology systems for the aircraft. And generalsident manager of the f35 program at Lockheed Martin corporation also joined the hearing remotely to answer questions from lawmakers. The committee will come to order. Like to all, i would congratulate Ranking Member komar. This is his First Full Committee Hearing as a ranking i believe we are want a strong private military, strong private sector that is widely tracking taxpayers money and spending it efficiently for the purposes that it was meant for. I look forward to working with the Ranking Member in the future and i am so pleased that he is with us here today. Without objection, the chair is authorized to declare recess of the committee at any time, and i now recognize myself for opening statements. Good morning. Todays hearing will focus on the f35 joint Strike Fighter. A highly technical Stealth Fighter that the pentagon s largest and most costly acquisition program. Since the f35 Program Began more than 20 years ago, the department of defense has spent more than 350 billion on its development. Total cost to sustain the program are estimated at more than 1 trillion. Unfortunately, this expensive program has been plagued by challenges for years, including major problems with maintenance of the aircraft. This hearing will address the money, time and manpower our military is being forced to spend to address problems with equipment logs for spare parts from a primary contractor, Lockheed Martin. In june 2019, the dod Inspector General found that over a three year period, more than 15,000 spare parts for the f35 lacked thatectronic equipment log maintains Important Information on the history of the spare part and the hours flown. This information is critical for the military to determine the age of a part and whether it is safe to keep using. In late 2019 and early 2020 , Committee Staff from the majority and minority visited multiple military bases and interviewed personnel who maintained the f35 fleet. During these visits, staff confirmed that the problems identified by the ig still have not been resolved. This is unacceptable. As a result of Lockheed Martins failure to provide spare parts that meet contract requirements, the military has been forced to divert personnel to troubleshoot these issues and use extensive workarounds to keep f35 planes flying. This costs american taxpayers millions of dollars they should not have to pay. For example, last year, the ig estimated that more than 300 million was bent on additional and 2018t between 2015 a result of Lockheed Martins failure to provide spare parts with electronic logs. The Inspector General estimates the taxpayers will have to continue paying up to 55 million a year if we do not fix these problems. That does not even include an additional 10 million in unwarranted and sensitive payments Lockheed Martin received in 2017 and 2018. Since then, the Defense Contract Management Agency has refined this estimate to determine how many missing and delayed electronic logs can be attributed specifically to Lockheed Martin. After this process, the Defense Contract Management Agency determined that Lockheed Martin is responsible for at least 183 Million Dollars in missing and delayed electronic logs from 2015 to early 2020. Thats 183 million that the american taxpayers were forced because Lockheed Martin failed to meet the requirements of its contract. That is why todays hearing is so important. This money belongs to the American People. These are funds that could have been used to train our war fighters, upgrade older airplanes or support Service Members and their families. In the 2020 National Defense authorization act, congress required dod to seek and i quote, compensation for costs incurred by the department of defense as a result of the contractors failure to deliver compliant, ready for issue spare parts under the contract. End quote. I believe Lockheed Martin needs to pay this money back. Lockheed martin is currently in negotiations with dod to compensate the government for all the defective spare parts it provided. It is imperative that lockheed acknowledge that it failed to meet contract requirements and pay back the American People for these failures. Lockheed will tell us that they have made improvements to ensure f35 parts arrive on base with electronic logs. Improvements have been made but parts are still being delivered without electronic logs. Corrupting and electronic logs occur throughout a spare parts lifecycle, not just when they are delivered to a base. And documents provided to the committee, dod itself identified nine points of failure in the lifecycle of a spare part. You are also going to hear and that missing electronic logs have never resulted in an accident or fatality, and that is very good news so far. But the Government Accountability office warns that every time dod disregards a warning about a missing electronic log, military personnel are at risk of ignoring real problems with that aircraft. We cannot simply hope that these accidents never occur. These problems must be addressed for our military personnel and we must address it now. The u. S. Government is a major client of Lockheed Martin and in 2019 alone, lockheed expected to earn 41 billion in revenue from the u. S. Government. Business paid for by the american taxpayers. For that much money, we can expect lockheed to deliver products that work and that keep our servicemembers safe. Anything else is unacceptable. I also plan to look at further whether legislation needed to ensure that f35 is meeting performance expectations and i want to thank our witnesses for testifying on this important issue. And i really want to thank and hismember comer staff for their cooperation and assistance on this hearing and the numerous meetings that we had beforehand. This truly is a bipartisan investigation. I now yield to the distinguished Ranking Member from the great state of kentucky for his opening statement. Well, good morning and thank you, madam chair for those nice words and for holding this important hearing. I appreciate each of our witnesses here today and want to extend my personal thank you to Lieutenant General fick for his continued service to this country and ms. Ellen lord for her hard work in the department. I want to note that mr. Ulmer wanted to be here today, but the democrat majority declined that request and forced him to testify virtually. Stand the Current Public Health situation, but i truly believe it would be vitally important to hear from the witnesses in person. Further, since the majority began in a station into Lockheed Martin, i feel it is appropriate for their representative to be question virtually even though the maturity did not advise the witness did hearing a fear that what we see today could be used tos express future minority participation. Weve seen a denial of minority witnesses in the select subcommittee and it is important in this committee operate a fair and equitable manner and i asked the chairwoman to commit to give all future witnesses the choice to appear in person if they wish and not force their virtual testimony. But today we are here to discuss the f35 fighter jet, the most advanced weapons system in the world which bring significant war fighting capabilities to our great military. The three variants are used by the air force, marines and navy to fly missions without detection by enemy radar and are equipped with sophisticated Electronic Components that aid the pilot in effectuating his or her mission. These jets let us gather information and engage targets at longer ranges with sophisticated, precision guided munitions while avoiding detection. These planes do not come cheap and although the cost per plane is always decreasing, we must be diligent to ensure the government is using all its tools in its belt to keep costs down while maintaining a Mission Ready f35 fleet. Even though the cost to acquire an f35 aircraft is significant , that is not the end of the story. Our military must keep that plane Mission Ready while performing routine maintenance and replacing parts when their life cycle is over. The cost of this sustainment or are significant. The department of defense Inspector General found that many spare parts were delivered to the military lacking or with the defective electronic equipment logbook, or eel, meaning the spare parts were not considered ready for issue. Even though these parts are genuine and ready for use on the aircraft, the inability to track the part means that flight crews have to manually track those parts for wear and tear which can lead to increased costs, human error and potentially a threat to life and safety. Fortunately the government and Lockheed Martin entered into a massive collaborative effort to reduce the incidence of nonready for issue spare parts. I am encouraged to hear progress is being made both in reducing l. Equency of e. E. Deficiencies and identifying previous deficiencies. But if there are instances of unsatisfactory contract performance those issues must be remedied, but we must also find the root cause. Government contracting can be burdensome and expensive, driving Innovative Companies away from the market. We must Work Together to ensure we get the best products quickly and at the least expenses to the taxpayer. Increasing commercial item acquisition, competition, transparency and enduser input may all help with that and i look forward to hearing from our Witnesses Today to talk about their hard work, supporting the f35 fleets and ways that congress can help increase contracting efficiency. With that i yield back. Thank you. Thank you. Now i would like to introduce our witnesses and a first witness today is the honorable ellen lord, undersecretary for acquisition and sustainment at the department of defense. Then we will hear from ,ieutenant general eric t fick executive officer of the f35 joint Program Office at the department of defense. Next we will go to ms. Diana mauer, who is the director of defense capabilities and management of the Government Accountability office. We will also hear from ms. Teresa hull, who is the assistant Inspector General at the apartment of defense, office of Inspector General. Finally, we go to gregory m. Ulmer, Vice President and general manager of the f35 lightning two program that Lockheed Martin corporation. The witnesses will be unneeded so they can be sworn in. Please raise your right hand. Do you swear or affirm that the testimony you are about to give is the truth, the whole truth and nothing but the truth, so help you god . Let the record show that the witnesses answered in the affirmative. Thank you and without objection your written statements will be made part of the record and with that, undersecretary lord, you are now recognized for your testimony. Good morning. Chairwoman maloney, Ranking Member comer and other distinguished members of the committee, thank you for the opportunity to update you on the departments f35 sustainment efforts to improve the f35 ready for issue parts for the war fighter and to ensure comprehensive oversight of our contractor support. I am pleased to be joined by my fellow Witnesses Today to brief progressttee on the the department has made on these issues. The f35 program is a key enabler of all three pillars of the National Defense strategy. First, rebuilding military readiness as we as we build a more lethal joint force. Second, strengthening alliances partners. Act new and third, reforming the departments Business Practices departments Business Practices for greater performance and affordability. The fifthgeneration stealth and battlefield networking capabilities clearly delivers the lethality needed to meet or war fighter requirements. As such, our International Partner nations and Foreign Military sales customers have chosen the f35 to be at the core of their future airpower planning. Lastly, the f35 program is a focus of the departments Reform Efforts to provide affordable or affordable war fighter capability. Today i would like to focus my remarks on three main topics to address congressional concerns increasing accountability within the f35 sustainment the departments management response to the dod Inspector General report on ready for issue parts, and my efforts to promote effective oversight within the f35 program. A core focus area of my tenure as under secretary for acquisition and sustainment has been strengthening accountability within the acquisition system. And and particularly for the f35 enterprise. The department has made significant improvements since krugmans in improvements in fleet availability over the past year. The department currently uses two main measures of fleet availability for the f35, Mission Capable rates and full Mission Capable rate. The department has increased the overall Mission Capable fleets for the f35 were mostly 60 of at the beginning of the year to nearly 70 in june. The department has similarly improved the full Mission Capability fleet rate from the from below 35 at the beginning of the year to nearly 40 in june. While more work remains to be done to meet war fighter needs, these improvements in fleet availability, driven primarily by improvements in maintainability and supply chain efficiency demonstrate the departments efforts and are having a significant and measurable impact. On the ready for issue parts concerns raised by the dod Inspector General, they their july 2019 report found the department did not ensure that the contractor was providing spare parts in a ready for issue state. The report also identified the department did not ensure the payments to Lockheed Martin were properly tied to performance against ready for issue metrics. The department concurred with all of the department of defenses Inspector General recommendations, and has aggressively implemented corrective actions based on a followup status reports provided to dod ig in january 2020 and subsequent conversations with dod ig representatives. The issues raised in the dod ig report are primarily issues of electronic records management, related to known deficiencies in the ability of the f35 logistics Information Systems ability to accurately and reliably track and transmit electronic equipment log, e. E. L. Files. The department has taken nearterm action to address key degraders are ready for issue rfi rates. But the longterm solution to the problem depends on the already underway efforts to replace alice with a more stable, capable system. As a result of those nearterm actions, the department has increased the rfi rate at the air force base, Luke Air Force base and Marine Corps Air station at yuma from 42 in february to exceeding the rfi threshold metric rate of 70 and every month since april. We achieved a high of 82 in june. In may, this committee spoke to unit commanders from the three services about the effects that ready for issue parts issued issues were having on the units under their command. I have also spoken directly with these f35 commanders to hear their feedback and suggestions for improvement. As a result, i will ensure