[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


 
                       F-35 JOINT STRIKE FIGHTER:
                   ENSURING SAFETY AND ACCOUNTABILITY
                          IN THE GOVERNMENT'S
                       TRILLION DOLLAR INVESTMENT

=======================================================================

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                          OVERSIGHT AND REFORM
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 22, 2020

                               __________

                           Serial No. 116-105

                               __________

      Printed for the use of the Committee on Oversight and Reform
      
[GRAPHIC IS NOT AVAILABLE IN TIFF FORMAT]      


                       Available on: govinfo.gov,
                         oversight.house.gov or
                             docs.house.gov
                             
                                __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
41-184 PDF                  WASHINGTON : 2020                     
          
--------------------------------------------------------------------------------------                            
                             
                   COMMITTEE ON OVERSIGHT AND REFORM

                CAROLYN B. MALONEY, New York, Chairwoman

Eleanor Holmes Norton, District of   James Comer, Kentucky Ranking 
    Columbia                             Minority Member
Wm. Lacy Clay, Missouri              Jim Jordan, Ohio,
Stephen F. Lynch, Massachusetts      Paul A. Gosar, Arizona
Jim Cooper, Tennessee                Virginia Foxx, North Carolina
Gerald E. Connolly, Virginia         Thomas Massie, Kentucky
Raja Krishnamoorthi, Illinois        Jody B. Hice, Georgia
Jamie Raskin, Maryland               Glenn Grothman, Wisconsin
Harley Rouda, California             Gary Palmer, Alabama
Ro Khanna, California                Michael Cloud, Texas
Kweisi Mfume, Maryland               Bob Gibbs, Ohio
Debbie Wasserman Schultz, Florida    Clay Higgins, Louisiana
John P. Sarbanes, Maryland           Ralph Norman, South Carolina
Peter Welch, Vermont                 Chip Roy, Texas
Jackie Speier, California            Carol D. Miller, West Virginia
Robin L. Kelly, Illinois             Mark E. Green, Tennessee
Mark DeSaulnier, California          Kelly Armstrong, North Dakota
Brenda L. Lawrence, Michigan         W. Gregory Steube, Florida
Stacey E. Plaskett, Virgin Islands   Fred Keller, Pennsylvania
Jimmy Gomez, California
Alexandria Ocasio-Cortez, New York
Ayanna Pressley, Massachusetts
Rashida Tlaib, Michigan
Katie Porter, California

                     David Rapallo, Staff Director
                       Krista Boyd, Chief Counsel
                          Amy Stratton, Clerk

                      Contact Number: 202-225-5051

               Christopher Hixon, Minority Staff Director
                                 ------                                
                         
                         
                         C  O  N  T  E  N  T  S

                              ----------                              
                                                                   Page
Hearing held on July 22, 2020....................................     1

                               Witnesses

The Honorable Ellen Lord, Under Secretary for Acquisitions and 
  Sustainment, U.S. Department of Defense
    Oral Statement...............................................     6
Lieutenant General Eric T. Fick, Program Executive Officer, F-35 
  Joint Program Office, U.S. Department of Defense
    Oral Statement...............................................     8
Ms. Diana Maurer, Director, Government Accountability Office, 
  Defense Capabilities and Management
    Oral Statement...............................................    10
Ms. Theresa Hull, Assistant Inspector General, U.S. Department of 
  Defense
    Oral Statement...............................................    12
Mr. Greg Ulmer, Vice President and General Manger, F-35 Lightning 
  II Program, Lockheed Martin Corporation
    Oral Statement...............................................    13

Written opening statements and witnesses' written statements are 
  available at the U.S. House of Representatives Repository: 
  docs.house.gov.

                           INDEX OF DOCUMENTS

                              ----------                              

The documents listed below are available at: docs.house.gov.

  * Press Release, Lockheed Martin 2019 Q4/Full Year Earnings; 
  submitted by Ranking Member Comer.

  * Press Release, Lockheed Martin 2020 Q2 Earnings; submitted by 
  Ranking Member Comer.

  * Questions for the Record: to Ms. Lord; submitted by 
  Chairwoman Maloney.

  * Questions for the Record: to Mr. Ulmer; submitted by 
  Chairwoman Maloney.

  * Questions for the Record: to Mr. Ulmer; submitted by Rep. 
  Foxx.

  * Questions for the Record: to Mr. Ulmer; submitted by Rep. 
  Gosar.

  * Questions for the Record: to Mr. Fick; submitted by Rep. 
  Higgins.

  * Questions for the Record: to Mr. Ulmer; submitted by Rep. 
  Higgins.

  * Questions for the Record: to Mr. Ulmer; submitted by Rep. 
  Norman.

  * Questions for the Record: to Ms. Hull; submitted by Rep. 
  Porter.

  * Questions for the Record: to Ms. Lord; submitted by Rep. 
  Porter.

  * Questions for the Record: to Mr. Ulmer; submitted by Rep. 
  Porter.

 
                       F-35 JOINT STRIKE FIGHTER:
                   ENSURING SAFETY AND ACCOUNTABILITY
                          IN THE GOVERNMENT'S
                       TRILLION DOLLAR INVESTMENT

                              ----------                              


                        Wednesday, July 22, 2020

                  House of Representatives,
                 Committee on Oversight and Reform,
                                                   Washington, D.C.

