The chair is authorized to declare a recess at any t time i now recognize myself for an Opening Statement. Good morning todays hearing will focus on the f35 joint Strike Fighter a highly technical Stealth Fighter that is the pentagons largest and most costly acquisition programs in cf 35 Program Began more than 20 years ago the department of defense more than 350 billion onts Development Total cost to sustain the program is estimated at more than 1 trillion. Unfortunately this program is plagued by challenges including major problems with maintenance of the aircraft. This hearing will address the many, time and manpower the military is forceded to spend for spare parts from Lockheed Martin. Juneck 2019 the dod Inspector General found over a threeyear period more than 15000 spare parts for the f35 lacked dialogue that maintains Important Information of the spare parts. 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 at 35 planes flying. This costs american taxpayers millions of dollars they should not have to pay. For example, last year the id estimated that more than 300 million was spent on additional labor costs between 2015 and 2018. As a result of Lockheed Martins failure to provide spare parts with electronic logs the input are 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 and 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 is seen 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 and missing and delayed electronic logs from 2015 to early 2020. Thats 183 million that the american taxpayers were forced to pay 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 and 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. 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. And missing and cropped electronic logs that 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 missing electronic logs have never resulted in an accident or fatality and that is very good news so far. The government accountable the 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 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 Ranking Member and his staff for their cooperation and assistance on this hearing and the numerous meetings that we had before hand. This truly is a bipartisan investigation and i now yield to the distinguished Ranking Member from the great state of kentucky for his Opening Statement. Spare 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 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 but democrat majority declined that request and forced him to testify it virtually great i understand current public house situation but i truly believe it would be vitally important to hear from 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 chairman to commit to give all future witnesses the choice to appear in person if they wish and not for force their virtual test away. Today we are here to discuss the f35 fighter jets, 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 protection by enemy radar and are equipped for sophisticated Electronic Components that aid the pilot and effectuating his or her mission. These jets let us gather information and engage targets at longer ranges with sophisticate 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 and is felt to keep costs down all maintaining a Mission Ready at 35 fleets. 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. The cost of this sustainment or significant the department of defense Inspector General found that many spare parts were delivered to the military lacking or with the defective electronic equipment log meaning that 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 incidences of non ready for issue spare parts. I am encouraged to hear progress is being made both in reducing the frequency of field efficiencies and identifying previous efficiencies 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 markets. We must Work Together to ensure we get the best products quickly and at the least expensive to the taxpayer. Increasing commercial item acquisition, transparency and in user 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. 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 Lieutenant General eric t thick, executive officer of the f35 joint Program Office at the department of defense. Next we will go to ms. Diana mauer, director of defense capabilities and management of the Government Accountability office. We will also hear from ms. Teresa hall who is the assistant Inspector General at the apartment of defense, office of Inspector General. Finally, we go to gregory m omer, 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 not ruggedized for your testimony. Good morning. Chairwoman, Ranking Member and other distinguished members of the committee, thank you for the opportunity to update you on the departments at 35 sustainment efforts to improve the f35 ready for issue part for the war fighter and to ensure comprehensive oversight of our contractor supports. I am pleased to be joined by my fellow Witnesses Today to brief the committee 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 lethal joint force. Second, strengthening alliances as we attract partners and third, reforming the departments Business Practices for greater performance and affordability. The fifthgeneration stealth and battlefield networking capabilities clearly delivers the lethality needed to meet or fired or requirements. As such, our International Partner nations and Foreign Military customers have chosen the f35 to be at the core of their future airpower planets. Lastly, f35 program is a focus of the departments Reform Efforts to provide affordable or fighter capability. Today i would like to focus my remarks on three main topics to address congressional concerns, increasing accountability within the f35 sustainment enterprise, 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 a strengthening accountability within the acquisition system and particularly for the f35 enterprise. The department has made significant improvements since 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 low 35 at the beginning of the year to nearly 40 in june. While more work remains to be done to meet or fighter needs these improvements in fleet availability written 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 part concerns raised by the dod Inspector General there july 2019 report found the department did not ensure that the contractor was providing spare parts and ready for issue states. 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 incurred was all the department of defenses specter general recommendation 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 issued of electronic records management. This is related to known deficiencies in the ability of the f35 logistics Information Systems ability to accurately and reliably track and transmit electronic equipment log, el files. The department has taken nearterm action to address key d graders 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. This achieves 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 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 maintainers to suspend their time keeping aircraft available rather than manually working around those flawed electronic records systems. On generate 14, 2020 i announced to the House Armed Services Committee Members the transition from alice to a new government owned system, Operational Data integrated network called odin. Department will introduce the first voting 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. Dod ig reports 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. Ecma notified Lockheed Martin of its intent to seek consideration on april 2 and formal discussion began on may 7. Ecmas path to see 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 comp areas of contract terms and features sustainment contracts to ensure the contract has defined eel and rfi metrics to measure performance. As we have worked to negotiate contracts at the federal law incentive with performance and account ability 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 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 35 development, production and sustainment issues, including the status of alice to odin 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 f35 for our war fighters bid thank you very much for your time and i look forward to answering your questions. Well now, we turn to Lieutenant General fick. You are now recognized. Chairwoman, maloney, Ranking Member 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 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 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 reshape the f35 program to product align organization with cross functional talent embedded within each project management team. I see the benefits of this change to improve communication and the stakeholders and rapid issue resolution across the organization. I focused this team on four lines of effort to continue the positive momentum we have seen in readiness over the last year. Those four areas are liability, maintainability and are 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 and are by parts electronic agreement logs or eels as requested. At 35 il assembly to a digital macworld record and tells a story of the part. Each part with an eel 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 eel 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 account Ability Office the dod Inspector General and my active dialogue we are aggressively targeting our root cause of il and part issues but 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 eels and are evaluating what if anything excessive may have been paid to Lockheed Martin when our war fighters connotative are 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 account ability, redesigned alice modules to maintain it more intuitive and revamped training and quality oversight at at 35 locations to catalog discrepancies and reduce human error in these measures are paying off. Last month our eel parts 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 system and have a more modern sustained management tool called odin. Led by the government odin starts with the new underlying integrative data environment and makes modern hardware and software to the f35 sustainer. And it will leverage practices in response to the evolving needs of our customers and global operations. Odin will decrease Maintenance Workload on a 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 song of 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. Connect thank you. Next is ms. Moeller and you are now recognized. We cant hear you. You have to speak up louder. Good morning german meringue a member and other members and staff, 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 she should stay on the ground. Over the past six years weve issued a statement recommendation to the dod to address these concerns. We are encouraged that secretary lord and general thick are taking recommendations seriously as i start a new path to transition from alice to odin. Odin 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 odin supposed to do . That was not clearly defined by alice. There was general agreement that it should diagnose maintenance problems and inform a Global Logistics chain, reduce sustainment costs and help keep 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 