Moves to restructure commercial deal under way, but cost and pricing data glitches could hinder process

US Air Force leaders earlier this month approved a plan to restructure Lockheed Martin's commercial contract for the C-130J transport to a "traditional" structure, addressing a top concern for the programme's critics.

The commercial deal was a prized experiment for acquisition reformers in the late-1990s, but fell from favour amid programme delays and wider scrutiny of the air force's acquisition policies. Critics of the programme such as Senator John McCain argued that the oversight restrictions imposed under commercial contracting terms – which simplify the purchase of off-the-shelf items, but restrict insight to the contractor's cost and pricing data – are inappropriate for complex and expensive military transports.

The USAF has now started renegotiating its current multi-year contract with Lockheed to obtain certificated cost and pricing data on any future C-130J purchases and better information on current pricing.

But several new "wrinkles" have appeared to complicate the conversion process, says Col Kevin Harms, the service's C-130 Systems Group commander.

First, it may not be possible for Lockheed to certify all costs and pricing because there may be pockets where no data exists. Some C-130J vendors never established tracking systems for the government's rigid accounting requirements and creating a new system could introduce delays and costs.

Traditional air force contracts also require the vendor to certify that their cost and pricing data is accurate to the best of their knowledge when initial bids are submitted. With the C-130J more than a decade past that stage, the air force and Lockheed are working under a tight deadline to introduce more cost insight midstream without raising prices.

The current C-130J multi-year procurement requires the USAF to provide funding for fiscal year 2006 aircraft by 15 November. Failure to meet this contractual commitment would free the contractor from an obligation to provide aircraft at the currently negotiated price.


Source: Flight International