that corrective action will drive a System Architecture and capability that meets war fighter needs and enables art our maintainers to suspend to spend their time keeping aircraft available rather than manually working around those flawed electronic records systems. On january 14, 2020 i announced to the House Armed Services Committee Members the transition from alice to a new government owned system, Operational Data calledted network, o. D. I. N. The department will introduce i. N. Capabilities fleetwide by the end of 2021 and in the interim the department has been working to develop solutions to the legacy alice system to improve accuracy, tracking and transmission, performance to reduce Maintenance Work around and mitigate potential risks of the fleet. The dod ig report also identified an existing contract terms were not sufficient to hold the prime contractor accountable for the deficiencies. Ecma has been working closely with the f35 to negotiate fair consideration to the government from the prime contractor for these deficiencies. Dcma notified Lockheed Martin of its intent to seek consideration on april 2 and formal discussion began on may 7. Path is to dcmas seek considerations for not rfi parts delivered between the beginning of 2015 and april 30, 2020 and to incorporate terms into the next annualized statement contract. The f35 has also been working to negotiate more comprehensive contract terms and features sustainment contracts to ensure the contract has defined e. E. L. And rfi metrics to measure performance. As we have worked to negotiate contracts at the federal law incentive with performance and accountability, the department recognizes the need to enable more robust and effective oversight on major issues that decrease availability and increase cost. My staff and i are personally engaged on these issues in a number of venues. I have been meeting weekly with f35 service and other stakeholder leadership to ensure management oversights. Furthermore, ive been meeting monthly with the vice chairman of the joint chiefs of staff and military Service Leaders to drive performance improvement. Ive also been meeting regularly with the ceo of Lockheed Martin to address key issues facing the f35 enterprise and i am keenly aware of congressional interests in the f35 program and my staff has been working mostly with the closely with the Congressional Defense Committee to ensure they receive timely information on key issues. My staff has provided quarterly updates to the Congressional Defense Committees on a range of f35 developments, production and sustainment issues, including the status of the a. L. I. C. E. To o. D. I. N. Transition. I appreciate the opportunity to have these meaningful discussions with the committee as we Work Together to strengthen the f35 enterprise and to continue to provide safe, reliable, and capable f35s for our war fighters. Thank you very much for your time and i look forward to answering your questions. I will now turn to Lieutenant General fick. You are recognized. Chairwoman maloney, Ranking Member comer and distinguish members of the committee, it is my distinct honor to serve as your f35 programming executive officer and Program Director leading the f35 enterprise and the developing production of sustainment of this amazing air system. On behalf of the 2100 men and women of the f35 lightning to program, it is lightning two program, it is my privilege to update you on the hard work that continues daily across the 35 global enterprise. I am encouraged by the Real Progress we made but remain keenly aware that much work remains before us. In the past year our program has matured rapidly and annual production rates reached an alltime high. We delivered our 500 aircraft 500th aircraft and unit costs continue to go down with capable rates continuing to rise. We remain committed to delivering the capabilities are war fighters need at a price our taxpayers can afford. Over the past six months, we reshaped the f35 program to product align organization with cross functional talent embedded within each project management team. I am seeing the benefits of this change through improved communication with f35 stakeholders and rapid issue resolution across the organization. I have focused this team on four lines of effort to continue to the positive momentum we have seen in the past year. Those areas are liability, maintainability and keeping the parts on the aircraft longer. Supply posture, which insures parts are available, repair capacity, which means capability to repair the parts and finally repair velocity, which means fixing parts quickly to get the test flying again. My remarks today express ready installation and installation electronic equipment logs, or e. E. L. S as requested. E. E. L. Assembly to a digital macworld record and tells a story of the part. Each part with an e. E. L. Roughly 1000 of the 50000 parts on an f35 is managed by the 35 autonomic logistics Information System or alice. That part if it arrives with a missing e. E. L. Or that is not on it a significant effort and time to maintain to reconstruct the part history and create a digital record for that parts. This activity diverts time from scheduled maintenance and increases the probability of human error and unit cost to the program. The bottom line is we must receive our parts on time and with all the required identification markings and electronic records. Aided by insight in the Government Accountability office, the dod Inspector General and my active dialogue with commanders in the field, we are aggressively targeting the rfi cause of e. E. L. And part issues. We have improved contracting language to ensure compensation is based on delivery of parts that are ready to be installed , but we work closely with the events Contract Management Agency to assess the impacts for parts with missing or incomplete e. E. L. S and are evaluating what if anything excessive may have been paid to Lockheed Martin when our war fighters not rfi parts. My team conducted site visits and quality inspections working sidebyside on the ground to did corrective action plans to address supplies and a graders and monitoring to ensure the supply chain is responsive to these corrective actions. We updated alice to include parts accountability, redesigned alice modules to maintain it more intuitive and revamped training and quality oversight at f35 locations to catalog discrepancies and reduce human error in these measures are paying off. E. E. L. Partsur were 83 and the target goal of 90 this year. Beginning in 2021 the contractor garment parts for issue is 99 paid to be clear, we heard the dod ig and we heard the gao we are taking action and these actions are making a difference. In the next two years the program will also sunset the autonomic logistics Information System and have a more modern sustained management tool called o. D. I. N. Led by the government, o. D. I. N. Starts with the new underlying integrative data environment and makes modern hardware and software to the f35 sustainer. It will leverage Agile Development practices in response to the evolving needs of our customers and global operations. O. D. I. N. Will decrease Maintenance Workload, improve readiness levels and be portable and easily deployable. My team of experts and i continue to work tirelessly to deliver a war fighting capability our nation needs. We will do it smart, efficiently and as costeffectively as possible and we will do it with the highest regard for those we serve and those who put their trust in us. As the son of an airman and the father of two airmen, nothing is more important to me that giving our servicemembers the tools they need to do their job. In harms way and to bring them back home safely every time. I appreciate the opportunity to appear before you today and i look forward to your questions. Thank you. Moeller. You are now recognized. Morning, Ranking Member comer and chairwoman maloney. We cant hear you. Please speak louder. Good morning, chairwoman maloney and Ranking Member coowner. Mer. Ember co, i am pleased to be here and pleased to testify today about body of work on the autonomic logistics Information System or alice. Over the year we found a number of significant problems and challenges with alice which are summarized in my prepared statement for today. Most concerning is the lack of trust that pilots, maintainers and commanders have with key aspects of the system. Getting alice to work requires cultural workarounds and forces commanders to assume the risk of allowing planes to fly when alice says they should stay on the ground. Over the past six years weve issued a statement series of recommendations to dod to help address the concerns. We are encouraged that secretary undersecretary lord and general fick are taking recommendations seriously as i start a new path to transition from alice to o. D. I. N. O. D. I. N. Is the fix for alice so rather than walk through a list of problems identifying what alice reveals, i will focus on key questions stemming from those findings that can assist congressional oversight. Question one, what is o. D. I. N. Supposed to do . That was not clearly defined for alice. There was general agreement that it should diagnose maintenance problems and inform a Global Logistics chain, reduce sustainment costs and help keep aircraft, put more aircraft in the air. But years ago dod gave lockheed essentially no specific requirements beyond create logistics Information Systems. And then did not adequately build users into the developed process. As the system evolved over time, there were often gaps between what users needed and what was delivered. For example, having a deployable system meant one thing to lockheed and something very different to the war fighter. To avoid similar disconnects in the future, it is important to clearly define and agree on what o. D. I. N. Was meant to do and informed by user need. Which leads to the second question, after defining what o. D. I. N. Should do, how will you know it has done it . Six years ago you recommended dod find a way to whether find to find if alice was performing as attended but that never happened. Instead, over the years alice had problems but it is getting better. However, lacking some kind of measures, it was never clear what success looks like or how far off it was. The f35 program can learn from history by learning how o. D. I. N. Impacts Mission Execution and whether its keeping them in the air or on the ground and how well is odin o. D. I. N. Meeting the needs of pilots and commanders. This leads to the third question, who will make this happen . Years ago dod had a responsibility [inaudible] that is not inherently bad and if done properly it can save money and raise better outcomes. But at the time, dod did not over the implications of getting nearly complete control of software, hardware, and intellectual property to the contractor. S now from alice to is ann. , there opportunity to reconsider who will do what. That includes dod technical data maintainers will be able to correct missing or Incorrect Information without having the contractor about how lockheed could join the office, you military service and International Partners will Work Together and implement, use, maintain, and upgrade o. D. I. N. Fixing alice by transitioning to o. D. I. N. Will not be quick or easy. Fully implementing the chairmans recommendations will help dod efforts [inaudible] and ongoing efforts. However, this transition throughout from alice to o. D. I. N. Is a much longer list for the f35 sustainer challenges. The f35 is a foreseeable future for this country and many of our allies but it will not achieve potential to the program can address the statement challenges associated with alice, spare parts, operating costs, supply chain and mission capabilities. Chairwoman maloney and other members, continued focus and action on sustainment issues not just production can help ensure the f35 is able to National Security goals. Thank you for the opportunity to testify this morning and i look forward to your question. Thank you. Next is ms. Hull. You are now recognized. Chairwoman maloney, ranking and the sting wish members of the committee, thank you for allowing me to come before you today to discuss the report on f35 ready for issue spare parts and sustainment performance Incentive Fees. I am the assistant Inspector General for audit, acquisition, contracting and sustainment, the dod ig directorate that conducted the investigation. With the dod expecting to spend over 1 trillion to operate and maintain the fleet for 66 years, our report findings highlight the importance of ensuring that f35 Program Costs are affordable and sustainable longterm. Lockheed martin is required to deliver rfi f35 spare parts. Rfi spare parts should be ready for Aircraft Maintenance on theel to install aircraft and should be assigned an electronic equipment logbook, or e. E. L. Lockheed martin has been providing a large number of nonrfi spare parts as 2015, when sustainment efforts began. Despite being aware of this problem, the joint Program Office did not resolve the issue are required dod personnel to the number of nonrfi spare parts received. Dod personnel submitted more than 15,000 action requests to request the non correctl the nonrfi issues. Dod personnel were assigned to informallytime on resolving the issues. In some cases, this preempted the needs to create an action request and therefore created an inaccurate impression that the issue of Lockheed Martin delivering the parts without e. E. L. S was improving. A still had to contact Lockheed Martin representatives or submit an action work west occurring request occurring additional charges. To 303uty has spent up Million Dollars between 2015 and 2018 on labor costs for dod personnel to bring the spare parts to rfi condition, and will continue to pay an estimated 55 million annually until Lockheed Martin consistently delivers rfi spare parts that meet the contract requirement. Dod paid performance Incentive Fees on the sustainment contract based on in laded and unverified f35 aircraft availability hours. Nonrfihe number of spare parts provided to sites, the dod issued guidance allowing aircraft to be flown with spare parts that had e. E. , issues, contradicting previous guidance to quarantine such parts and not use them until they were resolved. Nonrfi spare parts were used on aircraft. Local guidancef and ad hoc manual processes allow aircraft to fly and thelete missions instead of dod grounding aircraft due to receiving nonrfi parts. This practice inadvertently inflated aircraft availability hours. According to officials on any given day, 50 of the f35 fleet is flying with nonrfi spare parts. But the joint Program Office does not require f35 Site Personnel to collect aircraft availability hours and track the hours aircraft fly without rfi spare parts installed. The dod has no way to determine the total number of hours the f35 has flown with nonrfi spare parts. Earning martin is Incentive Fee payments earned through the use of dod labor, rather than the contractors ability to meet its performance metrics. As a result, performance Incentive Fees were potentially overpaid. Relied one, jpo employment hours to pay lockheed for 2017 and 2018. They compared availability hours on one Lockheed Martin generated report to another Lockheed Martin generated report because collect or track aircraft availability hours. As a result, the dod has potentially overpaid 10. 