a system evolved over time there are often gaps between what users needed and what was delivered. For example, having a deployable system meant one thing [inaudible] 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 odin was meant to do and forced by user need. Which leads to the second question, after defining what odin should do how will you know what has been done . Six years ago you recommended dod find a way to whether find if alice was performing as attended but that never happened. Instead, over the years alice had problems but it is getting better. However, [inaudible] the f35 program can learn from this system and develop a clear understanding of how odin impacts Mission Execution and whether its keeping them in the air or on the ground and how well is odin meeting the needs of pilots and commanders. That leads to the third question that who will make this effort . Years ago dod had a responsibility [inaudible] that is not inherently bad and if done properly it can save money and have private outcomes. But at the time duty did not think [inaudible] as dod is now from alice to odin there is an opportunity to reconsider who will do what and that includes dod technical data or 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 [inaudible] fixing odin by fixing alice by transitioning to odin 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 odin is a much longer list for the f35 sustainer challenges in 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 admission capabilities for 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. Next is ms. Hall, you are now recognized. Chairwoman, Ranking Member and established members of the committee thank you for inviting me to appear before you today to discuss the department of Defense Office of Inspector General reports on f35 ready for issue spare parts and sustainment performance incentive. I am the assistant Inspector General for audit acquisition and contracting and sustainment in the dod ig directorate that conducted the audit of the f35 spare parts and sustainment performance. 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 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 personnel to install on the aircraft and should be assigned and electronic equipment logbook ordeal. During the audit we found that Lockheed Martin has been providing a significant number of non rfi to f35 in 2013 and despite being aware of this problem the joint Program Office did not resolve the issue or require personnel to track the rfi spare parts and dod personnel cemented more than 15000 action request from december 2015 to june of 2018 to correct the non rfi issues. To maintain a volume of non rfi parts that Lockheed Martin for provided f35 sites week signed dod personnel to focus fulltime on informally resolving the eel issues and in some cases this transited the need to create an action request and crated an inaccurate impression that the issue of Lockheed Martin delivering the park without eel was improving. If reassigned dod personnel were unable to resolve the problem they still had to contact Lockheed Martin representatives or submit an action request incurring additional charges. As a result the dod received a non rfi spare parts and spent over a hundred 3 million between 20152018 on labor costs for dod personnel to bring the spare parts two rfi conditions and will continue to pay an estimated 55 million annually until Lockheed Martin consistently delivers rfi spare parts that meet the contract requirements. The dod pay performance Incentive Fees on the sustainment contracts based on inflated and unverified f35 aircraft availability hours due to the number of non rfi spare parts that Lockheed Martin provided to f35 sites that dapo issued guidance in october 2018 allowing aircraft to be flown with spare parts that had eel issues with contracting gardens with eel issues to be quarantines and not used until the issues were resolved. Personnel at the f35 sites were ordered to use whiteboards and spreadsheets to track flight hours when non rfi spare parts were used on aircraft. The dod use of local guidance and ad hoc manual processes allowed aircraft to fly incomplete missions instead of the dod grounding aircraft due to receiving non rfi parts. This practice inadvertently inflated aircraft availability hours and according to j full officials on any given day 50 of they are flying with non rfi spare parts. However, the Program Office does not require a 35 Site Personnel to collect aircraft availability hours and track the hours that aircraft flies with non rfi spare parts installed. Therefore the dod has no way to determine the total number of hours the f35 has flown with non rfi spare parts. Lockheed martin is receiving incentive payments that were earned through the use of labor rather than the contractors ability for performance metrics for it as a result the jay poe potentially overpaid performance Incentive Fees on the 2017 and 2018 sustainment contracts. Furthermore, the dapo relies fully on reported information on available the two pate Lockheed Martin for Incentive Fees for 2017 and 2018. The japo compared availability hours on one Lockheed Martin generated a port to another Lockheed Martin because they did not track or collect availability hours. As a result the dod has potentially overpaid 10. 6 million and performance Incentive Fees. F35 aircrafts are already proving to be more expensive to sustain than originally planned. If the dod and Lockheed Martin to not address the concerns we discussed issues related to non rfi spare parts will continue to compound as the fleet expands. Escalate sustainment costs and reducing Mission Capability rates and increasing the life and safety risk that occur when life limited non rfi spare parts are installed and flown without an eel. Additionally, until the japo and pendley collect data to verify contractor performance the dod may continue to overpay performance Incentive Fees on the 2018 and future sustainment contracts. Thank you for the opportunity to testify this morning and i look forward to your questions. We will now conclude with mr. Ulmer. You are now recognized. Thank you, chairwoman. Chairwoman, Ranking Member, distinguished members of the committee i appreciate the opportunity to testify on behalf of Lockheed Martin in our Industry Teammates to provide you with an update on the f35 program. My preference would be to testify in person but as you know ive 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 german manager i appreciate the opportunity to meet with congress and engage in meaningful dialogue concerning the program. At this time i would like to submit to my full written statement enacts that it be made part of the hearing record. Now i would like to provide a brief update on the state of the f35 program and the committee has asked specifically that i addressed the f35 sustainment focusing on electronic equipment logbook sort wheels as well as ready for issue or rfi parts. These are important issues for the maintainers on the flight line to keep the f35 line and we remain steadfast in our commitment to make their jobs seamless and without issue. The f35 Stealth Technology supersonic speed advanced sensor with weapons capacity and increased range make it the most lethal, survivable and connected aircraft operating in the world today. We have delivered more than five under 40 aircraft trained more than 1000 pilots and 9000 maintainers in flown nearly 300,000 flight hours. Currently the f35 operates from 20 bases in four shifts with nine nations operating the jets from their own home soil. Five countries of flown Operational Missions including the United States air force which has been a continuous deployment overseas for more than one year. War fighters tell us the aircraft provides Game Changing capabilities and providing unprecedented situational awareness, maneuverability and connectivity. The f35 program is also a powerful economic driver but the program currently has 1900 suppliers, 1800 of which are in 48 states plus puerto rico. Generating tuna 54000 jobs which results in a u. S. Economic impact of 49 billion annually. The f35 continues to make Great Strides in the area of sustainment but we quickly scaled from development to production to fielding at an unprecedented rate. In the last three years Lockheed Martin has delivered more than 300 aircraft and invested over 270 million improving our supply chain through Data Analytics and automation along with production and sustainment elements to improve performance at reduced costs. Lockheed martin in the japo have been working diligently to improve sustain performance with enough assist on affordability. The last two to four months the Mission Capable rate for the has increased from below 50 percentile to the mid 70s. Additional sustainment metrics that measure the health of maintenance due to supply and other associated maintenance activities have also significantly improved. Over the past five years Lockheed Martin has reduced the cost for flying our that we control by approximately 40 and we reject that with our further investments we will try that down or drive down costs applying aspects another 50 over the next five years. We acknowledge eels have been a challenge but sniffing it improvement have been realized. These challenges do not indicate that it is flawed nor eel issues exclude cost exclusively by industry alone. U. S. Services have confirmed a market improvement and ready for issue parts in 2020. These games are a direct result of the concerted joint government industry effort to identify cause and have corrections. Substantial progress has been relieved more than one year ago. Since then Lockheed Martin has demonstrated a 45 . Improvement and eel performance while simultaneously growing the fleet by more than one third. This year rfi parts have improved to approximately 82 and we will accelerate two more rounds of improvement this year which we expect will result in the 90 rfi threshold target specified by our customer. Lockheed martin is committed to transparency and partnership and the resolution of the challenges associated with eels and will continue to be compliant with our contractual obligations on the program and look forward to continued partnership with the committee, dod and joint Program Office to resolve this issue. In conclusion, a 35 performing and operating as we envisioned from an operational sustainment perspective and the f35 is proven itself in combat and quickly becoming the centerpiece of the u. S. Military fighter fleet and that of our allies. Its a privilege to lead the f35 Industry Team and over half of Lockheed Martin i think the members for their Selfless Service to our nation and again thank you for this opportunity to update you on the f35 program and i am happy to answer any questions you may have. Thank you. I want to thank all the panelists and i do want to respond to the items that my friend, the representative, raised and we are dod insisted on testifying in person so the witnesses are all from dod so we could only have three to conduct the hearing safely. We did try to work with your staff and the medical staff on the capital to have in person hearings as you requested. It was difficult to make this happen and meet the Health Standards to ensure people dont get infected. One thing i know from new york