Well, this is just fascinating. We’ve seen how many different types of procurement contracts there are (it’s mind boggling) and that none of them really mean what they seem to say but here’s yet another new one I had no idea existed – a unilateral contract whereby the government simply dictates the price. Yeah, we’re talking about the F-35 program. The government apparently got tired of negotiating with Lockheed and has simply issued a contract with the price they want (1).
“In an extraordinary action, the F-35 Joint Program Office decided 14 or 18 months of negotiations was enough and has issued a “unilateral contract” for the latest Low Rate Initial Production contract to defense giant Lockheed Martin.
In simple terms, the Pentagon got sick and tired of talking with Lockheed and told them, here’s how much we’re willing to pay you. Take it or leave it. All terms had been agreed to by both sides except one — the price.”
So what does Lockheed think of the imposed contract?
“The definitized contract for LRIP 9 announced today was not a mutually agreed upon contract, it was a unilateral contract action, which obligates us to perform under standard terms and conditions, and previously agreed-to items,” Lockheed’s F-35 spokesman Mike Rein said in an emailed statement. “We are disappointed with the decision by the Government to issue a unilateral contract action on the F-35 LRIP 9 contract.”
Does Lockheed have any recourse? Apparently, little.
“…Lockheed either accepts the government contract for 57 F-35s for roughly $6.1 billion or it goes to court to protest the government’s action.”
I am not a lawyer but how on Earth is this legal? An imposed contract? Wow.
We all scoffed at the government’s claim that the price of the F-35 would be $80M but I guess if you can just dictate the price then $80M is perfectly doable. Why not $70M or $10M or simply force the manufacturer to build them for free? Wait, I know – charge the manufacturer for the privilege of building them and the F-35 program can be a profit maker for the government!
If Lockheed is forced to accept this, it can’t bode well for their quality control enthusiasm! I wouldn’t want to be a pilot in one of these disgruntled builds.
(1)Breaking Defense website, “JPO To Lockheed: No More Talkie, Here’s LRIP 9 Deal”, Colin Clark,