New IG audit elevating questions on oversight on the Pentagon’s costliest program

Terry Gerton Let’s begin on the high. What did this audit got down to look at in the case of how the Protection Division offers oversight of the contractors on the F-35 program?

Chris DePerro Certain. The target of our report was to evaluate the division’s oversight of Lockheed Martin’s efficiency on the air automobile sustainment contract. And that’s the contract that the division makes use of to maintain type of the worldwide fleet of the Joint Strike Fighter plane the world over. It was essential for us to begin this venture once we did as a result of the division was in the course of negotiations with Lockheed Martin. And we had been hoping via our audit and thru our findings and proposals that we might present some info to the division that they might contemplate or use throughout negotiations with Lockheed Martin or after the contract had already been signed, perhaps that’s one thing that they’ll incorporate at a later date.

Terry Gerton Was there any historical past right here that actually raised a pink flag that you just had been involved about going into the audit?

Chris DePerro There’s been lots of audit work, not simply by the DoD IG, however the Basic Accountability Workplace and different audit organizations in regards to the Joint Strike Fighter. So there’s at all times been lots of oversight over this explicit program. One of many causes we received in once we did was the size of the negotiations that had been happening for that subsequent sustainment contract. That signing had been delayed. There have been loads negotiations happening with Lockheed Martin. So, it type of gave us a gap to get in early and, once more, attempt to present some info to the division that they might use or contemplate because it was nonetheless ongoing.

Terry Gerton So stroll us via your findings. What actually caught out about how DoD displays contract efficiency, particularly on this program?

Chris DePerro Our total discovering was that the division didn’t adequately oversee Lockheed Martin’s efficiency on the sustainment contract. And I wanna level out this system was monitoring efficiency by Lockheed Martin, however the actuality was that they weren’t at all times taking accountability or implementing accountability on Lockheed Martin because it associated to their efficiency. You recognize, there’s simply a few areas once we discuss oversight the place we felt the division fell brief. And a type of was having the correct kind of efficiency metrics and necessities within the contract. And when you could have the correct kind of efficiency matrix within the contact, that permits you to higher maintain the contractor, Lockheed Martin, on this case, accountable to these. So ensuring you could have the proper of efficiency metric. After which the opposite a part of that was ensuring that you’ve proper kind of construction and the correct kinds of sources crucial to offer oversight over a contract. No, it’s as giant and sophisticated as this one is.

Terry Gerton It seems like they had been noticing the place efficiency differed from the metrics however probably not doing something about it.

Chris DePerro Yeah, actually there have been lots of discussions and so it wasn’t a case the place nothing was being carried out. Actually there’s issues that the division would tackle with Lockheed Martin. However in the case of the contract itself, we had been type of restricted in what we might maintain them accountable to primarily based on what was or generally what was not within the contract. And instance of that’s in our report, we type of lay out a historical past of the various kinds of efficiency metrics that had been in contracts via the years. And early on, you may’ve had efficiency metrics that associated extra operationally. The supply of plane, the supply of absolutely mission succesful plane. Over time, due to points that they’d implementing a few of these, they had been in the end taken out and now it’s actually targeted on primarily provide and the way lengthy it takes Lockheed Martin to offer stock and offers provide to the fleet.

Terry Gerton What’s the real-world penalties of that change in perspective within the contract and in addition the gaps that you just seen in oversight?

Chris DePerro Certain. So among the actual world impacts actually comes right down to planning, to budgeting and to operations. You recognize, one of many points that we’ve had when it comes to the operational efficiency metrics versus what’s within the contract is that they aren’t aligned. So Joint Strike Fighter prospects, whether or not it’s the Air Power, the Navy, different associate nations, they could have very Particular operational necessities, once more, associated to what number of plane can be found and issues like that. However that’s not what Lockheed Martin is definitely held accountable to. Once more, with the present contract, they’re held accountable to, when it comes to efficiency metrics, sure features associated to produce. There’s lots of necessities on this contract for lots administrative issues and reporting gadgets. So there’s loads in there, however while you simply type of whittle it right down to the accountability piece and the way it pertains to the actual world, which is operations and the flexibility to fly missions, that’s the place we noticed the disconnect.

Terry Gerton I’m talking with Chris DePerro. He’s supervisory auditor, program director, Division of Protection Workplace of the Inspector Basic. Let’s come again to the findings and maybe get into somewhat little bit of the suggestions. What ought to efficient oversight appear to be in a program that’s as giant and sophisticated because the F-35?

Chris DePerro Yeah, so once more, as giant and sophisticated because the Joint Strike Fighter program is, you’ll hope that any kind of oversight is complete. And by that, we might count on this system to make the most of type of all of the sources out there to it inside the division. So along with the Joint Program Workplace, which is, that’s the workplace that’s liable for managing the Joint strike fighter. They’re offering oversight, it’s their contract, they’ve all of the contractual duties to offer oversight. There’s different organizations inside the division that additionally assist. Protection Contract Administration Company, Protection Contract Audit Company. So there’s different organizations and sources that we might hope that they might incorporate and use, and so they do in within the case of this contract. Once we discuss greatest practices, not simply greatest practices however rules would let you know that for a big and sophisticated contract corresponding to this. You really want to take time to tailor the oversight construction to verify it’s applicable for the complexity that this program brings. And that approach you make sure that you could have the correct kind, not simply construction, however the correct kind of sources to offer ample oversight. And one of many points that we focus on in our report is that the Joint Program Workplace didn’t successfully make the most of the contracting officer representatives when overseeing Lockheed Martin’s efficiency. And Contracting officer representatives are type of your eyes and ears on the bottom. In order that they’re representatives on the bases, and that type of sit with Lockheed Martin, wherever Lockheed Martin is offering some kind of service. We go into element in our report of how they might higher make the most of these contracting officers and have they got sufficient contracting officers, issues of that nature, simply to guarantee that they’ve the suitable quantity of oversight.