is we dont know enough about the virus. I talked to friends and they seem fine and the next day they are dead. They told us it doesnt affect children and one day 35 children came down with it in one of them died. You hear the heartbreaking stories of medical professionals who believed they are decontaminated, come home and they in fact their entire families. It is a deadly, deadly disease and we have to put health first but the next hearing we could have lockheed in person and have dod remotely. I will instruct the staff to work even harder with your staff to meet the accommodations and the concerns that you have and i deeply respect the position you hold and want to work with you. I thank you that we are united and having a Strong Military and strong private sector and strong government all getting a quality product at protecting taxpayers money. I sincerely would like to try to accommodate and next time we will have lockheed testify in person and others will be remotely. Right now i would like to recognize myself for five minutes. Ms. Hull, according to the dod report issued last year they said the dod incurred more than three hunt a million, a staggering amount, and access labor cost between 20152018 due to Lockheed Martin not delivering spare parts that net the requirement of the contract. The id also estimated the problems go unaddressed that it will continue to pay the department dod 55 million each year and extra labor costs. Your office recommended that the Defense Department seek compensation from Lockheed Martin dating back to 2015. Why did your office recommend that dod think to be reimbursed for these parts . Chairwoman, we recommended the dod seek reimbursement for that because 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 open logbook so to keep in terms with the contract our recommendation seeks to the need for compensation. Okay. According to the ig report the Defense Department previously sought payment from Lockheed Martin to these electronic logs in november 2018 but Lockheed Martin and i quote, refused to sign the proposed modification on the sustainment contract. Ms. Hull, is that right . Based 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 7000 for each problem identified with the spare parts and according to the dod Lockheed Martin refused to sign the modification because it would cost less to fix each individual problem that it would to reimburse the government, is that correct . The range of cost per eel issue is 700011000 and yes, according to what we found from our work Lockheed Martin found that it would be cheaper to address this on the sustainment contract. Okay, Lieutenant General thick, lets turn our attention here. Congress mandated the 2020 National Defense authorization act that the department follow the id of representative emendation by seeking compensation for defective parts. I understand that the discussion between Lockheed Martin and the Defense Contract Management Agency began in april and that dod worked with lockheed to identify the specific problems between 2015 and 2020. That are attributable to Lockheed Martin. What is the current status of the negotiations with Lockheed Martin now . Maam, those discussions are ongoing as we speak. My understanding is the team has come to an agreement relative to the magnitude of the issue and problem but that the consideration offered or demanded that it has not yet been agreed to. Okay. Esther omer, i would love Lockheed 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 . Mr. Olmer . Mr. Olmer, can you hear me now . He has left, i guess. No, problems with the audio. Okay. All right, we will go to another question but my questions are for mr. Olmer so i now yield to the Ranking Member for his questioning. Thank you, ms. Lord, i understand eels are a major issue but what are other issues in the program and how are you and the department responding to them . From a sustainment point of view we are trying to look at Lockheed Martins performance, particularly in terms of earning Incentive Fees by implementing some of the measures we talked on the Production Program where we very clearly linked what is goodness for the war fighter to what are those incentives that are paid so that is contractually what we are doing. Secondly, eels are a significant issue but we do have a challenge with visibility and parts being transferred and also in terms of maintaining warehouses and making sure that obsolete equipment is moved out so there are a variety of other things as well. Host general fick and miss lord, weve heard from men on the ground that they are following dod and japo that may be missing eel so i believe thas to make the proper decision regarding the health and safety of our pilots and our jets. I believe that lockheed is incentivized to keep jets in the air and keeps them partially Mission Capable. Notwithstanding the directions from dod and japo, if the jets were missing and eel would it be allowed to fly . Yes, sir. It could. Let me tell you the circumstances under which a jet missing and eel and it does not contain a safety or is not associated with the safety critical parts nor eight life limited part. When he spoke with my Maintenance Group commanders five of them on the phone this week each confirmed to me that if the eel or if a part that is missing and eel is safety critical or life limited in any way that parts will not be installed in the aircraft and that aircraft will not fly. So if the debt were not allowed to fight what it calmed positively toward aircraft availability for the Mission Capable rate . It would count negatively. Should a contractor be incentivized for performance that would otherwise not happen without the hardware the u. S. Government, personnel such as allowing a lane to flight without an eel . Sir, in general i would say no but at the end of the day we put green suitors and brown suitors in the cockpit to fly those mission so no aircraft takes off without some form of government assistance. The magic is finding or where in the middle and where is the right answer for response ability. Miss lord, are eels required by contract to be delivered by lackey to the government . Is lackey delivering eels intact 100 of the time . I have two minutes left. I will yield back until we can get online. Is he back online now . Fees on. We can hear you but i cant see you. There we go. Then with your last Quarterly Earnings call . Yesterday, congressman. How much revenue was reported . I believe 1 billion. What about revenue for all of fiscal year 2019 . I dont have that figure off the top of my head, congressman. How much of your revenue is from govern and account . I will have to get that information for you and provide that, congressman. Somewhere around 75 . Do you know what percentage came from the 35 program . 30 to 40 approximately. With all this profit, why is lockheed failing to deliver yield intact and on time . Congressman, those figures or orders and sales, notforprofit. And we are very engaged over to to resolving the problem comfortably with our customer. Okay. Well, i look forward to working with you all on this issue and continuing the efforts to make contracting less burdensome and safeguard the american taxpayer. If the american taxpayers want and expect us to have the best military in the world, the congress is committed to ensure the military has everything they need. I for one certainly want to work with the private sector to ensure we have the best, but they also expect the private sector to deliver on the contracts at the american taxpayer expects. So, look forward to working with you and lockheed through this process, and hopefully we will continue to see improvements. Madam chair, i will yield back. Id like to be associated with the comments of wanting to see improvements. We have our private briefing with leaders running the program and working with the men and women flying the planes and ive never seen a military person not in combat who was so frustrated wanting to have a product that is great for the country and not having the support or technology or even the parts that worked for the plane. So, this is a tremendous problem. So, i really want to ask you well you commit to paying the Defense Department back for every effective electronic log the Defense Contract Management Agency identified . Congresswoman, it is a complex problem. As we discussed when its not associate, its notassociated wn performance. As many aspects not ready for issue. This isnt simply this electronic file, we are making, we are innovating as we go through this process with our customer. This has been a conference program, so we conquered and they have developed, produced and sustained this aircraft and the products that we utilize to do that. And electronic equipment box contains quite a bit of sophisticated engineering information. It doesnt simply track apart. It includes technical data, graphical data, it contains a lot of different information. Through the business process, there are elements we can correct this data. It can be presented that way or the customer can miss input information. So theres a lot of complexities related to the electronic yield book. Weve been working wholeheartedly with the dcma to understand the technical issues and weve seen significant improvement in the last six months in particular as we mentioned an improvement to 83 ready for issue, and i am fully committed to securing a engagement to resolve those issues Going Forward. I am also committed to meeting with the Defense Contract Management Agency as well as the jpo to adjudicate the cost appropriately. I appreciate your concern, but i come from a military family. And every time a pilot gets in those planes and flies up through the sky, they are risking their lives. I know many widows and children lost their father because of faulty equipment. And ee 5 isnt good enough for a u. S. Military. Its got to be 100 . And they contracted th a contra. And the contract says you will deliver a plane. It is a beautiful plan, but it also says that the material needed to fly the plane has to be delivered and our military managers dont want to be sending people up in the air when they dont have everything perfectly in the contract. Thats only fair. So i hope you will change your mind and at the next hearing have an update how you are now at 100 and how you have worked out the understanding of the equipment so that its working for the military. One of the most heartbreaking things to me in the last meeting is one of the managers said i cant even repeat it, it is upsetting. I would like to say i sent you a letter, or Lockheed Martin, june 18, 2020. I appreciate Lockheed Martins cooperation so far in producing documents and getting back to us with some answers. But many documents have not been provided. So do you commit 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 can deliver a document, i have no trust you can deliver a plane that is going to operate and has all of the equipment. True it is a complicated claim and complicated equipment, that a contract for a trillion dollars to maintain it, the contract calls for the supportive equipment to be delivered in operating. How can you expect our military to respond . I hate to think what would happen if we were in a war and our men and women had to fly a plane that didnt have the Technology Working with the piece is working