6 million in Incentive Fees. F35 aircraft are proving to be more expensive to sustain than originally planned. Concerns are not discussed, issues will continue to compound as the fleet expands. Escalating sustainment costs, reducing Mission Capable rates, and increasing the life and safety risks that occur when not limited rfi spare parts are installed and fun without flown without an e. E. L. Dod may continue to overpaying performance Incentive Fees on the 2018 and future contracts. Thank you for the opportunity to testify this morning and i look forward to your questions. We will now conclude with mr. Ulmer. Ulmer, you are now recognized. Chairwoman, chairman, Ranking Member and distinguish members of the committee, i appreciate the ability to testify on behalf of of Lockheed Martin to provide you with an update on the f35 program. As you know, i have been asked to speak to you virtually due to covid. I want to thank you for your interest in the program and commitment to ensuring it delivers the best value to the taxpayer, but more importantly to our war fighters. As the f35 Vice President and general manager, i appreciate the opportunity to meet with congress and engage in needful dying meaningful dialogue to be part of the program. I would like to provide a brief update on the stage of the f35 program. The committee has asked that i address f35 sustainment focusing on electronic equipment law books, as well as ready for issue, are rfi parts. These are important issues for those who keep the f35 flying, and we considered our job to make it seamless for them and without issue. Advanced sensor suite, weapons capacity, and increased range the most effective aircraft operating in the world today. We have delivered more than 500 40 aircraft, trained more than 1000 pilots and 9000 retainers and flown nearly 3000 flight hours. Currently, the f35 operates from several bases and four ships. Five countries have flown Operational Missions, including the United States air force, which has been in continuous deployment overseas are more than a year last three years, Lockheed Martin has delivered more than 300 aircraft and invested 270 Million Dollars improving our supply chain through Data Analytics and automation along lets leveraging production and sustainment elements to improve performance at reduced cost. Lockheed martin has been working diligently to prove proof performance to sustainability. The Mission Capable rate for the fleet has increased from the lowest 50 percentile to the mid70s. Additional sustainment metrics supply another maintenance activities have also significantly improved. Over the past five years, Lockheed Martin has reduced the cost per flying hour by 40 . Be able towe will drive down our costs for flying our another 50 over five years. We acknowledge has been a challenge, but improvements have been realized. Has appliedtin diagnostic resources to the issue. This challenge is to not that a squad or el issues caused exclusively by industrial loan. U. S. Services have confirmed a market improvement and ready for parts in 2020. These gains are derisive a direct result of the joint government industry efforts to identify the root cause and implement actions. Substantial progress has been achieved since the release of the dod reported year ago. Since then, Lockheed Martin has demonstrated a 45 point improvement while simultaneously growing the fleet by more than one third. This year come our parts of improved to approximately 83 . We will accelerate two more rounds of improvements this year which we expect will result in the 90 threshold target specified by our customer. Lockheed martin is committed to transparency and the resolution of challenges associated with heels and we will comply with our contractual obligations and look forward to a continued partnership with the dod and joint Program Office to reserve to resolve this issue. They f35 is performing as envisioned. The f35 has proven itself in combat and is quickly becoming the centerpiece for the u. S. Military fighter fleet and that of our allies. Thes a privilege to lead f35 Industry Team and on behalf of Lockheed Martin, i thank the men of the men and women and their families of our servicemen. I am happy to answer any questions you may have. To thank all the panelists. Items to respond to the that my friend the representative raised. We are in person today because dod insisted on testifying so witnesses are all from dod. We could only have three to conduct the hearing safely. We did try to work with your staff. And the medical staff of the capital to have inperson hearings as you requested. It was difficult to make this happen then to Health Standards to make sure people didnt get infected. One thing i know from new york is we do not know enough about this virus. It talked to friends and they seemed fine, the next day theyre dead. They told us it does not affect children, one day 35 children came down with that, one of them died. You hear the heartbreaking stories of medical professionals who believe they are decontaminating who believe they are decontaminated, come home and infect their families. It is a deadly disease. We have to put health first. The next hearing, we could have lockheed in person and have dod remotely. Im going to instruct the staff to work even harder with your staff to meet the accommodations and the concerns you have. I deeply respect the position you hold and want to work with you. I think we are united in wanting to have a strong military, strong private sector, strong government all getting a quality product and protecting taxpayer money. I sincerely would like to try to accommodate and same we will have lockheed testify in person and others will be remotely. I would like to recognize myself for five minutes. To the dod ig report issued last year, they said that dod incurred more than 300 million, a staggering amount, in excess labor costs between 2015 and 2018 due to Lockheed Martin not delivering spare parts that met the requirements of the contract. The ig also estimated if these problems go unaddressed it will department,pay the dod, 55 million each year and extra labor costs. Recommended the Defense Department seek compensation from Lockheed Martin dating back to 2015. Why did your office recommend that dod seeks to be reimbursed for these parts . Chairwoman, we recommend the dod be seek reimbursement for that. By definition in the contract, the parts should have arrived ready for issue, which means they should have been ready to go on the aircraft along with an electronic call equipment logbook. Terms with the contract come our recommendation speaks to the need for compensation. According to the ig report the Defense Department previously sought payment from Lockheed Martin for these electronic log defects in november 20 18, but Lockheed Martin refused to sign the proposed modification on the sustainment contract. Is that right . On the information we had at the time, that is true. According to the ig report, based on a similar contract modification, the proposed change would have cost Lockheed Martin 7,000 for each problem identified with the spare part. According to dod, Lockheed Martin refused to sign the modification because it would cost less to fix each individual problem then it would to reimburse the government. Is that correct . Per yieldge of costs issue is 7,000 to 11,000. According to what we found from our work, Lockheed Martin found it would be cheaper to address it on the sustainment contract. Lets turn our attention to you. Congress mandated the 2020 National Defense authorization act that departments follow the igs recommendation by seeking compensation for defective parts. The discussion between Lockheed Martin and the Defense Contract Management Agency began in april. To worked with lockheed identify specific problems between 2015 and 2020. That are attributable to Lockheed Martin. What is the current status of the negotiation with Lockheed Martin now . Those discussions are ongoing. My understanding is the team has come to an agreement relative to the magnitude of the issue and the problem. Offered orration demanded has not yet been agreed to. Lockheedurture martin is responsible for fully executing the contract that american taxpayers are paying for and that our military is counting on your company to safely and effectively deliver. We dont need further delays or excuses from Lockheed Martin about these problems. Will you commit to paying the Defense Department back for every defective electronic log in the Defense Contract Management Agency that has been identified . They have lost audio. You may have to repeat. Can you hear me now . He has left, i guess. No, he is on. They have problems with our audio. Ok. Go onto the next question and come back. All right. Were going to go to another question. Yield to the Ranking Member for his questioning. R. Thank you what are some other what are some other issues and how was your department responding to them . From a sustainment point of to look ate trying Lockheed Martins performance particularly in terms of earning incentive buy up lamenting some of the measures we took on the production program. We very clearly link what is goodness for the war fighter to what are those incentives that are paid. Weres contractually what doing. Second, it yields yields are a significant issue but we have a challenge with visibility and parts being transferred. Also in terms of maintaining warehouses and making sure obsolete equipment is moved out. There are a variety of other things as well. Servicemen onom the ground that they are following dod and jpeg directives to fly aircraft. Makest our commanders to the proper decision regarding the health and safety of our pilots and jets. I believe lockheed is incentivized to keep them at least partially Mission Capable. Notwithstanding the directors from dod. ,f a jet was missing an eel would it fly . Yes it could. Which a jetances in can be missing an eel and fly is that eel is not a safety critical part. When i spoke with my Maintenance Crew commanders, five on the phone monday this week, each confirmed to me if the eel belonged im sorry if a part that is missing in the eel is safety critical or is life limited in any way, that part will not be installed on the aircraft and that aircraft will not fly. If the jet were not allowed positivelyld it have toward aircraft availability or Mission Capable rate . It was counted negatively. Should a contractor be incentivized for performance that would not otherwise happen without the hard work of u. S. Government personnel such as allowing a plane apply allowing a plaintiff layer without an eel . We put blue sutures and green tutors in the cockpit to fly those missions. Nora kraft takes off without some form of government assistance. The magic is finding what is the answer first possibility. Required by contract to be delivered to lockey by the government . Is lockey delivering eels intact 100 of the time . Have they failed to deliver a few parts, or thousands of parts . We are talking significant numbers. I believe it is thousands. Is mr. Alner back . Can you hear me . You a question . Are you online . [indiscernible] i have two minutes left. I will yield back until we get him back online. Is he back online now . Shes on . I can hear you but i cant see you. There we go. Great. [indiscernible] 102 finish. Why dont you finish. When was your last Quarterly Earnings call at lockey . Yesterday. How much revenue was reported . Believe 41 billion. What about revenue for all fiscal year 2019 . I do not have that figure. Of your revenue is from government accounts . I will have to get that information for you. Indicatesearch somewhere around 75 . What percentage of your revenues came from the f35 program . Approximately 30 to 40 . Without its profit, why is lockheed for failing failing to fulfill the contract . Those figures are sales, not profit. Are very engaged relative to solving this problem concurrently with our customer. I look forward to working with you all on this issue and continuing our efforts to make contracting less burdensome and safeguard the taxpayer. The taxpayers expect us to have the best military in the world. Congress is committed to ensuring that our troops come our military has the best and has everything they need. Want to work with the private sector to ensure that we have the best. We also expect the private sector to deliver on the contracts at the american taxpayer expects. I look forward to working with you and lock you through this process. Hopefully we will continue to see improvements. I would like to be associated with your comments about wanting to see improvements. Had a prior briefing from military leaders running this program and working with the men and women flying the planes. I have never seen a military person not in combat who was so frustrated, wanting to have a product that was great for our country and not having the support or the Technology Come over even the parts that worked for the plane. This is a tremendous problem. I want to ask you, will you commit to paying the Defense Department back for every defective electronic log the Defense Contract Management Agency identified . It is a complex problem, as we have discussed. It is not all associated with Lockheed Martin performance. There are many aspects relative. This electronic file, we are making we are innovating as we go through this process with our customer. This has been a concurrent program. We concurrently had developed from produced and sustained this aircraft. Wsproducts that we lose to utilize that. A logbook contains quite a bit of sophisticated engineering information. It does not simply track apart. It includes technical data, a lotal data, data of different information. Through the business process, there are elements we can corrupt. Orcan be presented that way, a customer can miss input information. There is a lot of complexities relative to the electronic yield book. We have been working wholeheartedly with the cma and jpo to understand these issues. Have seen significant improvement in the last six months in particular come up to 83 ready for issue. I am fully committed to supporting that continued engagement to resolve those issues Going Forward. I am committed to meeting with the Defense Contract Management Agency as well as jpo to sit down and reconcile concerns and adjudicate costs appropriately. Concern,eciate your but i come from a military family. Every time a pilot gets in those planes and flies, they are risking their life. I know many widows and children that have lost their father because of faulty equipment. 