    The committee met, pursuant to notice, at 10:08 a.m., in 
room 2154, Rayburn House Office Building, Hon. Carolyn Maloney, 
[chairwoman of the committee] presiding.
    Present: Representatives Maloney, Norton, Lynch, Connolly, 
Krishnamoorthi, Rouda, Khanna, Wasserman Schultz, Welch, 
Speier, Kelly, DeSaulnier, Plaskett, Tlaib, Porter, Comer, 
Jordan, Foxx, Massie, Hice, Grothman, Cloud, Gibbs, Higgins, 
Norman, Miller, Armstrong, Steube, and Keller.
    Chairwoman Maloney. Welcome, everyone, to today's hybrid 
hearing.
    Pursuant to House rules, some members will appear in person 
and others will be remotely via WebEx. Since some members are 
appearing in person, let me first remind everyone that pursuant 
to the latest guidance from the House attending physician, all 
individuals attending this hearing in person must wear a face 
mask.
    This is something that I believe very strongly in. I am 
from New York. We have lost over 30,000 souls.
    We still do not understand the virus. It is terribly 
contagious and it is easy for us to go home and infect our 
families. So, it really is a life and death issue, and so we 
will not recognize anyone unless they are wearing a face mask.
    Let me also make a few reminders for those members 
appearing in person. You will only see members and witnesses 
appearing remotely on the monitor in front of you when you are 
speaking what is known in WebEx as active speaker view.
    A timer is visible in the room directly in front of you. 
For members appearing remotely, I know you are all familiar 
with WebEx by now. But let me remind everyone of a few points.
    First, you will be able to see each person speaking during 
the hearing, whether they are in person or remote, as long as 
you have your WebEx set to active speaker view.
    If you have any questions about this, please contact staff 
immediately.
    Second, we have a timer that should be visible on your 
screen when you are in the active speaker with thumbnail view. 
Members who wish to pin the timer to their screens should 
contact committee staff for assistance.
    Third, the House rules require that we see you. So, please 
have your cameras turned on at all times.
    Fourth, members appearing remotely who are not recognized 
should remain muted to minimize background noise and feedback.
    Fifth, I will recognize members verbally. But members 
retain the right to seek recognition verbally in regular order. 
Members will be recognized in seniority order for questions.
    Last, if you want to be recognized outside of regular 
order, you may identify that in several ways. You may use the 
chat function to send a request. You may send it email to the 
majority staff. Or you may unmute your mic to seek recognition.
    Obviously, we do not want people talking over each other. 
So, my preference is that members use the chat function or 
email to facilitate formal verbal recognition.
    Committee staff will ensure that I am made aware of the 
request and I will recognize you. We will begin the hearing in 
just a few moments when they tell me they are ready to begin 
the live stream.
    Chairwoman Maloney. The committee will come to order.
    First of all, I would like to congratulate Ranking Member 
Comer. This is his first full committee hearing as ranking 
member, and I am pleased that it is one that we can work in a 
bipartisan manner.
    I believe we all want a strong military, a strong private 
sector, and a strong government that is wisely tracking 
taxpayers' money and spending it efficiently for the purposes 
that it was meant for.
    I look forward to working with the ranking member in the 
future and I am so pleased that he is with us here today.
    Without objection, the chair is authorized to declare a 
recess of the committee at any time and I now recognize myself 
for an opening statement.
    Good morning. Today's hearing will focus on the F-35 Joint 
Strike Fighter, a highly technical stealth fighter that is the 
Pentagon's largest and most costly acquisition program.
    Since the F-35 program began more than 20 years ago, the 
Department of Defense has spent more than $350 billion on its 
development. Total cost to sustain the program are estimated at 
more than $1 trillion.
    Unfortunately, this expensive program has been plagued by 
challenges for years, including major problems with maintenance 
of the aircraft. This hearing will address the money, time, and 
manpower our military is being forced to spend to address 
problems with equipment logs for spare parts from the primary 
contractor, Lockheed Martin.
    In June 2019, the DOD inspector general found that over a 
three-year period more than 15,000 spare parts for the F-35 
lacked an electronic equipment log that maintains important 
information on the history of the spare part and the hours 
flown.
    This information is critical for the military to determine 
the age of a part and whether it is safe to keep using. In late 
2019 and early 2020, committee staff from the majority and the 
minority visited multiple military bases and interviewed 
personnel who maintained the F-35 fleet.
    During these visits, staff confirmed that the problems 
identified by the IG still have not been resolved. This is 
unacceptable.
    As a result of Lockheed Martin's failure to provide spare 
parts that meet contract requirements, the military has been 
forced to divert personnel, to troubleshoot these issues, and 
use extensive work arounds to keep F-35 planes flying, and this 
costs American taxpayers millions of dollars they should not 
have to pay.
    For example, last year the IG estimated that more than $300 
million was spent on additional labor costs between 2015 and 
2018 as a result of Lockheed Martin's failure to provide spare 
parts with electronic logs.
    The inspector general estimates that taxpayers will have to 
continue paying up to $55 million a year if we do not fix these 
problems. That does not even include an additional $10 million 
in unwarranted and sensitive payments Lockheed Martin received 
in 2017 and 2018.
    Since then, the Defense Contract Management Agency has 
refined this estimate to determine how many missing and delayed 
electronic logs can be attributed specifically to Lockheed 
Martin.
    After this process, the Defense Contract Management Agency 
determined that Lockheed Martin is responsible for at least 
$183 million in missing and delayed electronic logs from 2015 
to early 2020.
    That is $183 million that the American taxpayers were 
forced to pay because Lockheed Martin failed to meet the 
requirements of its contract.
    That is why today's hearing is so important. This money 
belongs to the American people. These are funds that could have 
been used to train our war fighters, upgrade older airplanes, 
or support service members and their families.
    In the 2020 National Defense Authorization Act, Congress 
required DOD to seek, and I quote, ``compensation for costs 
incurred by the Department of Defense as a result of the 
contractor's failure to deliver compliant ready-for-issue spare 
parts under the contract,'' end quote.
    I believe Lockheed Martin needs to pay this money back. 
Lockheed Martin is currently in negotiations with DOD to 