Terry Gerton There’s been lots of consideration just lately on a brand new govt order that argues that the massive protection primes are underperforming and never being held accountable. Do you suppose that the findings right here reinforce these presuppositions, or is it a narrower discovering associated particularly to the administration of this program?

Chris DePerro Our report targeted solely on the Joint Strike Fighter. So I wouldn’t wish to touch upon type of Lockheed Martin as an entire, as a result of clearly they do present lots of providers and lots of totally different applications to the division. However I believe our report does replicate some points that we’ve recognized in earlier studies. You recognize, this contract is what’s referred to as a sole supply contract. In order that’s the place there’s just one contractor that may present the Joint Strike Fighter and that’s Lockheed Martin. And we see that with different applications, each giant and small, the place you could have one contractor that they’re the one participant within the recreation that may present you that asset. So in these kinds of environments, we’ve reported that it provides some complexities to the division, each in negotiations, as a result of we will solely cope with one provider. There’s not the chance for competitors or to seek out different sources. As well as, we’ve some points with enforcement. You recognize, if we’re making an attempt to implement one thing and that contractor doesn’t agree, they don’t must signal issues. So clearly that may create delays in contracting, can create delays in operations and issues of that nature. So, you realize, the only real supply setting is clearly one thing that this program has exhibited and we’ve reported on up to now. The opposite is having the correct efficiency metrics and necessities within the contract. What we imply by that’s any kind of efficiency metric the place you’re going to carry the contractor accountable after which generally present incentives to exceed and that these incentives can are available in a financial trend. So we’ll pay the contractor cash to satisfy or exceed sure metrics. You wish to guarantee that one, they’re measurable and that in case you’re utilizing knowledge from the contractor which occurs loads in applications in addition to the Joint Strike Fighter, in case you’re utilizing the contractor to offer a knowledge, that it’s knowledge that we will belief and depend on. Secondly, you wish to guarantee that these metrics are literally enforceable. And there’s actually not lots of argument or wiggle room as as to if the contractor met it or not. And third, and this will get into what we had been speaking about operational or efficiency necessities versus contractual is you wish to make the contract efficiency necessities really help the necessities that the division is in search of. So in case you ask the Air Power or the Navy, they’re in search of what number of plane am I gonna have out there? That’s a requirement that they’re targeted on. That doesn’t essentially translate to what’s within the contract.

Terry Gerton How has DoD responded to your suggestions?

Chris DePerro Yeah, so the division agreed with six of the seven suggestions we made within the report. So for the six suggestions that they agreed to, they’re taking efforts to implement issues and work in direction of issues corresponding to a workforce examine, as I discussed earlier than, associated to the contracting officer representatives. As well as, we made a suggestion for them to raised align the roles and duties within the contract for these contracting officer representatives to what they’re really doing on the bottom. As a result of we did type of establish, via interviews with these people, that there was generally a disconnect on what they thought they wanted to do versus what they had been really being required to do. After which they’re additionally, one of many suggestions that we additionally made that they agreed to is basically simply implementing necessities which can be already within the contact. So we’ve recognized necessities the place simply over time, for most likely an entire lot of various causes, issues weren’t enforced, which the longer that went, the extra points it created, you realize, to present day. There may be one suggestion that they didn’t agree with, and that’s our suggestion to incorporate particular operational necessities within the contract. And they also didn’t agree with that, and partially their response was that, now that the contract is in place, to return and renegotiate a few of these very particular operational necessities that, it could result in lengthy delayed negotiations and will interrupt operations, issues of that nature. So we’re nonetheless ready on some extra feedback from the division associated to that. However a part of our response that that’s included within the report is there are alternatives to type of waive these necessities if crucial. So there may be an settlement that the Joint Program Workplace has with the JSF prospects, so all of the associate nations, Air Power, Navy, Marine Corps. All of them have their necessities and there was an settlement that they signed with Joint Program Workplaces that stated, hey, we want these necessities within the contract. And so over time, they’ve discovered that perhaps it’s not essentially applicable for all of these to be in there. And there’s a easy solution to get out of it. And that’s you problem a waiver, however that’s one thing that they’ve not carried out but. That was merely our response is, you realize, there are alternatives so that you can type of not adjust to that, appropriately. And that might be to get the waiver.

Terry Gerton What is going to you be watching to inform whether or not or not DoD’s made progress in opposition to these points?

Chris DePerro So we’re gonna be taking a look at among the actions that the Joint Program Workplace takes concerning the contracts, any contract modifications or adjustments to the contracts that they had been to make that might affect a few of suggestions we’ve made. There may be some program documentation that we are going to be monitoring and getting copies of and requesting as they develop the workforce examine plan. In order they developed these outcomes, we’ll get these to see how they’re implementing these. As well as. Working with different oversight companies, we’re going to be following up on, are they really implementing among the necessities which can be already within the contract and ensuring that they’re complying with that as nicely.