85 is not good enough for the u. S. Military. It has got to be 100 . A contract is a contract. The contract says you will deliver a plane, which you have done beautifully, but it also says that the material that is needed to fly that plan has to be delivered too. Managers dont want to be sending people in the air when they dont have everything perfectly there that is in that contract. That is only fair. I hope you will change your mind. At the next hearing, have an update on how you are now at 100 and how you have worked out the understanding of this equipment so that it is working for the military. One of the most heartbreaking things for me in the last meeting is that one of the i cant even repeat it it is too upsetting. , mr. Ulmer, i sent Lockheed Martin a letter. I appreciate Lockheed Martins cooperation so far in producing documents and getting back to us with some answers. Many documents have not been provided. That Lockheed Martin will produce all of the remaining documents before the end of the month . I must tell you it is upsetting to me. If you cant deliver a document, i have no trust that you can deliver a plane that is going to operate and has all of the equipment true, it is a complicated plan. For 1 trillion to maintain it, the contract calls for the supportive equipment to be delivered in operating. Our militaryxpect to respond. This is in peacetime. I would hate to think what would happen if we were in a war and our men and women had to fly a plane that did not have the Technology Working there supposed to be working with this plane. Say, not just a money issue. It is a life and death issue. Plane that can fly . According to some managers because the equipment is not working . I look forward to following up as you on this request for the documents. Also going to request that Lockheed Martin live up to his contract. The American People have paid a lot of taxes to make sure we keep up with our contract to reducing this important plane, but lockheed is not responding to my request for documents, not responding to the militarys request for equipment they feel they need. I now yield to the distinguished lady. Madame chairwoman . Misses norton from the district of columbia. Thank you madam chair. Thank you for this hearing. Indicating innovations. Record say for the can you hear me . Yes, we can hear you. Yes, congresswoman. Recordnt to say for the that we signed a contract, we didnt sign to pay for innovation, we signed we didnt sign to pay for cost overrides. Thats whats happening. We are paying for cost overruns and that has simply got to stop. Ive got a question beginning with miss of the gao. Says thee Committee Also visited the f35 time and pointed at that oft ellis was the root cause the problems with the electronic they lose track of the logs do sometimes overnight after Maintenance Crews have already cleared the f35 to fly the next day. Talk about dangerous. What the committee founded his visit is not consistent with what the gao has found. Thank you for the question. Yes, those are consistent with what we found in our work. Ine summarized this march as part of our last year camaro team visited five different installations within the United States. [indiscernible] there is a great amount of concern that the and frustration, frankly with the problems with eels and with the interface itself. Either longstanding problems, we noted them in our reports as far back as 2014. Is rooted, and in fact this whole system. That dod fully implements our recommendations. These problems do not continue in the future, that is a problem with the past. Thank you. Of lockheed, lockheed provided the. Ommittee with the presentation in its presentation, you the house ist currently looking at its manpower and hardware, increased labor costs, decreased readiness , when you consider all of these steps is lucky taking now this is from mr. Ulmer, what steps is lucky until now to improve eels that system can be replaced . To an agileone Software Development process with the alice system. Alice is an i. T. Infrastructure developed in the early to thousandss before the iphone existed. It is an antiquated hardwareSoftware System. We have implemented Software Updates. Processingroved times significantly on the order of 50 or more. We have gone to quarterly releases. It was taking a stroll to 18 months to provide Software Updates. We are now currently with the jay powell releasing Software Updates every three months. We are receiving positive feedback. Reduced wait times, significant processing time, you can get all the information in front of you. Significantly reduced button clicks to get the information. Quite a bit of improvement has occurred on the alice system. Hear concern. R, i even discussed on both sides of the aisle. I can only hope this hearing to get a new system. We continue to pay for these redundant flaws. I thank you. [no audio] recognizes thew gentlelady for North Carolina for five minutes. Thank you mr. Chairman. Mr. Ulmer and Lieutenant General inspectorthe dod general report notes that ready for issue means some pair spare parts applied by the are ready to install on the aircraft and have an eel assigned. Can you explain in laymans terms what an electronic equipment log is and its importance to overall maintenance and sustainment of an aircraft such as the f35 . Yes, i can. An electronic equipment log i like to think of as a personal Health Record associated with that specific part. Digitally the parts and some of the functions we ask of that eel are to track life limits associated with that part, part number and tail number compatibility, manage complex assemblies like an ejection seat that meiko they may have an eel in the center. Also fort the eel export control as well as inspection requirements. Mr. Ulmer, would you like to respond . Yes maam. I concur with general thicks review of the description of the eel. In 2016, we implemented quarantined such that when we release material, we ensure the eel is in place inappropriate. In fort worth where we produce the aircraft in late 2016, we implemented we could not deliver aircraft without eels being compliant. It ist eel deliverance, consumed within the alice system. The information general fink described populates the information structure that informs the Maintenance System how to operate and sustain the airplane. Behindiness processes the transfer of that information, the communication of that information, the input of that information is what is issuesng with the eel today. That is why we are focused on creating solutions from an i. T. Business process point of view to resolve these issues. That is where we have seen in the last six months in particular the significant increase of ready for issue parts. Thank you. This question is also for both Lieutenant General fink and mr. Ulmer. What challenges is what programes is the f35 experiencing on electronic logs and what is being done to understand the root causes of sustainment issues . I will speak to them in general terms. There are three problems. One would be, does it exist . Relative to the initial existence of an eel on delivery. Those have more to do with alice and the i. T. System and have the eels are passed around than the eel itself. They may be corrupted or they may be removed or stripped inadvertently as the electronic footprint of that part works its way through the system from lockheed to a supply point in the country and eventually a squadron. Think ulmer, if you Lieutenant General ficks answer is sufficient, my time is running out and i have one more question. I concur. Thank you. Actions has, what Lockheed Martin taken to address the nonready for issue parts and ensure accuracy of electronic equipment logs, more than what you have stated . If there is Something Else you need to state, and Lieutenant General fick, have you seen improvement in ready for issue parts . Yes or no would be easy. We have seen an improvement parts thatwith rfi require nel. Eel. It is a very small number of parts that require eels. Relative tor point whether a eel is required, we are reducing those. Mr. Ulmer. Fox, we haveman invested 30 million to improving the ready for issue parts. The eel andment, engineering content associated with that, the complexity of that content, we have done a Systems Engineering approach. I am talking about enterprise, Lockheed Martin, conduct the events to go out to the war fighter, we have witnessed the concerns, documented the concerns, and then come back and go through a formal process to determine root cause and corrective action. Those actions play forward relative to the improvements we are seeing. More formal initiatives this year as we raise the bar. Thank you, both. I yield back. I will yield myself five minutes. Hall, you mentioned the counter contract point of order . It is the republicans turn. Ms. Fox just spoke. She is a republican, correct . [laughter] yes. I respect the gentlemans right. Long was the contract on the f35 . They are annual contracts. Some have gone beyond one year. As part of our review we look at , on the eel issue, 2015 to the 2018 contract covers part of 2019. I know ms. Lord and Lieutenant General fick were on board in 2019 when we went with this larger contract. Is this lot 12 we are doing . We are delivering lot 12. That is 149 aircraft, correct . 147 i believe. I trust you. Is there a problem with the way we have framed this contract that makes Lockheed Martin less responsive to issues like this, do you believe . I do not believe so. I know that on the sustainment contracts i do not have a whole lot of time, but is Lockheed Martin still getting incentives, despite the fact they are parts . Ing noncompliant we assess Lockheed Martins performance against the incentive criteria we build into the Production Contract is that not on flight time . If you fix a noncompliant part and get that up in the air, does lockheed get the bonus . Yes. They get the incentive. That is what i am getting at. Ulmer, ia way mr. Would like you to consider this seriously that part of the contract, the fact you are getting an incentive bonus because dod personnel have spent approximately 300 million in a workaround on your noncompliant parts to allow you to receive a bonus for work that you did not do correctly. Need to go back and figure that out. You can work with the Defense Contract Management Agency. That portion of the benefits you are receiving is not fair and just under the contract, and i would highly recommend if you want to avoid reputational damage, you need to rethink the terms of that contract and come back to the table and work something out that is fair for the american taxpayer. Lockheed martin has had a strong history in the defense sector. We respect that, but i do not believe, based on the facts here, the American People are being treated fairly. If it continues, that will be to the detriment of Lockheed Martin. I do believe the f35 is probably one of the finest aircrafts when it flies. That is the problem. We have this workaround in terms of this whole program. Notice, mr. Ulmer, and i would like to ask you questions. That we are in the process of fixing this problem . I have a report right now that tells me the Inspector General the staff addition to delegation, democrat and republican, we agreed on this, that because of pervasive problems with the f35s spare parts military personnel must be reassigned to troubleshoot problems, pilots must fly f35s on a near daily basis with defective spare parts, and maintenance personnel are at risk of allowing aircraft to fly with potentially dangerous issues. Weve got a problem. According to dod, our unified staff, and the Government Accountability office, what are you going to do about it and how quickly do we get this thing fixed . Congressman, i take this extremely serious. We are focused on manufacturing and sustaining the f35 and safety is at the forefront, as well as worthiness of the vehicle. For the record, i would like to state to the chairwoman, to my knowledge all documents have been provided. I would like to connect with your staff to make sure that occurs to your satisfaction, but my belief is we are doing that. We will follow up on that. Thank you, sir. You asked me what have we done . I indicated we have spent 30 million to resolve the issue today. Direct meetings april 2. We were meeting with the dcma to work on this. We have regular engagements with the joint Program Office, we make adjustments to the alice system to improve the system, not just from a electronic equipment logbook point of view, but from alice point of view. Withe participating taking Lessons Learned from the alice experience and informing the odin experience as we go forward. We are taking several approaches relative to program resolution. We have seen market improvement, we have more to go and understand we have more to go, and we will support. You have our result to fix the problem. Ok. This is the largest single contract we have got. This is an important part of u. S. Readiness and we have got unanimity here and we have got to get this right. The chair recognizes the gentleman from texas for five minutes. Thank you, chairman. This is quite the ordeal. It is amazing to think 20 years into the program this is where we are at. No doubt the f35 is an amazing piece of technology. We are glad to have it and want to make sure the United States stays preeminent when it comes to the race of technology. When it comes to the battle space, not just collateral, and especially today with the threats from china, it is also multifaceted. R, when nations have risen and fallen through history it was not just because they did not have the latest technology on the battlefield. It is extremely important we get this right, but also that we get it efficient as well. Lastent 1 trillion in the , at least on this and the estimate we have, and that could have gone to a lot of different places. We have china invading our cyber and doing other things. Important we get this right. Now, we have a shipping system that does not work. People say that when the parts come in they not labeled correctly. Them are or half of not even labeled correctly. I know the system is complicated, it is not like amazon where you are delivering the part. It seems like not being able to get to them correctly is a problem. We have 300 million in excess labor cost since 2015. Mentioned by was the chairman, they are incentivized for having planes flying. When they do not fly and we have to fix them, they still get paid for incentive. It is hard to see how this keeps going on. Has been sent insanity sent insanity is doing the same thing over and over expecting the same results, but it seems like a normal day in washington, d. C. It seems like we have a whole lot of work to do. 70 is not a benchmark for excellence. I know many of you came into this program and have not been in your positions 20 years. Recently we paid 30 million to maintain six f35s originally destined for turkey which makes me wonder, what is the general cost of not flying an f35 . When the f35 is not ready to fly what cost is associated . 