No. 1 defense contractor Lockheed Martin received 93 percent of its
eligible bonus fees on the F-22 fighter jet for the six-month period
sending Sept. 30 -- its highest percentage in more than six years,
according to internal Air Force figures.
The
$34 million payment for overall flight test, management and
manufacturing performance came as the $62 billion stealth fighter
program faced a potentially devastating budget cut, congressional
criticism and questions about its value. The radar-evading F-22 is the
most expensive U.S. weapons program.
The
bonus figures are a bright note for Bethesda, Maryland-based Lockheed
Martin in a year of corporate trauma over slashed earnings forecasts,
credit downgrades, program problems, delivery delays and a share price
that's fallen 55 percent. The F-22 program is crucial to Lockheed's
future revenue growth and restoring investor confidence.
"What's
really important is what is going on on the line as you produce these
things, and what's going on in flight test," Maj. Gen. Claude
Bolton, head of Air Force fighter and bomber programs, said in an
interview. Lockheed produces the F-22 at Fort Worth, Texas, Marietta,
Georgia and subcontractor Boeing Co.'s Seattle, Washington, plant.
"Even
while all the turmoil is going on -- that's essentially inside the
Beltway," Bolton said, referring to the nickname of the highway
that surrounds Washington, D.C.
"Our
message to (Lockheed) was 'Continue doing your job, because I guarantee
if you screw up in flight tests, no matter what I say inside the
Beltway, we're dead,' " said Bolton. Funds Shifted Lockheed Martin
officials weren't immediately available for comment on the award fee.
Congress
in the $268 million defense budget for the fiscal year that began Oct. 1
refused to approve a $1.8 billion Air Force request to buy the first six
aircraft in the start of a 339-jet production program.
Instead,
it mandated new testing milestones and approved a complicated package
that allows the Air Force to spend as much as $1.18 billion: $634
million to buy six more test aircraft; $275million as a down-payment on
the next batch of 10 aircraft; and, $300 million for liability coverage
in case the program is canceled. That's $437 million than Lockheed would
have received if Congress had not cut the funding.
"Still,
the contracts are on schedule for awards in December," Bolton said.
The
current engineering, manufacturing and development phase will end in
September 2003. Lockheed Martin is performing the development work under
a cost-plus award fee contract that requires the government to pay all
costs and a bonus, or award fee, every six months.
Lockheed
Martin overall has been paid $733 million in bonuses since F-22
development began in April 1991, or roughly 82 percent of what it was
eligible to receive -- in the "very good category," according
to the Air Force.
Compared
to Lockheed Martin's production ability just 16 months ago "we are
light years ahead," said Bolton, who picked the 93 percent number
based on a consensus range agreed to by the Air Force and Lockheed
Martin.
"What
that (93 percent) shows me is great communications between the
government and the contractor team, great performance," he said.
"There were lots of things going on that people didn"t expect
but they came through with flying colors. We are getting a high quality,
affordable product."(Article Courtesy Lockheed Martin Press Release)