compensate the government for all the defective spare parts it 
provided.
    It is imperative that Lockheed acknowledge that it failed 
to meet contract requirements and pay back the American people 
for these failures.
    Lockheed is going to tell us that they have made 
improvements to ensure F-35 parts arrive on base with 
electronic logs. Improvements have been made, but parts are 
still being delivered without electronic logs, and missing and 
corrupt electronic logs occur throughout a spare part's 
lifecycle, not just when they are delivered to a base.
    In documents provided to the committee, DOD itself 
identified nine points of failure in the life cycle of a spare 
part. You are also going to hear that missing electronic logs 
have never resulted in an accident or a fatality, and that is 
very good news. So far.
    But the Government Accountability Office warned that every 
time DOD disregards a warning about a missing electronic log, 
military personnel are at risk of ignoring real problems with 
that aircraft. We cannot simply hope that these accidents never 
occur. These problems must be addressed for our military 
personnel and we must address it now.
    The U.S. Government is a major client of Lockheed Martin. 
In 2019 alone, Lockheed expected to earn $41 billion in revenue 
from the U.S. Government, business paid for by the American 
taxpayers. For that much money we can expect Lockheed to 
deliver products that work and that keep our service members 
safe. Anything else is unacceptable.
    I also plan to look at whether legislation is needed to 
ensure that F-35 is meeting performance expectations.
    I want to thank our witnesses for testifying on this 
important issue and I really want to thank Ranking Member Comer 
and his staff for their cooperation and assistance on this 
hearing and the numerous meetings that we had beforehand. This 
truly is a bipartisan investigation.
    I now yield to the distinguished ranking member from the 
great state of Kentucky for his opening statement.
    Mr. Comer. Well, good morning, and thank you, Madam Chair, 
for those nice words and for holding this important hearing.
    I appreciate each of our witnesses here today and I want to 
extend my personal thank you to Lieutenant General Fick for his 
continued service to this country and to Ms. Ellen Lord for all 
her hard work at the department.
    I want to note that Mr. Ulmer wished to be here today, but 
the Democrat majority declined that request and forced him to 
testify virtually. I understand the current public health 
situation but I truly believe it to be vitally important to 
hear from witnesses in person.
    Further, since the majority began an investigation into 
Lockheed Martin, I feel it is inappropriate for their 
representative to be questioned virtually.
    Even though the minority did not invite a witness to this 
hearing, I fear that what we see today could be used to 
suppress future minority participation. We have seen denial of 
minority witnesses in the Select Subcommittee.
    It is important that this committee operate in a fair and 
equitable manner and I ask the chairwoman to commit to give all 
future witnesses the choice to appear in person if they wish 
and not force their virtual testimony.
    But today we are here to discuss the F-35 fighter jet, the 
most advanced weapons system in the world which brings 
significant war fighting capabilities to our great military.
    The three variants are used by the Air Force, Marines, and 
the Navy to fly missions without detection by enemy radar and 
are equipped with sophisticated electronic components that aid 
the pilot in effectuating his or her mission.
    These jets let us gather information, engage targets at 
longer ranges with sophisticated precision-guided munitions 
while avoiding detection.
    These planes don't come cheap, and although the cost per 
plane is always decreasing, we must be vigilant to ensure that 
the government is using all the tools in its belt to keep costs 
down while maintaining a mission-ready F-35 fleet.
    Even though the cost to acquire an F-35 aircraft is 
significant, that is not the end of the story. Our military 
must keep that plane mission ready while performing routine 
maintenance and replacing parts when their life cycle is over.
    The cost of this sustainment is significant. The Department 
of Defense inspector general found that many spare parts were 
delivered to the military lacking or with a defective 
electronic equipment logbook, or EEL, meaning that the spare 
parts were not considered ready for issue.
    Even though these parts are genuine and ready for use on 
the aircraft, the inability to track the part with the EEL 
means that flight crews have to manually track those parts for 
wear and tear, which can lead to increased costs, human error, 
and potentially a threat to life and safety.
    Fortunately, the government and Lockheed Martin entered 
into a massive collaborative effort to reduce the incidents of 
nonready-for-issue spare parts. I am encouraged to hear 
progress is being made both in reducing the frequency of EEL 
deficiencies and in identifying previous deficiencies.
    If there are instances of unsatisfactory contract 
performance, those issues must be remedied. But we must also 
find the root cause. Government contracting can be burdensome 
and expensive, driving innovative companies away from the 
market.
    We must work together to ensure we get the best products 
quickly and at the least expensive to the taxpayer. Increasing 
commercial item acquisition, competition, transparency and end-
user input may all help with that.
    I look forward to hearing from our witnesses today about 
their hard work supporting the F-35 fleet and ways that 
Congress can help increase contracting efficiency.
    With that, I yield back.
    Chairwoman Maloney. Thank you.
    Now I would like to introduce our witnesses. Our first 
witness today is the Honorable Ellen Lord, who is the under 
secretary for acquisitions and sustainment at the Department of 
Defense.
    Then we will hear from Lieutenant General Eric T. Fick, who 
is the program executive officer of the F-35 Joint Program 
Office at the Department of Defense.
    Next, we will go to Ms. Diana Maurer, who is the director 
of defense capabilities and management at the Government 
Accountability Office.
    We will also hear from Ms. Theresa Hull, who is the 
assistant inspector general at the Department of Defense, 
Office of Inspector General.
    Finally, we will go to Gregory M. Ulmer, who is the vice 
president and general manager of the F-35 Lightning II Program 
at Lockheed Martin Corporation.
    The witnesses will be unmuted so that they can be sworn in. 
Please raise your right hand.
    Do you swear or affirm that the testimony you are about to 
give is the truth, the whole truth, and nothing but the truth, 
so help you God?
    [Chorus of ayes.]
    Chairwoman Maloney. Let the record show that the witnesses 
answered in the affirmative.
    Thank you, and without objection, your written statements 
will be made part of the record, and with that, Under Secretary 
Lord, you are now recognized for your testimony.