30 million to not fly six planes seems like a lot of money. The 30 million cost for those planes accounted for the induction of the aircraft into the work storage and required to preserve them in that condition. That is not work we would normally do doing aircraft on the flight line because our objective is to continue to fly them. I can get you a breakdown of the cost associated with that entry into longterm storage and with the annual cost is associated with the storage. I have been surprised that we have these contracts being renewed and they do not seem to be getting any better. Are there performance metrics that are required, penalties for not meeting them . These are things that seem basic in the corporate world that we have a hard time doing when it comes to military contracting. Congressman, i would like to address that. Yearsin industry for 33 before taking this job three years ago. Putrimary energy has been into rewriting the acquisition system for the department of defense. We used to have one large, onesizefitsall system and we have broken that down into six individual pathways. For instance, we are talking about odin which is the upgrade from alice. We are using modern Software Techniques on that. We are tailoring to your specific questions about sustainment. Refiningre doing is the incentive structure, going back and getting the voice of the customer, understanding what it takes to get aircraft operational, and making sure that, as we write incentives, there is a clear linkage. Additionally, we have set multiple times this morning that one of the root causes of the alice,d rfi problems are the Software System we used to collect data and maintain the information. That is an out of date system and what we are doing in developing odin, the replacement, is going directly to the maintainers and getting the voice of the customer to make sure we drive Software Requirements from the front lines to the user versus someone sitting in a lab deciding that for them. Thank you. My time is expired. I will just say we owe it to the american taxpayer to do this right and require lockheed to pay penalties when they do not get it right. I yield back. The chair recognizes the Ranking Member. I ask for unanimous consent to clarify the questions. First, your Second Quarter profit is 1. 6 billion. 19ond, your physical your was over 2 billion. I renew my question which is why eelsckheed delivering intact and on time . I ask for these documents to begin the record. Can you repeat your question . Ok. Mr. Ulmer, i hope you heard that. The documents are accepted. Understood. We recognized the gentleman from virginia. Thank you, mr. Chairman and our speakers. Moore, what is unique about the f35 program . There are a list of things that make it unique, but among many it is one of the international programs. It is not just a u. S. Program. International partners and our closest allies like the british and australians have a decision. But is there not Something Else . I met the f35 is replacing all Strike Fighters, right . It is designed to replace Legacy Fighters across three services. Have we ever done that before . We have never had a single system. That is what is unique. Enormous andre are effect all of our services, we have never done this before, and it is a critical piece of u. S. Defense. Going back to 2014, jao provided a number of recommendations to dod, the project manager, which we have not focused on a lot. Inluding alice back september 2014. Where those recommendations adopted by dod . That has not been adopted. Report we sent20 it to congress for them to take action to ensure that happens. You would think with the stakes this high on this unique program dod would run that walk to make corrections to a system that was defective and you documented it 20. In 2014. I completely agree. They just have not done it yet. Why not . We heard they had other issues with the f35 program. This is one of many sustainment challenges and it is difficult for them to do, but we think it is vital. Now we are in a place where sustainment is the major problem. Yes. They ignored it, your. Ecommendations and the dodig were your recommendations implemented . The joint Program Office agreed to our recommendations in our june 2019 report. However, we are waiting for supportive documentation that they have implemented the recommendations. Your testimony, you gave us a laundry list of issues that were seemingly, cavalierly ignored by the joint staff over the years. Is that correct . Yes, i touched on the eel issues and the Incentive Fees. Right. Either when they were getting feedback from the field from pilots, command centers, they still did not implement changes that would have gone some way to ameliorating the problem, is that correct . In october 2018 they issued guidance allowing the parts to go on the aircraft without the electronic equipment logbooks and additional duty labor was used with work around to make sure the parts could get on the aircraft for it to fly. The Alice Program we are talking about, that was created by lockheed for just this program, correct . Alice was not a direct focus. It is my understanding though that that is true. Is that your understanding, ms. Moore . Yes. Alice was created specifically for the f35 program. It was approved by the joint project offices, correct . That is correct. It was approved nearly 20 years ago. 20 years ago. Hasnt been updated . It has been updated several times. Alice did not go fully operational until 2018. They had problems on the way getting it rolled out. There have been a number of. Pdates faster, butading the bottom line is there is no way to assess whether the users are getting what they need. We are not going to know when it is good enough. You advised the department of defense six years ago that it needed performance metrics. Yes, we did. They did not act on that recommendation. They have taken some action, but it has not been sufficient. Moore, had they accepted the recommendation when you made it do you believe some of the problems that we are chronicling today couldve been avoided . Yes. Implementedfully the programs, it could have mitigated the problems. Chairman, the mr. Rtcomings of the contract we need to focus on the shortcomings of the management. I think this hearing and this testimony certainly should give us pause about how confident the oversight management of the single most important new Fighter Aircraft in the history of the United States has been. I yield back. The gentleman yields back. The chair recognizes the gentleman from ohio for five minutes. Thank you, mr. Chairman. Mr. Ulmer, i hope you are still there. Do the latest aircraft have eels . Repeat the question . Do legacy aircraft have eels . No, congressman. The f35 ist is, such a sophisticated, complicated, highly technological aircraft. Is that the reason you have eels . How do you do it with legacy aircraft . Yes, sir. The Maintenance Systems for legacy aircraft are not integrated systems that support specific platforms. Attempt at the alice and electronic logbook approach which is about integrated i. T. Sustainment platforms. Lieutenant general fick, do the eels pose any safety concern or risk . Understanding from talking to the Maintenance Group commanders that authorize the aircraft to fly, there is no safety concern associated with flying aircraft with those parts. They will not allow a part to be installed in the aircraft i got that. The issue is not getting those parts readily available and in place. Yes. I guess the next thought wherehow much delay are we on that . We have mixed data from the commanders in the field relative to the times in which they have allowed the aircraft to fly without eels. We have good information from one of the installations we are using to kind of sort through and figure out i will call and otheron information from wings that are less clear. The navy and marine corps are not allowing the aircraft to fly parts. With nonrfi heard the office talk about the Alice Program just rolled out two years ago, but earlier testimony said it was started before that. Alice has been around a long time. I think you have the technology of an iphone. That . Fault is where does that happen at the . The program has been around for just got rolled out two years ago with technology that is 10 years outdated. I will get you the exact date, but the first version range. Out in 20062007 we had a substantial update to the alice system as we entered iotne. When i entered a few programs back it was alice 2. 0 and then we moved to 3. 1. 3. 5 which units are is the newest iteration. F35, the whole system is complicated and had technological. Is it fair for Lockheed Martin, on the contract because you are in a whole new area of sophistication, was it right to have a contract because there are so many unknowns . Lord, that might be a question for you. We have different contract types that correlate with the risk involved when there is a high level of development and unknown. Needed andwhat is there is a different level of fee than when it is more known. Contractsfixedprice with Incentive Fees for meeting certain criteria. Where we are in the department of defense is really working to make sure all of our Contracting Officers have all of the different so, this has been developing for quite a while and they are doing a lot more planes. We moved into the second phrase for production and what we are in the midst of doing is developing sustainment contracts that are better tailored. Are you seeing better results now working with the main manufacturer . We started out when i got involved with the Program Three years ago. Absolutely, from a production point of view, we got more fidelity around what was happening on the manufacturing floor. I will say the department of defense has an enormous amount of data relative to that versus where we were three weeks ago. I would say we are just turning our real focus on sustainment and just beginning to build that robust data set. We have a number of teams working on the alice to odin transition. You are confident and optimistic things are going to get better . I am confident we are making progress, but i think we have a way to go in sustainment. Thank you. I yield back. The gentleman yields back. The chair recognizes the gentleman from california for five minutes. Thank you, mr. Chair. One of my concerns is that if left uncorrected problems will only get worse. The fleet is expected to double by 2023. The u. S. Plans to purchase 2500 f35 from Lockheed Martin over the life of the program. To replace our entire fleet. That growth may be great for Lockheed Martins bottom line. But if problems with the f35 software such as alice and electronic logs on their parts are not addressed and fixed, the headaches for u. S. Pilots and Maintenance Crews will grow. A fair assumption the problems you identified in your june 2019 report will only get worse as the f35 fleet expense . Expands . Unless theue that ready for issues spare part and yell issue is addressed it will continue to participate to perpetuate. We have seen from the joint Program Office guidance to fly aircraft with yells with the fleet continuing to grow, the problems will become more pervasive unless addressed. Ms. Malory, would you agree with that assessment . F35 Program Faces a number of challenges and those are exacerbated by the growth flight. Of the overall there are challenges and they have agreed with our recommendations on sustainment. Fair enough, thank you. Air force personnel also told Committee Staff that if not addressed, Current Issues with electronic logs and spare parts would likely compound as the f35 fleet expands an additional aircraft to plan combat missions. Staffample, committee visited Hill Air Force base in utah, they were told in f35 squadron received immense support when the squadron deployed in the middle east in april of 2019. This was the f35 first time flying combat missions and everyone wanted to see the mission succeed without a hitch. Deployment had only a handful of f35 compared to the eventual size of the anticipated fleet. Committee staff were told it would be difficult to maintain that level of support as the f35 fleet grow and the demand for pilots, maintainers and support personnel grew along with that. Mr. Omer, the most recent combat deployment of f35s at the beginning of june, if there deployment follows patch once they should be home in six months. Can you commit today that the problems with electronic logs on spare parts will be fixed by the time that squadron comes home . Congressman it will take us more than that time to resolve these issues. But we are focused to resolve these issues. I appreciate your candor. General, if mr. Omer Lockheed Martin cannot meet that commitment, how will the joint Program Office of the Defense Department ensure pilots are fully supported under future deployments . Congressman, we have put language in place in our fy 19 and fy 20 spared contract that requires yields the requires parts to be are upon delivery so we have set the stake in the stand relative to the delivery of those parts. We are committed to working with the services, with Lockheed Martin, and with other industry best partners, to instantiate odin as a solution to the problems we continue to have an alice. And i firmly believe the instantiation of odin is the intervention required to most completely address the issue of nonrsi parts. Thank you. We all know these problems have to be fixed and they need to be fixed before the f35 fleet is so large that problems with missing electronic logs, defective spare parts and continuing Software Glitches are not so overwhelming they cannot be effects and with that i yield back. Are recognized mr. Higgins i now recognize mr. Higgins. Thank you, madam chair. General thick, americans want air dominance worldwide among and the parents and families of our pilots what does pilots to have total confidence in their aircraft. We are focused prime early today on talking about issues we have with electronic equipment logbooks. The eel. And the classification of and replace and parts for the f35 platform would be considered not rfi or not ready for issue. Absent those problems, as we work through those issues, general, do you consider the f35 to be the platform that delivers air dominance for the United States of america worldwide . I absolutely do. Thank you. That is what we are looking for. And as we address the problems we are discussing today which ive complete confidence that Lockheed Martin is dedicated to resolve, i turn my question to mr. Omer. Our sustainment costs for the f35 steadily coming down . Every dollarn, for of sustainment approximately . 39 is Lockheed Martin ortributes to peer about 13 . 