Lockheed Resists $119 Million in Fixes for Its $406 Billion F-35

(Bloomberg) -- Lockheed Martin Corp. is contesting a repair bill of $119 million to $180 million on the $406.1 billion program to develop and build F-35 jets, according to Pentagon contract data.

The dispute over poor workmanship that resulted in corrosion damage last year on some of the fighter jets illustrates the disputes that arise from time to time between the Pentagon and its biggest contractor over its costliest weapons program.

The problem was linked to a primer that’s supposed to be applied as a protective layer on aluminum fasteners to prevent corrosion. The Defense Department temporarily stopped deliveries of F-35s for the month ending Oct. 20 to assess the issue. Delivery of five planes is currently on pause until the dispute over who pays is resolved.

Lockheed stands to make billions as production of the F-35 ramps up. The Defense Department estimates jet procurement will cost about $292 billion, according to its latest Selected Acquisition Report on the fighter. The final fiscal 2018 omnibus budget bill approved $10.2 billion for 90 aircraft, which is 20 aircraft and $2.6 billion more than the Trump administration’s request.

“We’re not going to comment or negotiate this issue in the press,” Pentagon F-35 program spokesman Joe DellaVedova said in an email “regarding repair work to remediate” the flaw in “primer quality,” and “we look forward to a swift resolution.” Carolyn Nelson, a spokeswoman for Bethesda, Maryland-based Lockheed, said in an email that “we won’t discuss specific cost figures and contracting terms” but “we are working closely with” the Pentagon “to reach a resolution.”

Vice Admiral Paul Grosklags, commander of the Naval Air Systems Command, which oversees the Navy’s model of the F-35, told a House panel last week that the initial corrosion problem was a “mistake made by the contractor during production, and they should pay for that out of their bottom line, not our top line.”

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net.

To contact the editors responsible for this story: Bill Faries at wfaries@bloomberg.net, Larry Liebert, Laurie Asséo

©2018 Bloomberg L.P.