 STATEMENT OF ELLEN LORD, UNDER SECRETARY FOR ACQUISITIONS AND 
            SUSTAINMENT, U.S. DEPARTMENT OF DEFENSE

    Ms. Lord. Good morning.
    Chairwoman Maloney, Ranking Member Comer, and other 
distinguished members of the committee, thank you for the 
opportunity to update you on the department's F-35 sustainment 
efforts to improve the F-35 ready-for-issue parts for the war 
fighter and to ensure comprehensive oversight of our contractor 
support.
    I am pleased to be joined by my fellow witnesses today to 
brief the committee on the progress the department has made on 
these issues.
    The F-35 program is a key enabler of all three pillars of 
the National Defense Strategy: first, rebuilding military 
readiness as we build a more lethal joint force; second, 
strengthening alliances as we attract new partners; and third, 
reforming the department's business practices for greater 
performance and affordability.
    The fifth-generation stealth and battlefield networking 
capabilities clearly delivers the lethality needed to meet war 
fighter requirements.
    As such, our international partner nations and foreign 
military sales customers have chosen the F-35 to be at the core 
of their future airpower planning.
    Last, the F-35 program is a focus of the department's 
reform efforts to provide affordable war fighter capability. 
Today, I would like to focus my remarks on three main topics to 
address congressional concerns: increasing accountability 
within the F-35 sustainment enterprise, the department's 
management response to the DOD inspector general's report on 
ready-for-issue parts, and my efforts to promote effective 
oversight within the F-35 program.
    A core focus area of my tenure as undersecretary for 
acquisition and sustainment has been strengthening 
accountability within the acquisition systems and, 
particularly, for the F-35 enterprise.
    The department has made significant improvements in fleet 
availability over the past year. The department currently uses 
two main measures of fleet availability for the F-35: mission-
capable rate and full mission capable rate. The department has 
increased the overall mission-capable fleet for the F-35 from, 
roughly, 60 percent at the beginning of the year to nearly 70 
percent in June.
    The department has similarly improved the full mission-
capability fleet rate from below 35 percent at the beginning of 
the year to nearly 40 percent in June.
    While more work remains to be done to meet war fighter 
needs, these improvements in fleet availability, driven 
primarily by improvements in maintainability and supply chain 
efficiency, demonstrate the department's efforts and are having 
a significant and measurable impact.
    On the ready-for-issue parts concerns raised by the DOD 
inspector general, their July 2019 report found that the 
department did not ensure that the contractor was providing 
spare parts in a ready-for-issue state.
    The report also indentified that the department did not 
ensure that payments to Lockheed Martin were properly tied to 
performance against ready-for-issue metrics.
    The department concurred with all of the Department of 
Defense's inspector general's recommendations and has 
aggressively implemented corrective actions based on a followup 
status report provided to DOD IG in January 2020 and, 
subsequent, conversations with DOD IG representatives.
    The issues raised in the DOD IG report are primarily issues 
of electronic records management related to known deficiencies 
and the ability of the F-35 Autonomic Logistics Information 
Systems, or ALIS's, ability to accurately and reliably track 
and transmit electronic equipment log, EEL, files.
    The department has taken near-term action to address key 
degraders of ready-for-issue, or RFI, rate. But the long-term 
solution to the problem depends on the already underway effort 
to replace ALIS with a more stable capable system.
    As a result of those near-term actions, the department has 
increased the RFI rate at Hill Air Force Base, Luke Air Force 
Base, and Marine Corps Air Station at Yuma from 43 percent in 
February to exceeding the RFI threshold metric rate of 70 
percent in every month since April, achieving a high of 83 
percent in June.
    In May, this committee spoke to unit commanders from the 
three services about the effects that ready-for-issue parts 
issues were having on the units under their command.
    I have also spoken directly with these F-35 commanders to 
hear their feedback and suggestions for improvement.
    As a result, I will ensure that corrective actions will 
drive a system architecture and capability that meets war 
fighter needs and enables our maintainers to spend their time 
keeping aircraft available rather than manually working around 
the flawed electronic records systems.
    On January 14, 2020, I announced to the House Armed 
Services Committee members the transition from ALIS to a new 
government-owned system, Operational Data Integrated Network, 
called ODIN.
    The department will introduce the first tranche of ODIN 
capability fleet wide by the end of 2021. In the interim, the 
department has been working to develop solutions to the legacy 
ALIS system to improve EEL's accuracy, tracking, and 
transmission performance to reduce maintenance work arounds and 
to mitigate potential risks to the fleet.
    The DOD IG's report also identified that existing contract 
terms were not sufficient to hold the prime contractor 
accountable for the EEL's deficiencies. DCMA has been working 
closely with the F-35 JPO to negotiate fair consideration to 
the government from the prime contractor for these 
deficiencies.
    DCMA notified Lockheed Martin of its intent to seek 
consideration on April 2 and formal discussions began on May 7. 
DCMA's task is to seek consideration for non-RFI parts 
delivered between the beginning of 2015 and April 30, 2020, and 
to incorporate terms into the next annualized statement 
contract.
    The F-35 JPO has also been working to negotiate more 
comprehensive contract terms in future sustainment contracts to 
ensure the contract has defined EEL and RFI metrics to measure 
performance.
    As we have worked to negotiate contracts to better align 
incentives with performance and accountability, the department 
recognizes the need to enable more robust and effective 
oversight on major issues that decrease availability and 
increase cost.
    My staff and I are personally engaged on these issues in a 
number of venues. I have been meeting weekly with F-35 JPO 
service and other stakeholder leadership to ensure management 
oversight.
    Furthermore, I have been meeting monthly with the vice 
chairman of the Joint Chiefs of Staff and military service 
leaders to drive performance improvement.
    I have also been meeting regularly with the CEO of Lockheed 
Martin to address key issues facing the F-35 enterprise.
    I am keenly aware of congressional interest in the F-35 
program and my staff has been working closely with the 
congressional Defense Committees to ensure that they receive 
timely information on key issues of interest.
    My staff has provided quarterly updates to the 
congressional Defense Committees on a range of F-35 
development, production, and sustainment issues, including the 
status of the ALIS to ODIN transition.
    I appreciate the opportunity to have these meaningful 
discussions with this committee as we work together to 
strengthen the F-35 enterprise and to continue to provide safe, 
reliable, and capable F-35s for our war fighters.
    Thank you very much for your time and I look forward to 
answering your questions.
    Chairwoman Maloney. We will now turn to Lieutenant General 
Fick.
    Lieutenant General Fick, you are now recognized.

