10 Aug 16. Budget Impasse Could Derail KC-46 Tanker Program. Congressional failure to pass a budget for fiscal year 2017 could derail the KC-46A Pegasus tanker program and potentially force the Air Force to reopen the contract with Boeing, the service’s top official said Aug. 10. The new tanker is fast approaching a milestone C decision, which would enable the aircraft to go into low-rate initial production. But if lawmakers fund the government through a long-term continuing resolution — which would cap program funding and production at fiscal year 2016 levels — it would spell bad news for the project. A long-term CR would limit KC-46 production to 12 aircraft, short of the 15 asked for in the Defense Department’s fiscal year 2017 budget request, Secretary of the Air Force Deborah Lee James told reporters during a Pentagon press briefing. That would “delay operational fielding” of the platform, she added. The current budget impasse between Democrats and Republicans on Capitol Hill, coupled with election year politics, doesn’t bode well for budget regularity or Pentagon acquisition programs. “We are hearing that either a six-month CR or a one-year CR is at least a possibility,” James said. “This would be a very bad deal for the United States Air Force.” (Source: glstrade.com/National Defense)
11 Aug 16. BAE Systems Moves to Enter State Department FOIA Fight. Two large defense contracting firms are seeking to enter a Freedom of Information Act lawsuit where the Associated Press is demanding details on a settlement the State Department reached with one of the companies over export control violations. BAE Systems plc, a British company, and BAE Systems Inc., its U.S.-based affiliate, filed motions in federal court in Washington Thursday asking to intervene in the case. The companies, successor firms to the former British Aerospace, told U.S. District Court Judge Richard Leon that they’re concerned the case could lead to the release of confidential information about the companies and could discourage businesses from entering into settlement talks in similar cases. (Source: glstrade.com/Politico)
12 Aug 16. Pentagon Grants Lockheed About $1bn To Stem F-35 Lot 9 Production Costs. With F-35 contract negotiations stretching on, the US Defense Department in August approved about $1bn in additional funding to reimburse joint strike fighter manufacturer Lockheed Martin for costs incurred on the ninth batch of aircraft, sources with knowledge of the program said Thursday.
The move provides some financial relief to the company, which had been paying out of pocket for expenses associated with low-rate initial production (LRIP) lots 9 and 10. Last month, Lockheed’s chief financial officer, Bruce Tanner, said the company had spent nearly $1bn of its own funds to compensate suppliers.
While the F-35 program executive office declined to confirm how much money had been obligated to the company, joint program office (JPO) spokesman Joe DellaVedova told Defense News that “with what we have provided, Lockheed will be able to continue the LRIP 9 production without bearing any undue burden.”
The JPO obligated the funding through an already existing undefinitized contract action (UCA) for the ninth batch of LRIP aircraft. It is now negotiating with Lockheed on a separate UCA that would provide some cash for LRIP 10 if a final contract is not agreed to by then, DellaVedova said.
“We appreciate the actions taken by the JPO to ensure delivery of F35s to our warfighter customer,” Lockheed spokesman Mark Johnson said in an email.
The Defense Department issues UCAs in cases where it needs a vendor to perform work before the final terms of a contract have been set in stone. Lockheed had already collected $625 million through the LRIP 9 UCA, announced Nov. 3. The agreement has a not-to-exceed value of $5.37 billion, meaning that the government could use it to inject even more cash at a later date.
DellaVedova declined to comment on the timing and p