that are supposed to be working with this plane. So this is i would say not just a money issue but a life and death issue and we have to get this plane what good is a plane that can fly because some of the apartment isnt working . So, i look forward to following up with you on this request for the documents, and also i request that Lockheed Martin is up to its contract. The American People have paid a lot of attention to live up to our contract with producing this important plane. But lockheed isnt responding to the request for documents or to the military request for equipment they feel they need to fly this plane. So now i will yield to the distinguished lady mrs. Norton for the district of columbia. Thank you, madam chair. I want to say to mr. Ulmer of lockheed, you indicated innovations and the rest, i just want to say for the record that can you hear me . Yes we can, congresswoman. I want to say for the record of that we signed a contract, not a paper of innovations, but thats what is happening as we are paying for cost, and that is something that has simply got to stop. I have a question beginning with ms. Mauer of the gao because the Committee Staff also visited the sf 35 bases and pointed out that time that elvis was the root cause of the problems with the electronic logs and they lose track to do sometimes overnight after maintenance crews have already cleared the 35 to fly the next day. Talk about dangerous. Its what the Committee Staff found that this isnt consistent with what the gao has found in its work . Thank you for the question. Yes, those findings are consistent with what we found in our work. And [inaudible] as a part of our audit work last year. We visited five different installations in the United States. A great deal of frustration from the pilots, commanders there was a great amount of concern that and frustration, frankly, with the problems with fuels and the interface itself. These are longstanding problems. Weve noted them in the reports as far back as 2014. Much of this is rooted in the fact and we hope the dod fully implement the recommendations in implementing and i hope those do not continue into the future. Its definitely a problem in the past. Thank you, ms. Maurer. Mr. Ulmer of lockheed, lockheed, of course, has acknowledged and provided the committee with a presentation, and in its presentation, you indicated that its currently looking at its manpower, hardware, increased labor costs, decreased readine readiness. What steps when you consider these, what steps is lockheed taking now to to improve alice until the system can be replaced . Congresswoman, we are down to a Agile Software development with the system. Just to let everybody know, alice is an it infrastructure that was developed in the early two thousands before the iphone existed, so it is an antiquated Hardware Software system. We have implemented Agile Software systems, we have improved processing times and secondly on the order of 50 or more. Weve gone to quarterly releases. It was taking 1 is taking 12 too provide Software Updates. We are now currently releasing Software Updates every three months. We are receiving positive feedback, reduced waste time, significant processing time. You can get all of the information in front of you significantly reduced and buttons clicked to get the information to process the data, so quite a bit of improvement has occurred on the alis system currently. Madam chair, i share the concern even discussed on both sides of the aisle and i only hope that this hearing gets us ahead to get a new system as they continue to pay for these redundant flaws. My time is out, and i think you. The chair recognizes the gentle lady from north carolina, ms. Foxx for five minutes. Thank you, mr. Chairman. Mr. Ulmer and Lieutenant General fick, the dod Inspector General report notes that ready for issue means spare parts supplied by the contractor are ready to install on the air to craft and have a longer assigned. Can you explain in laymans terms of the electronic wallet is, and its importance to overall maintenance and a sustainment of an aircraft such as the 35 . Yes maam, i can. The electronic equipment blog i like to think of as a personal Health Record associated in that specific part. It follows the part digitally or electronically, and some of the functions we asked our to track life limits associated in that part, to track implementation, to look at the part number and tail number compatibility, to manage complex assemblies like an ejection seat that may have a lower below that. We look at it also for export control as well as inspection requirements for those parts. Thank you. Mr. Ulmer, would you like to respond . Yes maam. I concur with general ficks review of the description. To be clear, its an electronic file. The in 2016 implemented quarantine such that when weve released materiel that we ensure that it is in fact in place and appropriate. So here in fort worth are reproduced the aircraft in late 2016 and early 2017, we implemented and couldnt deliver it without being compliant. As it delivers it is consumed within the alis system. It populates the information structure that informs the Maintenance System how to operate and sustain the airplane. The business process is behind the transfer of information. The communication of that information, the input of that information is what is resulting in the issues today and that is where we are very focused on creating solutions from it business process point of view to resolve these issues and thats where weve seen in the last six months in particular the significant increase of the ready for issue parts. This question is for both Lieutenant General fick and mr. Ulmer. What challenges are they experiencing on electronic equipment blogs and what is being done to understand the root cause of sustainment issues in the 35 program . One but they doesnt exist with the existence of the second one would be into doing less with alis and more with the substantiation is solved and that is they may be corrupted, they may be removed or stripped inadvertently as the electronic footprint of the part works its way through the system. From lockheed to a supply point in the country come and then do a squadron. Mr. Ulmer come if you think that general ficks answer is sufficient, if you could say so. Why time is running out, and i have one more question. Congresswoman, i concur. Thank you. Mr. Ulmer, what actions as Lockheed Martin taken to address the long ready for issue parts, and its your accuracy of the electronic equipment blogs more than what youve already stated, is there Something Else you need to state and then Lieutenant General, have you seen improvements and issues for ready for issue parts . If we could get a yes or no, that would be easy, general fick. We have seen an improvement associated with the parts that require an eel. Remember they are only required in about a thousand out of the overall 50,000 per count on aircraft, said it is a very small number of parts that actually required this before. And to the point, and my earlier point. To whether eel is truly required, we are actively looking to reduce the number of parts so we reduce this problem. Mr. Ulmer. Congresswoman, we have invested 30 million relative to improving the ready for issue parts. The improvement, as we have described some of the eel and the generic content associated with the outcome of the complexity of that content, we have done a very formal Systems Engineering program. When i say we im talking the enterprise, jpo, Lockheed Martin, weve conducted events where weve gone out to the war fighter in her concerns, witnessed concerns, document concerns, then we come back and go through a very formal Systems Engineering process to determine the root cause and corrective action. Those actions and play forward relative to the improvements we are seeing a. We still have two more formal initiatives this year as we work to raise the bar relative. The gentle leader yields. Contract to a. How long was that . As a part of our review, we looked on the eel issue and the time pure 2015 until about april of 2019 the contract goes until april of 2019. They were both on board back in 2019 when we went with this larger contract. Is this lost 12 that we are doing a. I trust you. Is there a problem with the way that we have framed this contract that makes Lockheed Martin is responsive to issues like this, do you believe . I dont believe so. I know that on the sustainment contracts i dont have a whole lot of time, but is Lockheed Martin still getting incentives despite the fact they are delivering the noncompliance. Isnt that on flight time . If you fix the noncompliance part and get that up in the air, do they get a bonus . They get the incentive. Thats what im getting at, is there a way that, if mr. Ulmer, i would like to consider this seriously, thats par that parte contract, the fact that you are getting an incentive bonus because the dod personnel spent approximately 300 million in a work around on your noncompliance part two receive a bonus for work to get into correctly. You need to go back and figure that out if you work with the defense contracting agency, that portion of the benefits you are receiving isnt fair and just under the contract and i would highly recommend if you want to avoid reputational damage, you need to rethink in terms of the contract and come back to the table and work something out the despair for the american taxpayer. Lockheed martin has a long history in the Defense Sector and we respect that but i dont believe based on the facts here that the American People are being treated fairly. And that will be determined if that continues to be to the detriment of Lockheed Martin so we have to look at that hard. I do believe the s. 35 is one of the finest aircraft out there when it flies and thats the problem that weve got this whole workaround in terms of this whole program. So, you are on notice, mr. Ulm mr. Ulmer. Id like to ask you some questions. Do you believe that we are in the process of fixing this problem . I have a report right now that tells me the Inspector General of dod, in addition to the Government Accountability office and the Bipartisan Committee of staff delegation, republican and democrat we agree on this this isnt a partisan issue but because of pervasive problems with the f35 spare parts missing electronic locks, military personnel must be reassigned to troubleshoot problems, pilots must fly f35 is on a near daily basis with defective spare parts and maintenance personnel are at risk of allowing the aircraft to fly with potentially dangerous issues. So, weve got a problem. According to the dod, unified staff and the Government Accountability office. So, what are you going to do about it and how quickly do we get this thing fixed packs congressman, i take this extremely serious. We are very focused on manufacturing and sustaining the f35 and safety is at the forefront as well as the worthiness of the vehicle. And for the record, i would like to state to the chairwoman to my knowledge all documents have been provided i would like to make sure that occurs to the satisfaction but my belief is we are doing that. We are following up on that. You asked me what have we done. I indicated weve spent 30 million to resolve the issue to date and we continue to meet directly weve had six direct meetings