UPDATE 1-Lockheed says Pentagon recertifies cost-tracking system
* Move will allow Lockheed to collect withheld payments
* Payments had been docked since 2010
* Aeronautics sharing "lessons learned" with other divisions
WASHINGTON, Dec 2 (Reuters) - The Pentagon has recertified an internal cost-tracking system used by Lockheed Martin Corp's aeronautics division, freeing up progress payments that were docked starting in 2010 after problems arose with the system, Lockheed said on Monday.
According to a company statement, the Pentagon's Defense Contract Management Agency (DCMA) said it decided to recertify Lockheed's earned value management system (EVMS) after marked improvements in the company's approach to fixing the system.
"Lockheed Martin Aeronautics' genuine commitment and disciplined approach to correcting EVMS deficiencies has resulted not only in the company regaining its EVMS compliance credentials ... but has fundamentally changed the way it thinks and will manage work in the future," David Kester, director of DCMA's earned value management division, said in the release.
Lockheed said the move will allow it to collect progress payments that had been withheld over the past three years, but the company declined to give details on the exact amount. It said it was notified about the recertification on Nov. 22.
The Pentagon and its contractors use the EVMS to assess the performance of weapons programs, looking at scope, schedule and costs. The DCMA has been critical of Lockheed's system since 2007 and began withholding between 2 percent and 5 percent of progress payments on the company's F-35 fighter jet program in 2010 after the company failed to make progress toward fixing it.
When it first decertified Lockheed's EVMS in 2010, DCMA initially withheld 2 percent of progress payments on the F-35 program, but it increased the percentage to 5 percent in June 2012 after seeing insufficient progress with the system.
In August, DCMA lowered the withholding to 2 percent, citing "significant progress" by Lockheed on fixing the internal business system.
Tom Carney, vice president for program management, processes and controls for Lockheed's aeronautics division, said the recertification came after leadership changes at Lockheed and involved a much closer cooperative effort with the DCMA and the Pentagon joint program office (JPO) that runs the $392 billion F-35 program, the largest U.S. arms program.
"It really was a team effort with the JPO and DCMA," Carney said. "We established measurable capabilities with specific success criteria." He said the effort "got a lot of senior leadership attention" and the aeronautics division had over 30 people working on the EVMS system.
Lockheed executives met with a team of 10 DCMA officials about the recertification about six times over the past year, with each meeting lasting three to five days, he said.
Carney said Lockheed was now using the EVM system more consistently and rigorously across the aeronautics division. He said it was producing detailed reports for the Pentagon on a monthly basis, tracking cost, schedule and other indicators.
But company executives use the system on a day-to-day basis to oversee the F-35, F-22 and other programs, Carney said.
One of the changes made to improve the system, he said, was to automate accounting data so that actual costs could be entered into the EVMS system within one to two days, instead of the seven to eight days it had taken earlier.
Another change involved automating data from the factory floor and the manufacturing process so it could be entered into the F-35 integrated master schedule, Carney said.
He said Lockheed had an internal EVMS working group that includes representatives from all its divisions, including the space division, which is also having some of its progress payments withheld because of problems with its system.
"We have learned quite a bit," Carney said. "We're sharing all those lessons across the other business units." One primary lesson, he said, was the need to work more closely with DCMA and the government customer to establish clear expectations and create a specific and measurable corrective action plan.
Lockheed is also working with DCMA to develop a more data-driven approach for its surveillance of contractors, Carney said, calling previous efforts somewhat "subjective."
- Malaysian plane still missing; questions over false IDs |
- China draws 'red line' on North Korea, says won't allow war on peninsula
- Warning shots fired to turn monitors back from Crimea |
- Malaysian plane crashed off Vietnam coast: state media