In a February media engagement associated with the 2021 AFA (virtual) Air Warfare Symposium, Bruce Litchfield, Lockheed Martin Aeronautics Sustainment VP, and Ken Merchant, Lockheed Martin F-35 Sustainment VP, spoke of the company’s ongoing efforts to both engage is own F-35 subcontractors in multi-year Performance Based Logistics (PBL) arrangements and to transition to such a PBL arrangement in its prime contract with the F-35 Joint Program Office (JPO).
The briefing made clear reports that the F-35 JPO rejected Lockheed Martin’s initial plan to move quickly from a contractual annualized contracting approach to a Full PBL (five-year, fixed price, full weapon system solution) sustainment strategy and instead agreed with the company on a “skinny PBL” sustainment strategy through which Lockheed Martin might eventually gain the support of the JPO to move to a Full PBL.
As to Lockheed Martin’s criteria for moving its F-35 subcontractors from transactional repair contracts to PBL approaches, company officials aid that Lockheed Martin is willing to bear the risk of embracing PBL approaches where it has high confidence in the supplier. Ken Merchant described the company’s approach to the PBL relationship as follows:
“We have a handful [of subcontractors] that are currently under supplier PBLs…. We start out with what we call a master repair agreement. It is kind of a “try before you buy” that allows that supplier to start working with the Lockheed Martin Enterprise and the Government in a more efficient sustainment operation. Once we’ve done that three- or four-year activity then we transition them over to a PBL. And so our goal is to get as many of the suppliers into that mindset. We want to try to drive that way but we actually need to have the right conditions in place for some of these suppliers to make the successful, so it’s a constant negotiation with each of those companies to make sure that the conditions are set right and the behaviors can be produced that we desire.”
Mr. Litchfield added the following regarding the company’s rationale to move to PBL relationships with both its F-35 suppliers and its customer, the F-35 JPO: “I want to make clear that the PBLs are our initiative with our suppliers. We are not under a PBL with the Government ourselves, so when we look at the parts that are driving the aircraft availability and, to a large degree, cost, we put on PBLs our suppliers that [who] are mature enough to be able to drive the availability improvements, the repair capability increases in partnership with our depots.”
Lockheed Martin’s multi-year PBL contracts with F-35 suppliers number “north of twelve” and include agreements with BAE Systems on Electronic Warfare (EW) and “Crew Escape, Life Support and Fuel Systems repair.” Lockheed Martin also has a F-35 PBL with Collins ESA Vision Systems (CEVS) for the Display Management Computer/Helmet (DMCH) and with its own Missiles & Fire Control element related to the Electro-Optical Targeting System (EOTS). The company notes that it is “looking to implement additional supplier PBL contracts to continue delivering cost and performance benefits ensuring affordable readiness for the warfighter.”