since april 2. We were meeting with them prior to april 2 to work on this issue together. We continue to have regular engagements with a joint Program Office and we continue to make adjustments not just from the eel walled both points of view that the alis all of the point of view. We are working with jpo into taking the Lessons Learned from alis experience and performing as we go forward. So, we are taking several different approaches to the problem resolution. We have seen market improvement. We have more to go. We understand we have more to go, and we will continue to support and you have our resolve to fix this problem. Okay. You know, this is the largest single contract to god. This is an important part of the u. S. Readiness, and weve got unanimity here im a democrat, d republican, that weve got to get this right. The chair now recognizes the gentleman from texas, mr. Cloud for five minutes. Thank you, chairman. This is quite the ordeal. Its amazing to think that 20 years into this program, this is still where we are after. No doubt, the f35 is an amazing piece of technology. We are glad to have it in our force and want to make sure that the United States stays preeminent when it comes to a re to technology and dominance. But when it comes to the battle space, the battle space is not just collateral come in especially today as we look at threats from china, its also economic, its labor, its multifaceted. When nations have risen and fallen through history, it wasnt just because they didnt have the latest technology on the battlefield. Its because they collapsed internally with economic restraint. So its extremely important to get this right. Its extremely important we get it efficient as well. We spend 1 trillion in the last five years on this. At least they estimate they have here. That could have gone to a lot of different places. We have china invading cyber and other things. So, its just important that we get this right. So, where we are right now, we have a shifting system that doesnt work. I talked to people with boots on the ground an and basic imports them and they are not even labeled correctly. Sometimes up to 30 or half of them are not even labeled correctly. I know the system is complicated and its all like amazon thirdlargest delivering the part where you are not just delivering the part. There are 300 million in excess labor costs just since 2015 but going into this. When lockheed as was mentioned by the chairman, when they are incentivized for having planes flying, its a great idea, but when they dont fly and then we have to fix them, they still get paid for incentives. And so, its hard to see how this keeps going on. You know, its been said that insanity is doing the same thing over and over and expecting different results. Here it just seems like another day in washington, d. C. So, i appreciate the work that has been done to move this forward, but it still seems we have a whole lot of work to do. 70 i dont think is the benchmark for excellence. I know its not here and many of you came into this program into your positions for 20 years certainly. Recently, we paid 30 million to store and maintain six f35 destined for turkey, which makes me wonder whats the general cost of modifying an f35 so when it isnt ready to fly, with cost is associated . 30 million to not fly seems like a lot of money. So, respectfully, the 30 milliondollar cost for those six planes accounted for the induction of the aircraft into longterm storage and the work required to preserve them in that position. Thats not work we normally would do because ultimately our goal, our objective is to continue to fly them. I can certainly get you a breakdown of the costs associated with the entry into longterm storage and annual costs associated with those turkish jets. Now, we had these contracts being renewed every here and then they dont seem to be getting any better. Our performance metrics that are required penalties for not meeting them . These are things that seem basic in the corporate world but they seem to have a hard time doing when it comes to contracting. Congressman, i would like to address that. I was in the industry for 33 years before taking this job. My primary energy has been put into rewriting the acquisition system for the department of defense. So we used to have one large onesizefitsall system, and weve broken it down into six individual pathways. Super instance, we are talking about the upgrade from alis. We are using modern Software Technique on that. So, we are tailoring. To your specific questions about sustainment, what we are doing is refining the incentive structure, going back and getting the voice of the customer, understanding what it takes to get the aircraft operational and making sure that as we write Incentive Fees there is a clear linkage and weve set up multiple times this morning that one of the root causes of the problem is alis, the Software System we use to collect data and maintain the information. That is an out of date system, and what we are doing and developing its replacement is going directly to maintain and get the voice of the customer to make sure we drive the Software Requirements from the frontline, the user, what they need versus someone sitting in a lab deciding that for them. My time is expired. It is extremely important that we owe it to the american taxpayer and it is a duty to do this to pay penalties when they dont get it right. The chair recognizes the Ranking Member. I ask for unanimous consent to clarify the response to the questions. First, the secondorder profit is 1. 6 billion. Second coming for fiscal year profit of 6. 2 billion, so my question why is lockheed failing to deliver on time, and i ask for these documents to be in the record. And you repeat the question, right . I hope you heard about. Without objection, the documents were accepted. A gentleman firm virginia mr. Conley for five minutes. Thank you mr. Chairman. Theres more, is maurer, what is unique about the program . Among many Different Things, theres the international program, its not just a u. S. Program. So, International Partners, allies have a voice and physicians. Isnt there Something Else . The f35 is replacing all of the fighters. Yes across three different services, the navy got the army and the marine corps. Weve never had a single system designed to replace. Thats whats unique. The stakes are enormous in effect all oandaffect all of th. Weve never done this before, and its a critical piece of u. S. Defense and capabilities as well. Gao or going back to 2014, provided a number of recommendations to the deity, the project manager which we havent focused on a lot of the, including trying to create a Performance Measurement for alis back in september, 2014. Were those recommendations adopted by the dod . The recommendation has not been adopted. In a march report in congress to ensure that that happens. [inaudible] you would think with the stakes this high on the program, the dod will run, not walk, to make corrections to a system that was defective, and you documentedocumented it, but forx years ago. I completely agree we want to see the recommendations as quickly as possible, but they havent done it yet. Why not flex over the years we heard from them that they have a number of other issues to address. We are talking about the sustainment challenges that they are facing. Its also difficult for them to do. We think it is vital to. But now we are in a place where sustainment is a major problem because they ignored it and those are the dod. Were your recommendations implemented by the office fax the joint Program Office agreed to the conditions in our june 2019 report. However, we are waiting for the supporting documentation that they have in plan recommendations. In your testimony, you gave us a long laundry list of issues that were seemingly cavalierly ignored by the office over the years, is that not correct . Yes, i touched on the eel issues. Even when they were getting feedback on the field from pilots, command centers and the like, they still didnt implement the changes that would have dealt with the problem is that correct . The joint progra the joint Program Office in october of 2018 issued guidance allowing the parts to go on the aircraft without the electronic logbooks. It was viewed with workaround to make sure the parts could get on the aircraft for it to fly. The alis program we are talking about, that was created by lockheed just for this program; is that correct . Alis wasnt a direct focus its my understanding that that is true. Is that your understanding, ms. Maurer . Yes, alis was created specifically for the f35 program. And it was approved by the joint project office; is that correct . That is correct. Nearly 20 years ago. 20 years ago. So i hasnt been updated . Its been updated several times. It wasnt fully operational until two years ago, 2018. There were a number of problems along the way getting it out. Thereve been a number of updates. The problem weve heard the comments about how its gotten better and the bottom line is there are no Performance Measures in place [inaudible] for the record, you advised a different kind of defense for six years agsixyears ago that ih performance. Yes, we did. And they did not act on that recommendation. My final question, mr. Chairman. Have they accepted the recommendation when you made it, do you believe some of the problems could have been avoided if . Yes i think if they fully implement of the recommendation they could have potentially mitigated a number. Mr. Chairman, we focused on correctly the shortcomings of the contractor, but also has the oversight committee, we need to focus on the shortcomings of the management of contracting and the contractor, and i think his hearing, this testimony that we have heard from ms. Hull and ms. Maurer, gives cause about the single most important new Fighter Aircraft in the history of the United States has been. I yield back. Thank you. The gentleman yield back. The chair recognizes the gentleman from ohio, mr. Gibbs for five minutes. Mr. Ulmer, i hope you are still there. Do the aircraft have eel . Do like is the aircraft have eel . No sir, no congressman. So, i guess my thought is because the f35 is such a sophisticated, complicated, highly technological aircraft, is that the reason why, or how do you do that with legacy aircraft . The Maintenance System for legacy airplanes are more segregated, not integrated systems, that support specific platforms. So, this is an attempt at the alis and electronic equipment for the approach relative to the technology about an integrated sustainment it Sustainment System for a platform. Okay. General fick, does the eel pose a significant risk . Sir, my understanding from talking to the Maintenance Group commanders in the field of the authorized aircraft to fly in the event that a part isnt ready out there isnt a safety concern associated with flying an airplane with those parts. They will not allow a party to be installed in an aircraft is that okay, okay. So, the issue isnt or the parts readily available and in place, that is what the issue is. Yes. So, i guess the next thought would be how much do i or go, f35s have been grounded, where are we at now because of the quiet quiet we have mixed data from our commanders on the field relative to the times at which theyve a lot of aircraft to fly without eel. We have good information from one of the installations in particular that we are using to kind of sort through and figure out the adjudication of what the real impact would be. We have other information from others that are less clear and then i will say the navy and marinthemarine corps in particue not allowing them to fly, period. So there isnt an issue with that. Okay. I just heard the office talk about the alis program. It just rolled out two years ago but then i heard earlier testimony that there was a program that started way before that. Alis has been around for a long, long time. The technology of an iphone, the newer software. So, whos fault is that . Is the just government bureaucracy or where does that happen at . The first version rolled out in the time frame and have an update on a 12 to 18 month substantial update and weve continued to update. When i entered the program a few years back and it was alis 2. 