13 has to do with the propulsion system and there maitre has to do with operational sustainment costs are the government. Yes sir. In the interest of time, let me, America Needs to know, we recognize there are problems with the full deployment and manufacture and perfection of this world class aircraft that Lockheed Martin is delivering for a nation and for freedoms purpose across the world. Need to know, our sustainment costs steadily coming down . Yes or no. Yes they are. The Lockheed Martin elements of sustainment costs have come down 44 from a cost per flying hour in the last five years. Thank you. Nora the eel nonrfi issues, zapping addressed by blockade is that being addressed by Lockheed Martin . Yes sir, we are aggressively engaged to resolve that with our customer. A part of the component missing eel data, considered nonrfi . My colleague referred to it as defective. Does the part work . Will a plane fly if the technician manually updates that data . Congressman there is no issue with the part. The part is not defective. The issue is with the electronic File Associated with the part. Understood. It is clarifying for america and it is important that we know. Regarding progress lucky martin has made, can you clarify that Lockheed Martin has made can you clarify in production since 2017 has shown the ability to consistently deliver zero defect aircraft since 2016 17 . Yes sir, we have a very strong track record in multiyears relative to zero defect deliveries. We are less than one defect per delivery for the last several years. Thank you for the response. General thick in his opening statement, he said the bottom line is, we need parts delivered on time, with all required electronic identification markings and records, right upon arrival. There . R, when can we get are you optimistic we are moving in that direction and getting there quickly . Sir, we are optimistic we can get above 90 by the end of this year. As general fick alluded to we are going to be challenged to achieve 99 ready for issue. We are taking actions necessary to support that metric and requirement by our customer. Thank you for your response. My father was a navy pilot in world war ii. Im a veteran. And yesterday i spoke with a dear friend of mine whose son is a pilot for the navy. He showed the concern of parents and families across the country, that their concern is that pilots are flying planes. I thank you for holding this meeting today. I think the Ranking Member. I think the witnesses for testifying today. We are working through these issues and i have total faith in the f35 just an Lockheed Martin and i yield. Thank you for the questions and statement. Five minutes to congresswoman jackie spare. Spier. Ie spear Lieutenant General theres no question the alice system is underperforming, correct . Absolutely. Mr. Omer is a true and has underperformed . Not meeting our customer war fighter requirement. It has underperformed. It is anticipated there is a hundred 83 millie dollars 183 Million Dollars Lockheed Martin owes the taxpayers of the country for this underperformance. How much time is spent negotiating for locke with Lockheed Martin, how long and how much time . My recollection is that the negotiations specifically associated with the consideration on deals began in on eels, began in earnest in march this year and it continues forward. Comedy hours . How many hours . I would estimate tens of hours by the government. D. C. Ma. You continue to say you are negotiating on something that is clearly established, that you have underperformed. It has been estimated it is hundred 83 million. Million. The taxpayers of the United States government are paying 7 of your budget and your profits. I want to note when youre going to pay the 183 Million Dollars and stop nickel and dining the United States government and the taxpayers. Congresswoman, as we have identified in this testimony, the number has changed from 303 million which is a new number for me today so i think we have Due Diligence to do among the contributors associated with electronic eels. Sir, i have very little time. How long are you going to take before we can have an answer as to whether youre going to repay the government . Congresswoman we continue to negotiate in good faith across the table. All right, let me move on. Are we absolutely committed to doing odin . Yes, we have the dates rolling out now. As i calculated it, if we continue to just do workarounds over the course of the next 66 years, it would cost us 3. 6 billion dollars to just do workarounds with the existing alice system. Are we going to end up paying billion . Odin then 3. 6 we are developing odin so we do not have to do workarounds. Either stand that. We are doing it for the same amount we had budgeted for baseline alice. How much is it going to cost . Acrosses 547 million 2021 through 2025 associated without an us im sorry associated with oden. We believe there is also on the order of 70 million between now and 2022 that we will continue to put. Into alice. Who is going to know the intellectual property . The u. S. Government. No question . No question. That will allow us to have others fix it, so we are not negotiating with the prime contractor, over a measly 183 m a half awhen we pay billion dollars for every plane we purchase from them. I would like to say to mr. Elmer, you are not a good actor in this. This is just one component. We already know there are nine flaws on the f35, that are identified as critical. As priority one. That to my knowledge have still not been addressed. So we are looking at one component of the f35 and we have a lots with the f35. We have had problems with the seats, we have had problems with the oxygen system, and for you not to come to the table and negotiate this 183 mi llion really aggravates me and should aggravate every taxpayer in this country. Owning this system outright should have been the case initially, and we would not be in this situation. For all of those who think somehow the f35 is the safest plane around, i have news for you. We have had problems with this plane, and we continue to have problems with this plane. And we should be very concerned system not being accurate, because it draws that whole issue into question. I think the gentlelady for her passion and knowledge on this issue. I would like to call on congressman heise. Is important we state the end result is that we want to see this program succeed and the purpose of oversight is to ultimately get to that end. And there are some glicks in the road so to speak and we need to address those issues but we want to thank you for your work and acknowledge the purpose of oversight is to get some of these issues resolved. Glitches in the road so to speak. Ms. Lord within that context a lot of the argument is that we need to see lockheed write a check and go from that perspective. Unfortunately if that were to happen the check just as a going to treasury and it does not help the program. That does not help anything. Are there other forms of compensation that might be more beneficial . Absolutely. We are now negotiating the next annual sustainment contract in and the twoyear options after that. We could very well look for consideration in that contracting. So there are other options. I think those other options need to be on the table and need to be considered. Iso i do have another concern want to bring up for ig hall. We have 353 of these jets being that have been built out of 500 since 2015. , and yet ballpark 1 trillion is on sustainment that is 566 million per plane, per year. That is a staggering amount. If we are talking a trillion dollars in five years for these planes. Mouth at is just my my math but can i get clarification on this. We are going to go back and help you with the math. I do not understand where the 1 trillion over the last five years came from i dont understand that number. The most recent lifecycle cost estimate for the program over six years is 1. 6 trillion so i find it hard to believe we spent a truly dollars the last five years. That figure is out. The selected acquisition report actually i dont recall seeing that number but they did say that the amount of spending now going per year per plane is going to strain future Service Operations and sustainment. So whatever the actual cost is, this is an enormously expensive program here. And so i want to know how does ons cost compare to other fighter jet programs in the past . I cannot speak specifically to the ons cost of other fighter jet programs but i know that we are aggressively targeting getting our ons cost to 25000 per flight hour. By that is a stretch goal. 2025. Are we trending that direction with cost savings . We are making deliberate progress. To get to 25 by 25 will be a huge. If you could provide some comparison of past programs to rvr now as well as the goal . ,goals are great but i want to know the trends to get those goals. That should approach the fourthgeneration sustainment cost. That is the way we derived the target of 25000 per flight hour. If you could provide that to me i would appreciate that. Lord, i appreciate the conversations we have had in the past. We have problems with the alice system transfer to the , odin system can you walk us through the expectations and how this will play out . Absolutely. First, odin is going to be deployed on much more modern hardware. The alice system today, for one system you have 891 pounds of hardware. For odin you will have 50 pounds of hardware. So it is very different. As we move toward the first deployment of odin in september, 2021, and interim step as this fall to move alice onto the new hardware as the first step. We will own all of the data rights in the government for odin versus alice. It is going to be deployed in the cloud. It is being developed using requirements in large part so from the maintainers. For instance i was on the phone yesterday with the Maintenance Unit leads at five different locations making sure their voice had been heard by the actual team doing the coding for odin. We also, as opposed to using the old waterfall Software Development techniques and in we are using agile and deaf sect ops, codingsec every day and testing every night. We have deliverables from the team every single day. Government and Industry Team every single day. So we can measure those deliverables. And we can measure them against the baseline requirements. So a very different system. Ok, thank you. Madam chair i will yield back but i just want to say i do have some more questions i would like to get some answers specific to modified training we are seeing at hell and Luke Air Force base is and why that is happening thomas at hell air force air force base and Luke Air Force base and i will get with you on that. Thank you madam chair i yield back. And now recognize madame wasserman schultz. I went to ask my question three fiscal lens as a Senior Member of the appropriations committee. I am deeply concerned about what im hearing and seeing the waste in this management of is paramount. S there have to be oversight mechanisms in place to keep costs in check as dod and Lockheed Martin move forward so alice, the main Software System. In 2016 the Defense Department told gao it will cost an estimated 17 billion and they found that estimate not fully credible. Formed atment had not full analysis of these costs. What is the dod current estimate of how much money has been spent on alice . We are spending on odin the same amount we are spending on alice. If you give me a moment i have the amounts over the next five years. 547 million for the next five years. What has already been spent on alice . We do not have that here but we could get that to you shortly. Okay. Is it more than 17 million . 17 billion . I do not believe so. That seems like a large number. But we to get that to you shortly. Respectfully, that is the amount you said that defense gao that thetold alice Software System costs but that was deemed not fully credible because the department had not performed a full analysis. So my suspicion is that it costs more than that already and now youre projecting other 547 billion. Announcede department it would pay Lockheed Martin 87. 5 million to begin the development and to start the transition from alice. I will ask you a series of questions. What will that initial include . The 87 point 5 Million Contract to transition from alice is only the beginning. To expect i imagine odin cost a lot more than that. You just that will be 547 million. Since the program is had significant cost overruns in the past, how do you plan to ensure the cost of odin is not excessive . The way odin is being contracted for is very different than what we have done in the past. We are actually defining the architecture and releasing app by app. The firstleased contract to Lockheed Martin in july. And the work is being done in a government owned cloud environment. We have total visibility to what is delivered every day. Ok. If i can ask you to pause the 87. 5 milliondollar contract is transition from alice from the beginning, you expected to cost more than that so what is the initial work by Lockheed Martin include . We have 550 million over the next five years and the initial work is a series run by apps but a series of coding done by app. But i will pass it over to the Lieutenant General for more specifics. That is accurate. Lockheed martin will code three specific applications for odin the early Work Associated with those apps. General, do you think dod should move forward with any redesign plan, without knowing what that plan or any component of that plan will cost . Maam, my Team Continues to refine the cost estimate for alice and odom moving forward. The 547 milliondollar many was money that had previously been allocated to nls rearchitecture effort. We play we can fully instantiate yearsver the next five within that budgetary cap. But we know that over the course of 50 years remaining in the program to remain viable we will need to continue to update the software as those issues are found and the Program Evolves we do anticipate more will be required. Gaos march, 2020 report recommended that ms. Lord in concert tatian with you general develop a detailed strategy. In consultation with you, general, develop it detailed strategy. Can you comment on the uncertainty looming on how much it is going to cost for the redesign of alice . That includes the cost of redesigning the whole system. We plan to have odin deployed december fully. Sorry, the question is for ms. Moore. Yes, we share your concern about the ability to track the overall approach on the strategy for implement and go to and as well as the cost associated with that. Relatively new initiative there odin is arelatively new design to there replace something that has been around over 20 years. There will be significant challenges and cost associated with doing that. It is important that it be done right and done in a costeffective way. Thank you. Thank you madame chair i yield back the balance of my time. Thank you to the gentle lady for her questions we now recognize representative norman. Thank you madame chair. Inspector hall in your testimony , you stated that while a mean apart does not is effective, it can create life and safety concerns for aircrews. He also stated the dod use of local