    STATEMENT OF ERIC T. FICK, LIEUTENANT GENERAL, PROGRAM 
EXECUTIVE OFFICER, F 0935 JOINT PROGRAM OFFICE, U.S. DEPARTMENT 
                           OF DEFENSE

    Mr. Fick. Chairwoman Maloney, Ranking Member Comer, and 
distinguished members of the committee, it is my distinct honor 
to serve as your F-35 program executive officer and program 
director, leading the F-35 enterprise through the development, 
production, and sustainment of this amazing air system.
    On behalf of the 2,100 men and women of the F-35 Lightning 
II Program, it is my privilege to update you on the hard work 
that continues daily across the F-35 global enterprise.
    I am encouraged by the real progress we have made as an 
enterprise, but remain keenly aware that much work remains 
before us. In the past year, our program has matured rapidly.
    Annual production rates reached an all-time high. We 
delivered our five-hundredth aircraft. Unit costs continue to 
come down and mission-capable rates continue to rise.
    We remain committed to delivering the capabilities our war 
fighters need at a price our taxpayers can afford. Over the 
past six months, we reshaped the F-35 program office to a 
product-aligned organization with cross-functional talent 
embedded within each project management team.
    I am seeing the benefits of this change through improved 
communication with F-35 stakeholders and rapid issue resolution 
across the organization.
    I have focused this team on four lines of effort to 
continue the positive momentum we have seen in readiness over 
the last year.
    Those four areas are reliability and maintainability, or 
keeping the part on the aircraft longer; supply posture, which 
ensures parts are available; repair capacity, which means the 
capability to repair the part; and finally, repair velocity, 
which means fixing parts quickly to get the jets flying again.
    My remarks today address ready-for-installation, or RFI, 
parts and electronic equipment logs, or EELs, as requested in 
your invitation.
    An F-35 EEL is similar to a digital medical record. It 
tells the story of the part from cradle to grave. Each part 
with an EEL, roughly, 1,000 of the 50,000 parts on an F-35, is 
managed by the F-35 Autonomic Logistics Information System, or 
ALIS.
    When a part arrives with an incorrect or missing EEL, that 
part is not ready for installation, or non-RFI. It takes a 
significant effort and time for maintainers to reconstruct the 
part history and create a digital record for that part.
    This activity diverts time from scheduled maintenance, 
increases the probability of human error and in costs to the 
program. The bottom line is we must receive our parts on time 
and with all the required identification markings and 
electronic records.
    Aided by insights from the Government Accountability 
Office, the DOD inspector general, and my active dialog with 
commanders in the field, we are aggressively targeting the root 
cause of EEL and non-RFI parts issues.
    We have improved contracting language to ensure that 
industry compensation is based upon delivery of parts that are 
ready to be installed.
    We worked closely with the Defense Contract Management 
Agency to assess the impacts from parts with missing or 
incomplete EELs and are evaluating what, if any, excess 
incentive fee may have been paid to Lockheed Martin when our 
war fighters compensated for non-RFI parts.
    My team conducted site visits and quality inspections, 
working side by side with maintainers on the ground. We 
developed corrective action plans with industry to address 
supply system degraders and we are monitoring to ensure that 
the supply chain is responsive to these corrective actions.
    We updated ALIS to improve parts accountability, redesigned 
ALIS modules to make data entry more intuitive, and revamped 
training and quality oversight at F-35 locations to catalog 
discrepancies and reduce human error.
    These measures are paying off. As Ms. Lord mentioned, last 
month our EEL parts ready-for-install rate reached 83 percent 
with a target goal of 90 percent this year.
    Beginning in 2021, the contracted requirement for parts 
ready-to-issue will be 99 percent. To be clear, we heard the 
DOD IG. We heard the GAO. We are taking actions, and these 
actions are making a difference.
    In the next two years, the program will also sunset the 
Autonomic Logistics Information System and introduce a more 
modern sustainment management tool called the Operational Data 
Integrated Network, or ODIN.
    Led by the government, ODIN starts with a new underlying 
integrated data environment and brings modern hardware and 
software to the F-35 sustainer, and will leverage agile 
development practices and interactions in response to the 
evolving needs of our customers and global operations.
    ODIN will decrease maintenance workload, improve readiness 
levels, and be portable and easily deployable.
    My team of experts and I continue to work tirelessly to 
deliver the war fighting capability our Nation needs. We will 
do it smartly, efficiently, and as cost effectively as 
possible, and we will do it with the highest regard for those 
we serve and those who put their trust in us.
    As the son of an airman and the father of two airmen, 
