Defense Department Continues Criticism of Lockheed Martin’s EVMS System

June 16, 2010 by
Filed under: Business Line, Companies, Congress, Department of Defense, development program, Events, Lockheed Martin, Military Aviation, production program, Services, U.S. Air Force 

Earned Value Measurement System (EVMS) is the way defense contractors measure their cost and schedule performance in reporting to the Defense Department on their contracts. The system tracks how money is being spent and schedule achieved against contract and work breakdown structures to provide management a way to show where cost overruns are occurring and schedule is slipping. In 2007 due to the problems with the Joint Strike Fighter (JSF) the Pentagon reviewed Lockheed Martin’s (LMT) internal system and found it wanting.

Now that the program is still experiencing cost and schedule problems that are manifesting themselves as major cost increases in the price per aircraft the Pentagon continues its criticism of the defense giants system. The failure of the company to bring them up to the standard required by the DoD is leading the Government to consider financial penalties by withholding payments due on a variety of contracts, not just only the JSF.

The EVMS system has become more important over the last twenty years as a primary tool to track program progress and accomplishment. One of the recent reforms of the Congress and Obama Administration for defense acquisition is even more focus on the use of it. Lockheed has supposedly until the end of the current month to submit a get well plan for their system or face the withhold of funds by the Government.

The JSF has seen major schedule delays that have helped contribute to the cost increase for the aircraft. If Lockheed’s internal EVMS does not work properly it is hard for the contractor and the Project Management Office to get a handle on these schedule and cost issues and even contribute to more cost and schedule problems. Lockheed has already lost some of their fee from the development and test phase of the program and the Government is threatening now to dock the payments for work done and not just profit.

The Pentagon is especially concerned with being able to estimate how much work remains on the program and the total cost. The defense budget will be under pressure for the next several years in the U.S. and with its Allies. This means that the greater cost of the aircraft may lead to a longer production run with smaller annual quantities further increasing prices and delaying the retirement of older aircraft nearing the end of their life.

Lockheed needs to meet the requirements of the Defense Department in this area as just one facet of their JSF get well plan. The program is too critical to the overall modernization of the U.S. and many of its Allie’s aviation forces. It needs to be done on time and within cost boundaries so that the necessary quantity of aircraft may be bought. If not the West could face a significant gap in its overall fighter and strike aircraft capability.

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Comments

3 Responses to “Defense Department Continues Criticism of Lockheed Martin’s EVMS System”

  1. Tweets that mention Defense Department Continues Criticism of Lockheed Martin’s EVMS System | Defense Procurement News -- Topsy.com on June 16th, 2010 5:28 am

    [...] This post was mentioned on Twitter by Dagpotter, DefProcureNews. DefProcureNews said: Defense Department Continues Criticism of Lockheed Martin’s EVMS System: Earned Value Measurement System (EVMS) is… http://bit.ly/bmLoVG [...]

  2. Enrique (Rick) Contreras on August 11th, 2010 9:54 am

    This article puts the pressure on LM, but does not address the lack of control by the government PMO, or the lack of responsibility assigned to DCMA to identify issues in a contractor's EVMS. DCMA only identifies issues, not proper corrective actions. I speak from experience. There is much more to this story than the article addresses.

  3. defproc on August 11th, 2010 10:44 pm

    Sir,

    I agree that the situation may be unfair to Lockheed Martin. The article was stressing that the government is moving to punish the company for this situation potentially further impeding progress on the JSF program. I also think the government would argue that it is not up to them to fix the EVMS system as Lockheed signed up to a contract which delineates what data should be provided. Certainly managing by CV and SV alone which the PM shops often do without necessarily recognizing their contribution to the problem is also not fair. The current emphasis on earlier cost estimates with higher fidelity will only increase these issues as the pressure to manage to EVM will only be higher.

    Thank you,

    MCP

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