Pentagon Agency Rips Lockheed for Its Management of Billion-Dollar Programs

This morning POGO released a scathing Pentagon report (pdf) that criticizes Lockheed Martin's military aircraft division for failing to follow contractually-required industry standards for managing its multibillion-dollar weapons programs.  These industry guidelines are supposed to help contractors and the government spot and manage cost and schedule problems.

The report essentially says the world's largest defense contractor isn't fit to manage billion-dollar weapons programs. Lockheed Martin does “not provide the requisite definition and discipline to properly plan and control complex, multibillion dollar weapon systems acquisition programs,” it states.

The compliance report by the Defense Contract Management Agency (DCMA; pdf), which conducted its review in August 2007, states that Lockheed has been "non-compliant" in 19 of 32 guidelines known as the Earned Value Management System (EVMS).

The DCMA rips Lockheed (LM-Aero, or Lockheed Martin Aeronautical Systems):

These and the other identified deficiencies raise significant concerns regarding LM-Aero management processes and practices and the Company's ability to mitigate emerging cost and schedule issues in a timely manner. Because the accuracy and validity of LM-Aero performance measurement data is suspect, the Department's ability to use EVM data to determine product delivery dates and to develop timely and accurate estimates of program completion costs is adversely impacted.

It was apparent during discussions with LM-Aero CAMs that their involvement in performing their EVM responsibilities was superficial at best. Most CAM functions are being performed, with little management control, by the business operations personnel assigned to Integrated Product Teams (IPT). The result is a serious deterioration of system discipline.

This undisciplined approach to program management and towards the maintenance of the EVMS, will ultimately jeopardize the long-term stability of LM-Aero programs at Fort Worth, Texas facilities and diminishes the purchasing power of the Department.

An earlier GAO report also revealed that on average the 95 major defense programs it reviewed are facing dramatic increases in both acquisition costs and schedule delays. Problems with EVMS contribute to cost and schedule growth.

The DCMA report is likely to be addressed at this morning's Senate Armed Services Committee hearing looking into the acquisition of major weapon systems by the Defense Department.

-- Nick Schwellenbach

UPDATE: Click here to watch a live webcast of the hearing.

Comments

[K]

If you want to uncover a real scam, take a detailed look at the Earned Value Management System itself.
Where does the baseline data come from? How is it developed? Who provides it?
If the contractor uses errant and/or corrupted past data in order to prepare a government cost estimate for an upcoming contract, what do the taxpayers get?
Have any of the contracting officers or price cost analysts working for the government been trained to drill down and truely analyze the baseline data persented by the contractor?
Do you think the contractors don't know that they haven't been trained?
Does anyone who reviews projected costs have any idea of what any type of technical job "should cost"? What are these estimates based on - does anyone know?

This EVM system was developed to allow government contractors to remove as much money as quickly as possible, from the public trough.

When costs magically increase, (this generally starts early in the contract) is the contractor required to fix the problem to bring themselves back on schedule and cost? No. The facade allows the government to provide more dollars. Keeping the dollar burn and the accomplishments in sync (justify expenses) are all that matters. The underlying problems are not fixed. The contractor is not required to "recover" to the original schedule and burn rate. The taxpayer continues to be ripped off.

[richard]

This is to question why no one is questioning Northrop Grumman Corporation. It has been stated they received hundreds of millions, if not, billions of dollars in aid. Each time I have question where the money was spent the answer changes. The principal parties, the Navy, Northrop Grumman Corporation, and Northrop Grumman Corporation all gives contradictory answers. Millions of these dollars were giving to Northrop on the condition that if they receive insurance money(years) down the road, they would repay which many doubt. Northrop' s seeemingly unconditional free ride on taxpayers dollars is of great concern. The strange part it was reported that at the Navy's request $1.98 billion dollars that was originally intended for FEMA and/or the victims of hurricane Katrina . Yet Northrop in a discrimination suit response stated it had never paid salaries to Northrop Grumman Shibuilding employees. Years after the storm neither the Pentagon, White House, Navy, Elected officials, who
supported giving taxpayers dollars to a billion dollar Los Angeles based Corporation, or Northrop Grumman has given taxpayers an anwser to how the money was used. Taxpayers, Citizens, and Voters should demand anwsers. Please Contact elected officials, especially those in the Gulf Coast States and demand anwsers.

[Tom Adams]

If you saw the hearing yesterday you know that Sen. McCaskill is the only one on that Committee with balls. I bet Warner sits down to pee, and he was one of the better ones. LM probably says a prayer every night thanking God that this country is run on fear and kickbacks and not on effectiveness and accountability.

I would question if the DCMA was doing their job as the Earned Value Management Executive Agent since 1996 why corrective actions weren't already in place -- after 9 years you might think there could have been substantial savings to the American taxpayer? It appears they didn't take their role as the Executive Agent until very recently.

Calm down chicken little. The document states that it "may" contain proprietary info. I'm no expert, but the released section seems OK other than the fact that it's bad news for LM.

Do you reaslize you have posted a proprietary document on a public website?