Wednesday, October 9, 2013

F-35: Pratt & Whitney hit with 5% witholding penalty

I mentioned yesterday that Lockheed Martin had seen it's EVM withholding reduced from 5% to 2% because of the progress they've made within the management system (designed to save money for the contractor - DoD).

Pratt & Whitney, on the other hand, were told that they would see 5% withheld until they address some improvements within that system.  P&W provides the engines for the F-35:
The Pentagon's F-35 program supports DCMA's decision to withhold some funding from Pratt, said spokesman Joe DellaVedova. He said Air Force Lieutenant General Chris Bogdan, who heads the F-35 program, met with Pratt & Whitney executives on Friday to discuss measures to improve the internal system.

"The EVM requirement is meant to protect taxpayers from over-billing and focuses on the business systems defense companies use to estimate costs for bids, purchase goods from subcontractors, manage government property and materials, and track for costs and schedule progress," he said.

Bates, the Pratt & Whitney spokesman, said his company was focused on delivering a highly capable propulsion system for the F-35 on time, and at an affordable cost for our customers.

He said DCMA identified "room for improvement" in four areas: updating documentation to better align with manufacturing processes; improving management and integration of scheduling tools; better estimating and forecasting of costs; and improving work package planning.

He said the company's corrective action plans to address those problems were being reviewed by the agency. 

Like I said yesterday, this is pretty normal stuff (audits, I mean).  And I like the incentive created by withholding a percentage to spur the contractor, any contractor, to improve their efficiency and their management with the goal of reducing costs.

It will be interesting to see how critics attempt to spin this as another example of - well, you decide what they'll claim.  But it will be out there - just watch.  That's not a prediction, it's a promise.


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