0, we were at 3. 0 m. 3. 1. 87 of the units have alis 3. 5, which is the most recent iteration. Greg mentioned we are going im out of time, whoever wants to answer this, the f35 the whole system as we know is that a sophisticated, high technology. Is it fair for Lockheed Martin and a contract echoes you are in a whole new area of sophistication was it right to have a contract they couldnt with so many unknowns bringing the system online . Ms. Lord, that might be a question for you. They have different contract types that correlates with the risk involved. When theres a high leve there F Development and unknowns, we do cost contract when we pay for what is needed and there is a different level than when it is more now on when you get into the production for instance. Those are fixed price contracts with Incentive Fees for meeting certain criteria, so where we are in the is working to make sure all of our Contracting Officers have all the different techniques so its been quite a while now. So we move into the second phase for production and defend what they are in the midst of doing is developing sustainment contracts that are better tailored are you seeing better results now that its gone along with the manufacturer Lockheed Martin . We started out and i got involved in the Program Three years ago absolutely from a production point of view. We got much, much more fidelity around what was happening on the manufacturing floor. I will say that 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 focus on sustainment and beginning to build the robust data set so we have a number of teams working on the alis transition. So you are confident and took up the cost overruns that things are going to get better . Im confident that we are making progress but they still have a way to go in sustainment. I will yield back. The gentleman yields back into the chair recognizes the gentleman from california mr. Rouda for five minutes. Thank you, mr. Chair and to all of the participants. We appreciate your commitment to the security of our country. We have a few questions we would like to ask. One of my main concerns with the f35 program that if left unaddressed, problems with defective f35 spare parts will only get worse as it grows. If my numbers are correct as of february, 2020, the global f35 fleet was about 500 aircraft, but the fleet is expected to double by 2023. The u. S. Alone plans to purchase about 2500 f35 is from Lockheed Martin over the life of the program, as it was pointed out earlier, to replace the entire fleet. That may be great for Lockheed Martins bottom line, but with problems with the f35 software such as alis and electronic logs on spare parts are not thoroughly addressed and fixed of course for the pilots and maintenance crews if only grow. So, ms. Hull is it a fair assumption the problems identified in you the june, 2019 report will only get worse as the f35 fleet stands . It is true that unless the ready for issue spare part and eel issue is addressed, it will continue to perpetuate. And weve seen from the joint Program Office, guidance to fly with eel and the fleet continuing to grow, the problems will become more pervasive and less addressed. Ms. Maurer, would you agree with that assessment . I definitely agree the f35 Program Faces a number of challenges. [inaudible] they are exacerbated [inaudible] they have a lot of challenges and we are encouraged with the recommendations. Fair enough. Thank you. Air force personnel also told Committee Staff that is not addressed, Current Issues with electronic logs and spare parts would compound as the f35 expands with additional aircraft on the combat missions. For example, with Committee Staff in the air force base in utah, they were told the f35 squadron had received and immense amount of support from the squadron deployed in the middle east in april, 2019. This in fact was the f3 f35 ft time flying combat missions and everyone wanted to see it succeed without a hitch. The deployment of only a handful of f35 is compared to the eventual side of the anticipated fleet. As many staff were told it would be difficult to maintain that level of support as the f35 fleet grew and demand of personnel grew along with it. Mr. Ulmer, the most recent from the air force base left at the beginning of june. If the deployment follows past, they should be home i think in about six months. Mr. Ulmer, can you agree that they will be fixed by the time the squadron comes from . Congressman condit will take us more than a time to resolve these issues, but they are focused to resolve these issues. I appreciate your candor. Lockheed martin cant meet that commitment, then how will the joint Program Office and Defense Department and sure the pilots are fully supported under future deployments flex so, mr. Congressman, we have put language in place in our 19 and 20 contract that requires parts upon delivery, so we have set a stake in the sand relative to the delivery of those parts. We are committed to working with the services with Lockheed Martin and other industries best partners to substantiate odon to the problems we continue to have with alis, and i firmly believe the instantiation of odon is the intervention required to completely address the issue. Thank you. We all know these problems have to be fixed and they have to be fixed before the f35 is so large that the continuing software and spare parts are not so overwhelming that it cannot be the. With that, i will yield back, mr. Chair. I now recognize mr. Higgins. Thank you, madam chair. Americans want dominance worldwide from the military borders and the parents and families want those pilots to have total confidence in the aircraft. We are based primarily today on with electronic logbooks, eel, and a classification of missing data in replacement for the platform that would be considered not ready for issue. Absent those problems as we work through those issues, general, do you consider the f35 to be the one that delivers dominance for the United States of America World wide . I absolutely do. Thank you. That is what we are looking for and as we address the problem we are discussing today, which i have complete confidence that Lockheed Martin is dedicated to resolve, so i will turn my question to mr. Ulmer. Or sustainment costs for the f35 steadily coming down . For every dollar of sustainment approximately 39 cents is contributed. About 13 has to do with the propulsion system and the remainder has to do with operational sustainment costs for the government. Lockheed martin in the interest of time, but they just America Needs to know we recognize there are problems with the full deployment manufacture of this worldclass aircraft that Lockheed Martin is delivering for the nation and for the purpose across the world. We need to know are the sustainment costs steadily coming down, yes or no . They have come down 44 from the cost per flying hour in the last five years. There are other [inaudible] they are aggressively engaged to resolve the issue with our customers. The part that is missing eel data as my colleagues have referred to as defective, does the parts work, would the plane fly if the technician then they update the data . Congressman, theres no issue with the part, it isnt effective, the issue is the electronic File Associated with the part. We are clarifying for america it is important that the note regardinwe know ofregarding thee Lockheed Martin has made, can you clarify since 2017 has shown the ability to consistently deliver since 2015 . Yes, sir, we have a very strong track record and actually both a year relative to the deliveries. Thewe are less than one defect r delivery for the last several years. Thank you for that response, sir. General fick in his Opening Statement said the bottom line is we need parts delivered on time with all required identification markings and records upon arrival. When can we get there and are you optimistic that we will move in that direction very quickly . Are optimistic we can get about 90 by the end of this year as general fick alluded to there will be 90 ready for issue and we are taking the actions necessary to support that metric and requirement by the customer. My father was a navy pilot in world war ii, ima veteran and yesterday i spoke with a friend of mine whos son is a pilot for the needy and he shares the concern of the appearance and families across the country that their concern is the pilots are flying planes. I think the Ranking Member and the witnesses were testifying today we are working through these issues and i have total faith in f35 jets and Lockheed Martin, and i will yield back. I would think the gentleman for his questions in a statement, and i now yield five minutes to congresswoman jackie speier. Thank you all for participating today. Let me ask you a question. Lieutenant general, there is no question that the alis system is underperformed, correct . Absolutely. Mr. Ulmer come is it true that its underperformed . If it isnt meeting the requirements. Its been anticipated that there is 183 million Lockheed Martin owes the taxpayers of the country for this underperformance. How much time has been spent negotiating, and how long and how much time . My recollection is that negotiation specifically associated with the consideration on eel began in earnest in april of this year, and it continues how many hours have been put into that . A i dont have that number off the top of my head. Ms. Lord. I would estimate tens of millions of hours by the government. Dcma. Mr. Ulmer coming to continue to say you are negotiating on something that is clearly established that youve the underperformed, it is estimated that its 183 million the United States government, the taxpayers of the country are taking 75 of your budget and your profits. I want to know when you are going to pay 183 million in stock vehicle into dining the government and the taxpayers. Congresswoman, as we identified in the testimony, the number has changed from 303 to 183 which is a new number to me today. So, i think that we have Due Diligence to do it among ourselves relative to the contributors t that influence te issues associated with electronic eels. I have very little time. How much time are you going to take before we have answers as to whether or not youre going to repay the governments . Or are we developing so we dont have to do the work around . But were doing it for the same amount we had targeted. How much of that cost . 