| WASHINGTON, June 16
WASHINGTON, June 16 Republican Senator John
McCain on Monday said he was concerned by recent revelations of
U.S. government-industry "cronyism" in developing Lockheed
Martin Corp's F-35 fighter jet, and said the $398.6
billion program still had "major problems."
McCain, a key member of the Senate Armed Services Committee,
said he had long been troubled by the Pentagon's payment of
85-percent or higher award fees to Lockheed on the F-35 program
despite cost increases and schedule delays, adding the
background to those decisions was "disturbing."
Former Deputy Defense Secretary Ashton Carter last month
said the Pentagon's F-35 program manager told him he had kept
the fees high because he liked the Lockheed executive in charge,
and the company official had said he would be fired if the fees
fell below 85 percent.
Carter, who was the Pentagon's chief weapons buyer at the
time, made the remarks at a university event on May 16 and they
were reported by InsideDefense.com on May 30.
"This is, of course, totally unacceptable. It is the kind of
cronyism that should make us all vigilant against, as President
Eisenhower warned us over 50 years ago, the military-industrial
complex," McCain said in a speech on the Senate floor on Monday.
Carter did not name the people involved but said the F-35
program manager was fired. Then-Defense Secretary Robert Gates
fired Brigadier General David Heinz, the two-star Marine Corps
general who was running the F-35 program at the time, in
February 2010 and elevated the job to the three-star level.
Lockheed later announced the departure of Dan Crowley, who
was the company's F-35 program manager at the time. Lockheed
declined comment on Monday.
McCain said the incident raised questions about why award
fees were included in the initial F-35 contract in 2001, and why
senior officials overseeing the program had not questioned the
level of the fees given cost and schedule problems.
He said it also highlighted the importance of giving federal
acquisition officials the tools they needed to avert the
"unwarranted influence" of contractors on government programs.
McCain said the F-35, the Pentagon's largest weapons
program, continued to face major challenges despite a recent
report from the Government Accountability Office, which said it
was "moving in the right direction."
"This is clearly a program that has had and continues to
have major problems," McCain said, citing mandatory inspections
ordered last week of all F-35 jets after an oil leak caused an
in-flight emergency at a Marine Corps based in Arizona.
Frank Kendall, the Pentagon's current acquisition chief,
last week highlighted the importance of incentive fees in
structuring contracts, but rejected the use of "one size fits
all" policies on contracts since each deal was unique. He said
training acquisition workers was critical.
McCain also said was skeptical about letting acquisition
officials decide which contract structure was "appropriate" in
the absence of effective guidance and training.
(Reporting by Andrea Shalal; Editing by Ken Wills)