nothing is more important to me than giving our service members 
the tools they need to do their job in harm's way and to bring 
them back home safely every time.
    I appreciate the opportunity to appear before you today and 
I look forward to your questions.
    Chairwoman Maloney. Thank you.
    Next is Ms. Maurer.
    Ms. Maurer, you are now recognized.

STATEMENT OF DIANA MAURER, DIRECTOR, GOVERNMENT ACCOUNTABILITY 
          OFFICE, DEFENSE CAPABILITIES AND MANAGEMENT

    Ms. Maurer. Thank you very much.
    Good morning, Chairwoman Maloney, Ranking Member Comer----
    Chairwoman Maloney. We can't hear you right now. You have 
to speak up louder.
    Ms. Maurer. Good morning, Chairwoman Maloney, Ranking 
Member Comer, and other members and staff. I am pleased to be 
here--pleased to testify today about GAO's body of work on the 
Autonomic Logistics Information System, or ALIS.
    Over the years, we have found a number of significant 
problems and challenges with ALIS, which are summarized in my 
prepared statement for today.
    Most concerning is the lack of trust the pilots, 
maintainers, and commanders have in key aspects of the system. 
Getting ALIS to work requires cultural work arounds and forces 
commanders to assume the risk of allowing planes to fly when 
ALIS says they should stay on the ground.
    Over the past six years, we have issued a series of 
recommendations to DOD to help address these concerns, and we 
are encouraged that Under Secretary Lord and General Fick are 
taking our recommendations seriously as they chart a new path 
ahead, transitioning from ALIS to ODIN, and as you have heard, 
ODIN is the fix for ALIS.
    So, rather than walk through the list of problems we have 
identified with ALIS over the years, I will instead focus on 
key questions stemming from those findings that can assist 
congressional oversight.
    Question one, what is ODIN supposed to do? That was not 
clearly defined for ALIS. There was general agreement that it 
should diagnose maintenance problems and form a global 
logistics chain, reduce sustainment costs, and help keep 
aircraft--put more aircraft in the air.
    But years ago, DOD gave Lockheed essentially no specific 
requirements beyond create a logistics information system and 
then did not adequately build users and to develop a process.
    As the system evolved over time, there are often gaps 
between what users needed and what was delivered. So, for 
example, having a deployable system meant one thing to Lockheed 
and something very different to the war fighter.
    To avoid similar disconnects in the future, it is important 
to clearly define and agree on what ODIN is meant to do 
informed by user needs.
    Which leads to the second question. After defining what 
ODIN should do, how will you know it has done it? Six years 
ago, you recommended DOD develop ways to determine whether ALIS 
was performing as intended. That never happened.
    Instead, over the years we have heard consistently that 
ALIS has a lot of problems but it is getting better. However, 
lacking some kind of measures, it was never clear what success 
looked like or how far off it was.
    The F-35 program can learn from its history by developing a 
clear understanding of how ODIN impacts mission execution. Is 
it helping putting planes in the air or keeping them on the 
ground, and how well is ODIN meeting the needs of pilots, 
maintainers, and commanders?
    That leads to the third question. Who is going to make this 
happen? Years ago, DOD handed responsibility for F-35 
sustainment, including ALIS, to Lockheed. That is not 
inherently bad and, if done properly, it can save money and 
lead to better outcomes.
    But at the time, DOD did not think through of the 
downstream applications of giving nearly complete control of 
software, hardware, and intellectual property to the 
contractor, and as DOD pivots now from ALIS to ODIN, there is 
an opportunity to reconsider who will do what.
    That includes DOD's access to technical data, whether 
maintainers will be able to correct missing or incorrect 
information without having to pay a contractor, and how 
Lockheed, the Joint Program Office, the U.S. military services, 
and international partners will work together to implement, 
use, maintain, and upgrade ODIN.
    Fixing ODIN--fixing ALIS by transitioning to ODIN will not 
be quick and it will not be easy. Fully implementing GAO's 
recommendations will help DOD's efforts in its duty and its 
ongoing efforts.
    However, this transition from ALIS to ODIN is only one item 
on a much longer list of F-35 sustainment challenges. The F-35 
is the foreseeable future of combat aviation for this country 
and many of our allies, but it cannot achieve its full 
potential until the program can address sustainment challenges 
associated with ALIS, spare parts, operating costs, supply 
chain, and mission capability.
    Chairwoman Maloney and other members, your continued focus 
and action on sustainment issues, not just production, can help 
ensure the F-35 is able to meet our national security goals for 
decades to come.
    Thank you for the opportunity to testify this morning and I 
look forward to your questions.
    Chairwoman Maloney. Thank you.
    Next is Ms. Hull.
    Ms. Hull, you are now recognized.