547 million and that is associated with odin and 70 million between now and 2022. Who will on the intellectualproperty . Us government. No question . No question. That allows us to have others fix it so we are not negotiating with the prime contractor over 183 million when we pay half a billion dollars for every plane we purchase from them. You are not a good actor in this. This is just one component we arty know that identified as critical as priority one we have problem with the oxygen system if you not to come to the table to negotiate this really aggravates me. Should aggravate every taxpayer in the country they should been the case initially to own this out right we would not be in the situation for all of those that think the f35 is the safest plane around come i have news for you. We have problems with this plane and we continue to have problems at this plane when we should be very concerned about the system not being accurate because it pulls that to question and i yield back. We thank you for your passion and your knowledge on this issue and now i would like to call on the congressman. Thank you madam chair. It is important that we state the end result we want to see this program succeed and with oversight ultimately we want to get to that end. There are some glitches in the road so to speak. We need to address those issues. Thank you for your work and acknowledge the purpose of oversight with some of these issues. I want that on record. So within that context, a lot of the argument we need to see lockheed right a check from that perspective. Unfortunately if that would happen the check just goes to treasury and does not help the program. Are there other forms of compensation that might be more beneficial . Absolutely. We are negotiating the next annual sustainment contract in the to your options after that. We could very well look for consideration in that context. The other options need to be on the table but be considered. So i do have another concern i want to bring up. Let me just say we have 353 of these jets being built since 2015. And yet ballpark 1 trillion is on sustainment that is 566 million per plane, per year. That is a staggering amount. Again is just my math and i get clarification . We have to take that back and help you with the math. The 1 trillion over the last five years came from i dont understand that number. The most recent lifecycle estimate over 60 years is one. 6 trillion so i find it hard to believe we spent 1 trillion. That figure is out. The selected acquisition report actually i dont recall seeing that number but they did say that the amount of spending going per year per plane will strain future Service Operations and sustainment. Whatever the actual cost is, is an enormously expensive program here. How does the annual cost compare to other fighter jet programs in the past . I cannot is busy on speak specifically but we are aggressively targeting keeping our cost at 25000 per flight hour. That is a stretch goal. Are we trending that direction with cost savings . We are making deliberate progress. If there is a comparison to past programs as well as the goal . Excuse me that should approach the fourthgeneration thats the way we derive the target of 25000 per flight hou hour. We have problems with the transfer to the odin system can you walk us through the expectations and how this will play out . Absolutely first it is scheduled to be deployed on much more modern hardware. We have all the hardware now would only be 50 pounds of hardware so it is very differen different. In fact come as we move toward the first part of odin in 2021, 2021, then we could move alice onto the mid hardware is the first step. The original date deployed in the cloud to use requirements in large part so for instance i was on the phone yesterday at five different locations making sure their voices were heard by the actual team. Also looking at the waterfall Software Development techniques and in essence we are coding every day and testing every night. We have deliverables from the team every single day. So we can measure those deliverables. So a very different system. 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 that timing that we see here at the air force base. Will get with you later on that. Thank you madam chair i yield back. And now recognize madame wasserman schultz. I went to ask my question through the appropriations committee. I am deeply concerned about what im hearing and seeing the federal dollars is paramount as dod and Lockheed Martin move forward so in 2016 the Defense Department told gao it will cost an estimated 17 billion and they found that specific quote not so incredible that they have not formed a full analysis. What is the dod current estimat estimate . We are spending the same amount on and teach and as alic alice. I have the amount over the next five years. 547 million for the next five years. What has already been spent per our . We dont have that right here but we could get that to you shortly. Okay. Is it more than 17 million . I believe so that seems like a large number but we to get that to you shortly. That is the amount you said that Defense Department told gao because the department had not performed a full analysis. So the cost more than that already and i you are suggesting the 527 million. Earlier the department announced 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 contract from alice is only the beginning. Odin cost a lot more than that so how do you plan to ensure that odin is not excessive . The way odin is constructed for is very different than what we have done in the past. We are actually defining architecture we release the first contractor Lockheed Martin in july. And the work is being done in that environment with total visibility what is delivered every day. If i can ask you to pause the 87. 5 milliondollar contract is expected to cost more than that so what is the initial work by Lockheed Martin include . 550 million over the next five years and the initial work is a series run by apps but i will pass it over to the Lieutenant General for more specifics. Thats accurate Lockheed Martin will code three specific applications for odin the early Work Associated with that. You think the dod should move forward with any design plan without knowing any component and what that cost . Maam, we continue to refine the cost estimate moving forward the 547 milliondollar many previously allocated to alice we architecture effort we feel we can substantiate odin over the next five years but that budgetary cap 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. Gao report recommended in consultation to develop the details. Can you comment on the uncertainty for the redesign of alice . We have odin deployed fully. Yes. We share your concern to implement odin as well as the cost associated with that. Odin is relatively new initiative there will be significant challenges and cost associated with the doing that for it to be done right. 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. In your testimony you stated that while it does not mean apart is defective that yet you also state that the dod use of local guidance allowed aircraft to fly missions instead of grounding the aircraft this suggest to me if anyone puts lives at risk since the individuals that dod. Is this your opinion . So the commanders have a very difficult decision the their have to conduct day work around or continue training and Operational Missions or to potentially impact of that ability. So for quality and safety that is a Critical Safety Item and tract of manual practices such as the whiteboard. Is this a safety concern or a risk in your opinion . Sir, my opinion, the answer is it depends. Some parts are safety critical and those must be in place to be installed in the aircraft so yes it is safety critical. Those parts some are not safety critical. It is those parts to find a way to remove the requirement so that this discussion comes off the table. Can you give me an example of the part that demonstrates what youre talking about . You dont have a specific part number or nomenclature but as of right now where looking at eliminating close to 600 across the airplane but they are not safety critical. So there is a distinction. Yes sir. Quickly what is the estimated cost to develop to deploy . 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 million for the few years after that to continue that deployment. We intend to declare the initial capability for scott on squadron and by december 2022 our intent is to spread across the fleet those that decide not to transition otherwise need to continue to use the legacy and we will do that soon as constraints allow. What is Lockheed Martin done to ensure the f35 sustainment fits the war fighter needs . There are several avenues relative we have been working on reliability and maintainability to improve the prognostic system on the platform we are in advance of those requirements to ensure we have the spare parts when the customer needs and there are several different aspects we been working to improve the alice system theres many different levers we use for sustained performance on the f35. Thank you like the congressman mentioned, to solve the issue the question has come up to be paid back but also it doesnt solve any problems. Lockheed martin does a great job to produce airplanes and i think will continue if we find any problems that exist you 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 was online. Congressman are you with us . We will go to 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 said by 2025 want to get 20000 for per flight hour . What is the current cost. I believe on the order of 35000. There is a schedule each year to get to that quick. We pivoted the Program Office to be associated with five different visions with the engines and the Training Systems and with that cost savings targets but they need to pursue. When was this established . 25 by 25 goal about two years ago and to move the program in that direction with a number of initiatives but also development sustainment cost as well. Two years ago was at 35000 per flight hour quick. 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. 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 the data and accuracies due to human interface and we know that will happen no matter what your building when you deal with that 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 alice has been user unfriendly to get people to learn how to use it the latest release helps that significantly. However with odin we are making sure its more quantitative with data feeds counting the user to input so should be very helpful. And then to have this totally implemented . Or is there a phase we can see how this is working just to see the benefits of this . We will have the first system deployed september 2021 and then it will be by december 2022 to be deployed on an aircraft carriers. There has been a lot of talk about Different Things but talk about the actions the department has taken was section 192 of the nda a with the relief of failure for spare parts . Absolutely. What we have done this pitiful team together. We have really gone to bat over the root cause what is the fundamental issue . But it fundamentally comes down to allison what has incentivized us. Talk about alice these we have experienced since the beginning of the Alice Program . Yes. Moving away from that we should not be repeating the same issue issues . We should not. And then to talk to the maintenance units. And then to make a lot of difference. It is not as streamlined as it could be. Odin will start 2021. When the department start using alice . 