guidance in ad hoc missions allowed aircraft to fly missions instead of grounding the aircraft. This suggests to me if anyone puts lives at risk it would be the dod. Is this your opinion . The staff, maintainers and commanders at the depot had a difficult decision. They how to conduct a workaround to get parts onto the aircraft so they could continue training and Operational Missions for they had to quarantine apart and potentially impacts that ability. Earlier foryou said quality and safety, we were aware of apart that was a part that was the seat Survival Kit Assembly that is a crackle safety item, was flown a Critical Safety Item that was flown and tracked through manual processes, such as a whiteboard. Pose aral, do eels safety concern . Or is it a rest, in your opinion . Is that a risk in your opinion . The answer is it , depends. Some parts are safety critical and life limited. In those parts have eels. And those must be in place to be installed in the aircraft so yes it is safety critical. For other parts who also have eels those parts some are not , safety critical. Life limited. It is those parts to find a way to remove the requirement for discussion ofhis comes off the table. Can you give me an example of the part that demonstrates what youre talking about . Have a specific part number i do not have a specific part number or nomenclature but as of right now where looking at eliminating close to 600 across the airplane that have eels but that are not safety critical, nor have life living parts. Of the 6000, roughly 600. So there is a distinction. Yes, sir. How quickly willie we get the od in operational and what is what is the s minute cost to develop and deploy the odin. The initial delivery of the system is targeted through september 2021 and to develop that will be several hundred Million Dollars over the next couple of years and then 100 a couple of hundred Million Dollars for the few years after that to continue that deployment. We intend to declare initial operational capability, for one squadron in september 2020 on. Inember, 2022 september, 2021. By december, 2020 two, our intent is to spread across the fleet. Those that decide not to transition because otherwise they are currently deployed or otherwise need to continue to use the legacy and we will do that as soon as operational constraints allow. Lockheed martin done to what has Lockheed Martin done to ensure the f35 sustainment fits the war fighter needs . There are several avenues relative to sustainment. We have been working on reliability and maintainability improvements on the platform. We have been working to improve the prognostic system on the platform. We have gone in advance of those requirements to procure materiel to ensure we have the spare parts when the customer needs them. And there are several different aspects. We been working to improve the we have been working to improve the alice system. Theres many different levers we apply to improve performance on sustainment performance on the f35. Thank you, like commerce that heise mentioned, we need to be looking to solve the issue. The question about the money has come up to be paid back. Also the question to the fact that that does not solve any problems. Lockheed martin does a great job of producing airplane and i think will continue to. And we are trying to find any problems that exist. Yall are trying to find a solution to them. Im out of time. I yield back. I think the gentleman and recognize the next member. He ispersons tubing online. Steubing . We are going to go to congressman burke Keller Congress member keller . Thank you, madame chair. And i would like to think the panelist or the witnesses for being here today. A couple of questions to follow up on questions my colleague from georgia was asking regarding the cost per hour he cost per flight hour. You said by 2025 we want to get to 25,000 per flight hour . So we consider that a stretch goal. Yes, sir. What is the current cost . I believe the current cost per flight hour is on the order of 35000. Ok, so there is a schedule each year to get to that . I mentioned in my opening we comments we pivoted the Program Office into lines of effort associated with five different include the air vehicle, engines, Maintenance Systems, data systems and training systems. I have allocated cost savings targets to each one of those offices that they need to pursue to get to that overall cost per flying our goal. Or when was start this established . 25 by 25 goal about two years ago and to move the program in that direction with a number of initiatives. From a sustainment perspective but also respecting that development influences sustainment cost as well. That 35,000go was per flight hour . Two years ago,. It was higher. I know off the top of my head. Can we find out what we gained . Its important to know who we are i appreciate it. It is important to note where we are. I appreciate it. The other thing i wanted to follow up on we know its important but i went to go back we know there are reported issues associated with the electronic equipment logs and some of the data inaccuracies are due to human interface and we know that will happen no matter what you are doing when you do without. Are there any strategies identified to help cut down on the manual input of data so reducing the human interface . Absolutely. There are two different pieces to that. One is, alice has been user unfriendly to get people to learn how to use it in our latest release helps that significantly. However with odin we are making sure it is more automated in terms of data feed. The user tompting input, so those things should be very helpful. And youre going to have this totally implement it, or is there a phasein we can see how this is working . How soon do you anticipate being able to see the benefits of this . We will have the first system deployed in 2021 and then it september, will be throughout 2022,eet by december, except for units to be deployed on aircraft carriers or in remote austere areas. Ok. Also there has been a lot of , talk about Different Things but can you speak to actions the department is taken regard to section 192 of the nda a with the relief for failure to issue spare parts . Absolutely. What we have done is put a team together. We have gone back to look at what is the root cause what is , the fundamental issue . Although there are many issues we believe at fundamentally comes down to alice and that is part of what has incentivize us to accelerate the odin transition. Ok. So when we are talking about alice and the issues were having, have these been issues we have experienced since the beginning of the Alice Program . Yes. So over time moving away from , that we should not be repeating the same issues . We should not. No, there have been large gains made with alice. There have been multiple releases. If you talk to the maintenance eunice they will tell you particularly 3. 5. Two we just put out has made a lot of difference. But still it is not as streamlined as it could be. It is not as easy she is. Wended we began using alice . When did we began using alice . Odin will start in 2021. Have an updated version of alice that went up a month ago. Wended the department start using alice . When did the department start using alice . 2012. 2006. Im curious. How quickly we can input met procedures and if it is taken us this long. I want to make sure when they transition over does not take is that time we will have the benefit in this case of odin of understanding what we do not like and using that to build what we do. As the team collects metrics from the users associated with the performance of alice we are using that to inform the capability needs statement associated without end. So we have a better idea to the point made previously, of what good looks like. And what we really need odin to look like from a maintainers and war fighters perspective. And we are driving that train this time. Youre not leaving it up to someone else. In other words we have learned from our past history and things we have done inappropriately to make sure we do not repeat the same failures. Yes, sir. I know recognize representative to leave. Tlaib. I really appreciate everyone being available to us. Its really important with the things i am hearing from a community. Two days ago the house adopted my amendment to the nda a focus on care for crewmembers whove experienced the f35. Unexplained psychological episodes while operating the f35. Lieutenant thick do you know , what is causing the psychological episodes . What has the department of defense done to protect from safety issues . We are working very closely with the services to understand each of the physiological events we have seen over the course of the last three years to be characterized as a decrease. In the occurrence of pe in the f35 enterprise. But to say there is a common root cause between all of them i dont think weve come to that conclusion at this time. More work to go. F35. Lord, we know the sustainment contract included a clause that said, the government may require the contractor to replace or correct any supplies that are nonconforming at the time of delivery. Ms. Lord, problems with the electronic logs, this is important. It can happen through the lifecycle of a part, correct . Yes. That is why we need to look at contract language and make sure it reflects the experience that we have had. As you point out at the time of , delivery is not the entirety of the time it goes through the ill system. We have to recognize that. If a problem develops following delivery, what it be possible for the dod to reject that spare part or with a dod need to keep that part and wait for Lockheed Martin personnel to fix it . We have ongoing discussions about those kinds of issues but if it is after the point we initially accepted, that becomes more complicated. Ando be cleared for flight f35 policy states an aircraft must be electronically complete and alice meaning that all records from each installed part must be installed in alice. N a part is listening missing an electronic log, that signals the aircraft should be grounded. But on any given day over 50 percent of the fleet, defined the fleet is flying with nonrfi parts. Do you find that concerning . I have faith in our Maintenance Unit leaders who look at each part and determine , whether the aircraft is fit to fly. They are wellversed in safety and would never make any safety compromises. All that said i have faith in all of our maintainers. I would like our systems to be 100 percent correct and effective. The American Public would agree. In the gao reported with that it is common for f35s to fly was over 20 inaccurate or missing electronic records then alice signals the plane should be grounded. So ms. Lord how can , servicemembers be 100 percent sure that alice issues are due to defective electronic logs and not to a dangerous issue on the aircraft . [indiscernible] maintainers on the Front Line Work with that aircraft to be sure the flight [indiscernible] that cost hundreds of millions of dollars to develop and deploy [indiscernible] the plane can be allowed to fly, is entrusted, that is the problem. The records, the spreadsheets, it injects another level of risk into those decisions. That is one of the many reasons alice needs to be improved. So essentially our pilots are being forced to fly aircraft that neither the dod or Lockheed Martin and verify r1 had a problemsafe due to ill or problems electronic log problems. I think its outrageous that we are spending millions of dollars and thousands of hours and manpower that our pilots are still being asked to risk their lives in terms of malfunctioning equipment. In case anything in here was not clear, fix this now. I think my chair would agree, before you have blood on your hands. I think it is important before you have actual life human beings behind these flights it is our responsibility to make sure they are safe. With that i yield the rest of my time. Thank you so much. Thank you for your important observations. I would like to recognize the congressman . Is he here . Im here. Thank you madam chair. Mr. Elmer, first i would like to give you the opportunity to tlaib saidhat ms. With regard to the safety of the aircraft. As we mentioned, it is the parts are not of concern. That is the electronic File Associated with the part. We have processes in place, the maintainers have processes in place relative to part integrity. Ed, dd250d. Eliver it goes through a formal inspection process. The aircraft has a diagnostic system on board with the platform itself. There are several layers of protection related to part integrity. Can Lockheed Martin arrow functionality and data on its own, or is that a broader issue . It needs to be done as an enterprise and we have clicked a link that. We need to listen to the war fighter how they operate and sustain and maintain aircraft and we need to incorporate that learned information relative to the implementation of alice and as we go forward into the oden system. Those requirements need to be defined by the user and industry and government need to understand that requirement. We can work to solve that andwe can work to solve that problem. We will be able to do that. Program has been referred to as a concurrent develop program. How does concurrent development affect the sustainment portion of the program . As the product has been developed, we have also begun production. In the early phases of the Program Development was ongoing while we still produce the aircraft. Two years ago, we received full war fighter capability. As that capability was released, the fleet has grown approximately 300 aircraft in the last three years. There has been a lot of planning of how we plan to sustain the aircraft, anothers a lot of learning as we implement and sustain the airplane in the fleet. We then apply that learning relative to the experience that has occurred and update the system accordingly. We have seen significant sustainmentin the and oMission Capable rate of the last two years has increased from the low fifties to the mid 70 percentile. We also see sustainment metrics in terms of supply and made its activities also significantly improved so we can route measure our performance at a system level relative to how the system is improving. General thick, how do you feel about our pilots being safe and flying the f35s . Sir, i have full faith and confidence in our Maintenance Crew and commanders and getting ready for flight aircraft. And i mentioned in my opening remarks i have a son flying for the air force. He doesnt fly f35s to his dismay. But he trusts his maintainers implicitly and explosively to deliver him an aircraft that is safe to fly. I believe that the Maintenance Group commanders assessed parts put onto the aircraft, they are making sure that any aircraft they clear to fly is safe to fly. General, can you please provide the committee an overview of how the f35 is performing, and the capabilities aircraft is providing to the men and women a uniform . Ed is the fifthgeneration Strike Fighter platform. It relies upon stealth and sensor fusion and enter bob interoperability to penetrate and persist and to punish in a way no other air system is capable of doing today. If you talk to a war fighter who flies the f35 and operations or training very happy with the , you will find they are very happy with the plane and the system we have got. We need to give them more. They always want more andwe need to give them more. Because the threat is not slowing down or stopping. We need to continue to move the Program Forward from that development perspective. And from a development and reduction and sustainment perspective. And what do you thank you can be done to ensure the f35 is ready to take on emerging threats. Sir, we are deliberately moving a program into a new paradigm for development referred to as continuous capability and delivery. Working to transition a legacy departmental or industry style of development and delivery a trench huge tranches to an agile focus. Its important as we work our way forward and the threat continues to change but to be in lip nimble the things that we , can do with and on the platform is critical. The chair recognizes congresswoman porter. Hello. Mr. Elmer, does Lockheed Martin owe the federal government money . Congresswoman we are , negotiating that today with the Defense Contract Management Agency with issues associated. Ith electronic eels how much does Lockheed Martin owe taxpayers . We are going through that. The figures provided 303 million is reduced at 183 million today. We are collectively working to understand the accountability point of view what those numbers are. [indiscernible] the f35 depicted parts cost the government 300 million. Why . Is that amount being reduced i do not know the specifics. Was that the governments idea to reduce the amount you of them, or is that Lockheed Martins idea . It came from the government. They came from the government. Ok, i will ask about this in a minute. So you were negotiating over what was 350 million but it has somehow been reduced to half of that. How is lockheed doing financially . Maam we just released our , Quarterly Earnings yesterday. Net sales are 16. 