 STATEMENT OF THERESA HULL, ASSISTANT INSPECTOR GENERAL, U.S. 
     DEPARTMENT OF DEFENSE, OFFICE OF THE INSPECTOR GENERAL

    Ms. Hull. Chairwoman Maloney, Ranking Member Comer, and 
distinguished members of the committee, thank you for inviting 
me to appear before you today to discuss the Department of 
Defense Office of Inspector General report on F-35 ready-for-
issue spare parts and sustainment performance incentive fees.
    I am the assistant inspector general for audit, 
acquisition, contracting, and sustainment, the DOD IG 
directorate that conducted the audit of the F-35 RFI spare 
parts and sustainment performance incentive fees.
    With the DOD expecting to spend over $1 trillion to operate 
and maintain the fleet for 66 years, our report findings 
highlight the importance of ensuring that F-35 program costs 
are affordable and sustainable long term.
    Lockheed Martin is required to deliver RFI F-35 spare 
parts. RFI spare parts should be ready for aircraft maintenance 
personnel to install on the aircraft and should be assigned an 
electronic equipment logbook, or EEL.
    During the audit, we found that Lockheed Martin has been 
providing a significant number of non-RFI spare parts to F-35 
sites since 2015 when sustainment efforts began.
    Despite being aware of this problem, the Joint Program 
Office did not resolve the issue or require DOD personnel to 
track the number of non-RFI spare parts received. DOD personnel 
submitted more than 15,000 action requests from December 2015 
to June 2018 to correct the non-RFI issues.
    To maintain the volume of non-RFI parts that Lockheed 
Martin provided, F-35 sites reassigned DOD personnel to focus 
full time on informally resolving the EEL issues.
    In some cases, this preempted the need to create an action 
request and, therefore, created an inaccurate impression that 
the issue of Lockheed Martin delivering the parts without EELs 
was improving.
    If reassigned DOD personnel were unable to resolve the 
problem, they still had to contact Lockheed Martin 
representatives or submit an action request incurring 
additional charges.
    As a result, the DOD received non-RFI spare parts and has 
spent up to $303 million between 2015 and 2018 on labor costs 
for DOD personnel to bring the spare parts to RFI condition and 
will continue to pay an estimated $55 million annually until 
Lockheed Martin consistently delivers RFI spare parts that meet 
the contract requirements.
    The DOD paid performance incentive fees on the sustainment 
contracts based on inflated and unverified F-35 aircraft 
availability hours. Due to the number of non-RFI spare parts 
that Lockheed Martin provided to F-35 sites, the JPO issued 
guidance in October 2018 allowing aircraft to be flown with 
spare parts that had EEL issues, contradicting previous JPO 
guidance that required spare parts with EEL issues to be 
quarantined and not used until the issues were resolved.
    Personnel at the F-35 sites resorted to using white boards 
and spreadsheets to track flight hours when non-RFI spare parts 
were used on aircraft.
    The DOD's use of local guidance and ad hoc manual processes 
allowed aircraft to fly and complete missions instead of the 
DOD grounding aircraft due to receiving non-RFI parts.
    This practice inadvertently inflated aircraft availability 
hours. According to JPO officials, on any given day 50 percent 
of the F-35 fleet is flying with non-RFI spare parts.
    However, the Joint Program Office does not require F-35 
site personnel to collect aircraft availability hours and track 
the hours that aircraft fly with non-RFI spare parts installed.
    Therefore, the DOD has no way to determine the total number 
of hours the F-35 has flown with non-RFI spare parts. Lockheed 
Martin is receiving incentive fee payments that were earned 
through the use of DOD labor rather than the contractors' 
ability to meet its performance metrics.
    As a result, the JPO potentially overpaid performance 
incentive fees on the 2017 and 2018 sustainment contracts. 
Furthermore, the JPO relied solely on contractor-reported 
information on availability hours to pay Lockheed Martin 
performance incentive fees for 2017 and 2018.
    The JPO compared availability hours on one Lockheed Martin-
generated report to another Lockheed Martin-generated report 
because the JPO did not track or collect aircraft availability 
hours.
    As a result, the DOD has potentially overpaid $10.6 million 
in performance incentive fees. F-35 aircraft are already 
proving to be more expensive to sustain than originally 
planned.
    If the DOD and Lockheed Martin do not address the concerns 
discussed, issues related to non-RFI spare parts will continue 
to compound as the fleet expands, escalating sustainment costs, 
reducing mission-capable rates, and increasing the life and 
safety risks that occur when life-limited non-RFI spare parts 
are installed and flown without an EEL.
    Additionally, until the JPO independently collects data to 
verify contractor performance, the DOD may continue to overpay 
performance incentive fees on the 2018 and future sustainment 
contracts.
    Thank you for the opportunity to testify this morning and I 
look forward to your questions.
    Chairwoman Maloney. We will now conclude with Mr. Ulmer.
    Mr. Ulmer, you are now recognized.