2012 . And to decide how quickly we can implement procedures. But then saying that we dont like. And with those users with the performance. And then to have a better idea of what good looks like and from the maintainers and then leave that up to somebody else. We learn from past history to make sure we dont repeat the same failure. Thank you i yield back. I now recognize representative. She is remote and online. Can you hear me . Yes. I really appreciate everyone being available to us. Its really important with the things i am hearing from a community but two days ago the house adopted my amendment to the nda a focus with those who experienced unexplained problems with the f35. Do you know what is causing the psychological episodes one 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. But to say there is a common root cause between all of them i dont think weve come to that conclusion at this time. We know that sustainment government may require a contractor at the time of delivery. This is really important the electronic logs through the lifecycle, correct . Yes. Thats why we need to look to make sure it reflects the experience that we have had to point out at the time of delivery is not the entirety that we have to recognize that. Would it even be possible to reject that . Do we need to wait for personnel to fix it . We have ongoing discussions about those kinds of issues but after the point we initially expected that becomes more positive. An aircraft must be electronically complete meaning that all electronic records are multi functioning and that no aircraft should be grounded. But on any given day over 50 percent of the fleet, defined that concerning . With her maintenance leader they look at each part and determine if the aircraft is fit to fly and never make any safety compromises. All that said i have faith in all of our maintainers for systems to be 100 percent correct and effective. The American Public would agree. The gao reported with that inaccurate or missing electronic records then the plane should be grounded. How can servicemembers be 100 percent sure and not have a dangerous issue on the aircraft . And that with hundreds of millions of dollars but that is the problem and that injects another level of risk into the issue is one of the many reason reasons. That they could verify to be coupled i simply think its outrageous spending millions of dollars. So in case anything here was not clear i think its really important that it is our responsibility so 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. First i would like to give you the opportunity to respond to it was just that in regards to the safety of the aircraft. As we mention the parts are not of concerned that is associated with a part we have a process in place relative to part integrity. Each part is delivered to go 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. And Lockheed Martin look at that on its own or is it a broader issue . And needs to be done as the enterprise we have engage that issue we need to listen to the war fighter how they operate and sustain and maintain aircraft and as we go forward those need to be defined by the user and industry and government we can work to solve that problem. The f35 program is a Development Program how does that have the sustainment portion of the program . As the product has been developed so in the early phases of the Program Development was ongoing while we still produce the aircraft. Two years ago we received full fighter capability. As that was released, the fleet has grown approximately 300 aircraft in the last three years. There has been a lot of planning and now there is a lot of flirting as we implement and sustain the airplane in the fleet felt that the experience that has occurred and we have seen significant improvement in my opening remarks the sustainment over the last two years has increased from the low fifties to the mid 70 percentile. And the other metrics in terms of those also significantly improve but also to how the system is improving. How do you feel . I have full faith in our commanders and and i mentioned in my opening remarks have a son flying for the air force. He doesnt fly f35s to his dismay but he trust his containers implicitly and explicitly to deliver him an aircraft that is safe to fly. And those that are flying is safe to fly. Can we please provide an overview and with that the men and women in uniform . It relies upon stealth and interoperability to penetrate and persist into punish in a way no other air system is capable of doing today. With those operations in training were very happy with the plane and the system we have got. We need to give them more. We need to continue to move the Program Forward from that perspective. And what do you thank you could be done to it has emerging threats. We are moving the program into a new era oF Development with this capability and delivery. Departmental the industry style oF Development and a huge tranche with that more incremental and agile focus its important as we work our way forward and the threat continues to change but to be in limbo the things that we can do with and on the platform is critical. Congresswoman porter. Hello. Does Lockheed Martin owe the federal government many . We are negotiating that today with the defense contract management issue with electronic yields. You are negotiating today. 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. Costing the government 300 million. I dont know the specifics. It came from the government. So negotiating 350 million but it has been reduced i was lucky doing financially . We just released our Quarterly Earnings yesterday. Net sales are 16. 2 billion net earnings one. 6 billion in cash is two. 2 billion. From the Quarterly Investor call is up 15 percent and in profits so far in 2020. And that headline is the ability and Small Businesses struggle. And as a pandemic star writing a letter to the white house asking taxpayers. 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 a free Lending Program . I am aware relative to covid19 and the cares act with the disruption aerospace and defense i dont know the specifics of the letter you are mentioning. The Lockheed Martin request many through the cares act . Yes maam. Why . Because of the disruption associated with covid19. With the disruption with your profit when we didnt have covid19 . Making gobs of money for is a disruption for you but for every day americans to see their stuff go up 15 percent three. 5 billion in 2020 they wouldnt call that a disruption but a miracle it would not be coming to the government to take more taxpayer dollars at the same time you are failing to pay the us taxpayers back with regard to the f35 strikeforce. I dont understand why you need this additional money when you breached your contract for 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. Reclaiming my time. Use your 15 percent increase of profit to pay to protect her workers during covid. Why are we footing the bill with the company who has an huber profitability moment . No funds have been provided relative to the care act. That you have asked. Yes like Many Aerospace and defense companies. One wrong does not make a right. I yield back. The gentle lady yields back. And with the 303 million cost if that figure is right its a big number can you explain how you arrived at that number . Thats just the cost of labor it cost about 7000 per issue to fix or resolve so that figure is just for the labor. Really its a larger number overall. It does not take into account that lockheed to back to the government. That way we could obtain that information. We requested the information during the course of the audit but they did not provide it. Do you have any recourse for you just tolerate that quick. Lockheed martin with the audit team and then to provide that to that cost us. So your saving cost. Do you to continue to deliver those parts . We are in the process of waiting for the information. We are waiting for documentation and to validate actions taken. So with your office what type of changes we need moving forward. We work very closely with Lockheed Martin to put the process in place to ensure that a number of parts that arrive so one of the moves the group made was he advanced shipping notice that is significantly reduced fears associated with manual entry of data so it pretty populates the system for the easier transmittal and the acceptance and arrival thats a large part where at the 83 percent number. Said to ask a similar question from your perspective in the 2016 Inspector General report . As we have alluded to in the opening comments increasing from 43 percent or 45 percent at 83 percents the last six month months. Thank you very much i yield the rest of my time. There gentle man yields back. Thank you for being here today to testify before the committee as they all understand the f35 program is one of the most essential tools in our Nations Armed forces disposal i strongly support the continued investment in the f35 program and it will play a major role to defend the United States and our allies for decades to come. I saw the work the department of the defense Lockheed Martin and suppliers around the country in the home state of West Virginia to ensure the f35 program will continue to be costefficient Mission Capable and effective i am encouraged by the progress made especially in the last year to reduce the cost per flight and to ensure ready for compliance at a much higher rate thank you for being here today and to show the American People the importance of the f35 program. How has the coronavirus pandemic with a sustained economic shut down impact the supply chain for the f35 program . Congresswoman it is a mixed bag those that have shut down for a period of time it could take weeks or a month. Suppliers that have had little impact and the workforce has been significantly impacted. We have a supplier that reduced the workforce from 100 percent down at 20 or 30 percent. It has been a diverse impact also suppliers that have commercial material as well as military hardware. From a commercial aviation point of view they have been significantly impacted from the health point of view. There are many different aspects how covid has impacted it cross the aerospace sector. General how does the Mission Capable rate of the f35 compared to one year ago or even six months ago . The f35 over the course of the last year has come up from the mid fifties from the mid seventies as i look back at the data today it seems relatively far from the midseventies below the fleet level individually at the f35 is doing a little bit better the bnc are doing a little worse there are variations in the systems and we see the impact on the Mission Capability rate. We are taking a wide variety of issues to drop that sustainment outcomes in the 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] at the Richard Nixon president ial library in california. This is just over one hour. Ladies and gentlemen, the honorable
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