2 billion net earnings 1. 6 billion in cash is two. 2 billion. From the Quarterly Investor call, profit is up 15 percent from this time last year and three my five billions in profit so far in 2020. 10 times that 3. 5 billy dollars dollars, billion what you owe the taxpayers. One headline called Lockheed Martin a pandemic star for your ability to earn money as taxpayers and and small everyday families and Small Businesses struggle. Bar about why, given that lockheed is a pandemic star, lockheed is writing a letter to the white house asking taxpayers. To give blocky bailout funds. To get lockheed bailout funds. I am not aware of that letter congresswoman. You are telling me that the Lockheed Martin statement on the record that there is no request for additional money related to things like a free Lending Program . Or the money set up specifically in cares for National Security companies . Maam, i am not aware of a specific letter. I am aware relative to covid19 and the cares act with the disruption to aerospace and defense. I dont know the specifics of the letter you are mentioning. Requestockheed martin money under the cares act . Yes, maam. Why . Because of the disruption associated with covid19. Because of the disruption that caused you to have a profit of 15 over the prior year when we didnt have covid19 . ,that does not make sense. Maybe making gobs of money for is a disruption for you but for seeyday americans, if they their income go up 50 this year , if they were making three by five billy dollars in 2020, they would not call that a disruption. There were call that a miracle. They would not be coming to the government trying to get more taxpayer dollars. At the same time youre failing to pay the u. S. Taxpayers back with regard what you owe for breach of contract with regard to the f35 strikeforce. I am unable to understand why you need this additional money when your profits are up and you breached your contract for regard to producing defective parts. Why should the taxpayer foot the bill to help Lockheed Martin at this time . Maam, the disruption associated with covid19 requires many different aspects relative to health and welfare of the employees. Pardon me reclaiming my time. Use your 15 percent increase of profit to pay to protect your workers during covid. Why are we footing the bill with helping a company that is having a high profitability moment that is a pandemic star. Congresswoman no funds have , been provided relative to the care act. But you have asked. Like Many Aerospace and yes like Many Aerospace and defense companies. , one wrong does not make a right. I yield back. The gentle lady yields back. I now recognize representative grossman. The report found as a result of receiving not ready for issue spare parts the department of defense spent 303 million in labor cost since 2015. If that figure is right, it is a big number. Can you explain how you arrived at that number . The 303 million is just the cost of dod labor. To 11,000 per issue to fix or to resolve. So that figure is just for the labor attributed to the action request. So it is really a larger number and cost overall. Yes italy reflect dod labor and does not take into account the additional amount blocky charged back to the government to get the parts back ready for issue. Tino how much that was . Because of they way data was not tracked we were not able to obtain that information. Orare you trying to get it would lockey give you the information . We requested the information from Lockheed Martin during the course of the audit but they do not provide it. To have a recourse . Or do you just have to tolerate it . Lockheed martin shared with our audit team that they do not track the information in a manner in which they could provide that cost to us. I guess they are saving costs,. And the air since the report has been released, have you continue to monitor the delivery of nonrfi parts . Issued, our report was we are currently tracking recommendations we made to the joint Program Office. The joint Program Office agreed with all four recommendations. We are in the process of waiting for information to validate the actions taken. Do you have any update for us . Or just gotta keep waiting . Currently we are waiting for documentation to validate actions taken. Lets give general thick a question. What has your office done to address that problem and what kind of changes you think are needed to move forward . Deal issue to the and the rfi parts we have worked closely with the field relative to the eels issue and the rfi parts we have worked closely with Lockheed Martin to put practices in place to ensure the number of parts that arrive, that require an eel actually have that eel. One of the technical moves the group made was to provide an advance shipping notice that significant reduces the errors associated with manual entry of data when apart arrives at a base. An effectively prepopulates the system to allow for easier transmittal of the eel at easier acceptance and arrival of that eel on the base. That is part of the reason we are now at an 83 eel rfi number. I will ask a similar question. Mr. Omar, have the issues raised theonrfi spare parts in june, 2019 Inspector General report seen improvements . Yes or, they have. Or yes, sir. To 83 inimproved 43 the last six months. Ok. Rep. Miller thank you, madam chairman, thank you Ranking Member. As all of my colleagues today iserstand, the f35 program one of the most essential tools and our Nations Armed forces disposal. D strongly support the continue support of the program. I applaud the work that the department of defense, Lockheed Martin and thousands of suppliers across the country have done to ensure the f35 program will continue to be costefficient, Mission Capable, and effective. I am encouraged the progress that has been made, especially in the last year to reduce the the per flight and ensure parts for compliance are at a much higher rate. I want to thank you all for being here for questions and American People the importance of the program. Mr. All murder how has the impactedus pandemic these supply chain for the f35 program . Mr. Elmer, how has the coronavirus pandemic impacted the supply chain for the f 35 program . We have had suppliers that impact for a week or month. We have had suppliers who have little impact. We have suppliers that have reduced their workforce from 100 down to 20 or 30 . Diverse impact. We also have had commercial material. From a commercial aviation point of view they have been significantly impacted. So, theres many different aspects of how covid has affected the aerospace sector. How does the Mission Capable rate compared to a year ago or even six months ago . Mission capable for the f35 the mid50s from to the low to mid70s. As i look back at the data, it actually seems relatively flat at the state level. We do see variations caused by in some of these systems on the aircraft and we see the impact on the different fleet sizes. We are taking in a wide variety of issues articulated in our sustainmente the outcomes in the right direction. Right direction that we have 12 different lines we are taking with that organic use of increased maintenance authorities on the front line with a wide variety of other issues at all together move the needle in the right direction. Good. What does the future look like for the f35 production how does lockheed and your suppliers thank you can scale . We signed the Production Contracts over the course of last fall and currently entering negotiations with contracts i cannot talk to those specific details but as you look into the service plan you can see the numbers of aircraft and those years are not rising as a did march 10 through 14. The flatness and those years will challenge the ability to bring the price down we are committed to work hard with the department to establish the best value for taxpayers and war fighters. The last three years weve been ramping apart we delivered 61 in 2018 we deliver 91 last year 100 and this year prior to covid we run track to deliver 141 aircraft perk you can see the production rate increase we will continue that Going Forward the 165 aircraft and then see a slight decline in production quantities around 155. So just with an overview we been able to reduce the price of the airplane significantly we are on a trajectory of the 80 milliondollar aircraft we could achieve that in 2013. What that allows is we can now produce an aircraft at the price of the fourthgeneration Legacy Fighter would cost. I yield back. Thank you everybody. This is the last question are in thank you to the panel for their remarks and i want to commend my colleagues on both sides were there he are really informed and passionate concern and participating in this conversation i would like to yield to my colleague and good friend for his closing remarks. Thank you madam chair and all the witnesses who were here. Our side of the aisle has been focused on oversight. Its good to have a bipartisan hearing where we share the same goals to be sure our troops have the absolute best and make sure the taxpayers get their dollars worth. You will find no group in congress more in support of the private sector then our side of the aisle. We know parts and contracting and aircraft can be produced significantly cheaper than the government could. Having said that we expect the private sector to deliver on their end of the bargain. With respect to Lockheed Martin i appreciate the fact Lockheed Martin has a significant separate in america. It employs a lot of people and have excellent wages. I appreciate that. But we have had this discussion about the issues with the f35 and considering the significant percentage this product is with your total sales with Lockheed Martin i certainly hope moving forward we can get these issues resolved for the sake of our military for the congressman and women and the taxpayers. Confident we can get this resolved but i look forward to continue discussions with Lockheed Martin and the United States military and the majority in this committee. I yield back. Thank you and your staff and all members for joining us to work on this challenge a join my colleagues to say im very pleased that Lockheed Martin said they are dedicated to resolving these challenges. And as mentioned Lockheed Martin already spent over 30 million to correct this problem i want to point out this is a small percentage of the cost of one plane especially if you add the 50 million they say as needed to maintain the program because of the challenges i want to say how pleased we are to learn about the contract the government will be putting forward and the intellectual property and the component will be owned by the american taxpayer and government this should be the standard for any military contract Going Forward. I consider this National Security challenge because there have been so many reports of information stolen from our contractors through hacking including obligations the f35 has been compromised and information stolen. To have it controlled by the government to protect this information i believe is a very good step in the right direction. We are looking forward to learning more of the odin program and contract and how you spell that out so these challenges do not happen in the future to protect the safety of our men and women in the air force and also and in september. And those that reported 183 million owed to the american taxpayers and this would be resolved and to learn more of what dod is doing to modernize the contract process first and foremost with safety and security of the tax dollars in this country for their lifes work and dedication and testimony today and i believe this is the best participation of any hearing this year to show deep concerns and commitment to resolve this issue in a positive way the private sector and the military and the taxpayer. I yield back and thank you on both sides of the aisle to the staff every single meeting was held in conjunction with both parties we interviewed every report on this issue. And in closing thank you to our panelist for their remarks and for those with participating without objection all members will have five legislative days to submit additional written questions and then forwarded to the witnesses for their response please respond as promptly as you are able. This hearing is adjourned. [inaudible conversations]. [inaudible conversations] [inaudible conversations] doing the summer months, reach out to her elected officials with cspan a positive congressional directory. Your elected officials with cspans congressional directory. Order your copy online today at cspanstore. Org. Org. President trump spoke about efforts to combat Violent Crime in u. S. Cities. He announced that federal Law Enforcement would be sent to cities like albuquerque, new mexico. A great honor to be with you today