Pratt & Whitney To Address DoD Auditors' Concerns on F-35 Engine Management

Oct. 10, 2013 - 03:11PM | By AARON MEHTA




WASHINGTON — Pratt & Whitney expects to address concerns raised by government auditors by mid-November as the company faces withholdings on sales of its F-35 Joint Strike Fighter engine.

The engine manufacturer is confident that the audit, which raised four management issues and led to a 5 percent withholding on the company’s F-35 related contracts, will not affect ongoing negotiations for lots 6, 7 and 8 of the F135 engines.

“We plan to reach agreement as soon as possible, hopefully no later than middle of November,” said Matthew Bates, a Pratt & Whitney spokesman. Bates added that the company has already submitted its plan to fix issues raised by the Defense Contract Management Agency (DCMA).

Bates acknowledged that date may slip due to the ongoing government shutdown. Most DCMA workers were furloughed for a week, leaving the agency with a backlog of work to catch up on.

The DCMA audit was conducted April 8-19. On Sept. 30, the agency alerted Pratt that it had failed to meet four of the 32 Earned Value Management System (EVMS) guidelines and would be decertified. EVMS is a system used by the Pentagon to track scheduling and performance at contractor facilities, with an eye toward protecting taxpayers from unnecessary costs.

The 5 percent withholdings will be taken from Pratt’s low-rate initial production (LRIP) 5, 6, 7 and 8 contracts, as well as a Navy Advanced Engine Contract looking at fuel burn on the jet. The company expects to finalize its contract for LRIP 6 shortly, and has already submitted initial bids on LRIP 7 and 8.

That 5 percent is the highest withholding that can be applied toward EVMS issues, although that number can be reduced if DCMA decides progress has been made by the company. If and when Pratt meets the EVMS criteria, the withheld funds will be returned to the engine manufacturer.

The four areas where Pratt failed to meet expectations — updating documentation to better align with processes, improving management and integration on scheduling tools, better forecasting on costs, and improved work package planning — are fairly benign by the standards of the F-35 project, which has seen massive cost overruns and design failures over its history.

Nonetheless, it is a DCMA standard that violations of the EVMS guidelines lead to withholdings. It’s something Lockheed Martin, the prime contractor on the F-35 program, is still operating under following a 2010 decertification — although the company hopes that changes soon.

“Following two incremental assessments of our EVMS Corrective Action Plan, the Defense Contract Management Agency, at the end of August, concluded that Lockheed Martin is making significant progress on the approved Corrective Action Plan and reduced the withhold of payments from five percent to two percent,” said Lockheed spokeswoman Laura Siebert. “We continue to focus on execution of the plan to restore full certification of our EVMS by the end of the year.”

This is the first violation of EVMS guidelines for Pratt since the Defense Federal Acquisition Regulation rules were changed in 2012.

The audit’s findings come at a time when the F-35 program has been gaining momentum. Both Lockheed and Pratt have made progress on contracts, while the top program official has touted improved relations between the Joint Program Office (JPO) and its two prime contractors.

While advocates say the biggest challenges are behind the program, small details are still proving to be a problem. In addition to the DCMA audit, a Department of Defense inspector general report identified 147 management issues with contractors on the single-engine, stealthy fighter.

Despite DCMA’s findings, Pratt has “demonstrated our commitment to the success of the F135 engine program by taking on 100 percent of overrun risk on production engines in our last LRIP award,” Bates said.

Lt. Gen. Christopher Bogdan, the head of the F-35 JPO, met with Pratt officials in early October to go over the audit’s findings.

“The F-35 Joint Program Office fully supports the Defense Contract Management Agency’s decision to impose a 5 percent withhold against Pratt & Whitney for not being in compliance,” Joe DellaVedova, program spokesman, said in a statement. “We will continue to work closely with DCMA to ensure Pratt & Whitney corrects the four deficiencies.”

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