STATEMENT OF GREG ULMER, VICE PRESIDENT AND GENERAL MANAGER, F 
     0935 LIGHTNING II PROGRAM, LOCKHEED MARTIN CORPORATION

    Mr. Ulmer. Thank you, Chairwoman.
    Chairwoman Maloney, Chairman Lynch, Ranking Member Comer, 
Ranking Member Grothman, distinguished members of the 
committee, I appreciate the opportunity to testify on behalf of 
Lockheed Martin and our industry teammates to provide you with 
an update on the F-35 program.
    My preference would be to testify in person, but as you 
know, I have been asked to speak to you virtually due to COVID.
    I want to thank you for your interest in the program and 
commitment to ensuring it delivers the best value to the 
taxpayer but, more importantly, to our war fighters.
    As the F-35 vice president and general manager, I 
appreciate the opportunity to meet with Congress and engage in 
meaningful dialog concerning the program.
    At this time, I would like to submit my full written 
statement and ask that it be made part of the hearing record.
    Now I would like to provide a brief update on the state of 
the F-35 program. The committee has asked specifically that I 
address F-35 sustainment, focusing on electronic equipment 
logbooks, or EELs, as well as ready-for-issue, or RFI, parts.
    These are important issues for the maintainers on the 
flight line who keep the F-35 flying, and we remain steadfast 
in our commitment to make their job seamless and without issue.
    The F-35 stealth technology, supersonic speed, advanced 
sensor suite, weapons capacity, and increased range make it the 
most lethal, survivable, and connected aircraft operating in 
the world today.
    We have delivered more than 540 aircraft, trained more than 
a thousand pilots and 9,000 maintainers and flown nearly 
300,000 flight hours.
    Currently, the F-35 operates from 20 bases and force ships 
with nine nations operating the jets from their own home soil. 
Five countries have flown operational missions including the 
United States Air Force, which has been in continuous 
deployment overseas for more than a year.
    War fighters tell us the aircraft provides game-changing 
capabilities, providing unprecedented situational awareness, 
maneuverability, and connectivity.
    The F-35 program is also a powerful economic driver. The 
program currently has 1,900 suppliers, 1,800 of which are in 48 
states plus Puerto Rico, generating 254,000 jobs, which results 
in a U.S. economic impact of $49 billion annually.
    The F-35 program continues to make great strides in the 
area of sustainment. We quickly scaled from development to 
production to fielding at an unprecedented rate.
    In the last three years, Lockheed Martin has delivered more 
than 300 aircraft and invested over $270 million improving our 
supply chain through data analytics and automation along with 
leveraging both production and sustainment elements to improve 
performance at reduced cost.
    Lockheed Martin and the JPO have been working diligently to 
improve sustainment performance with an emphasis on 
affordability.
    Within the last 24 months, the mission-capable rate for the 
fleet has increased from the low 50 percentile to the mid-70's.
    Additional sustainment metrics that measure the health of 
maintenance due to supply and other associated maintenance 
activities have also significantly improved.
    Over the past five years, Lockheed Martin has reduced the 
cost per flying hour that we control by approximately 40 
percent and we project that with our further investments we 
will be able to drive that down--drive down our costs per 
flying hour aspect another 50 percent over the next five years.
    We acknowledge EELs have been a challenge, but significant 
improvements have been realized. Lockheed Martin has applied 
diagnostic and engineering resources to resolve the issue.
    These challenges do not indicate that a part is flawed nor 
are EEL issues caused exclusively by industry alone. U.S. 
services have confirmed a market improvement in ready-for-issue 
parts in 2020.
    These gains are a direct result of the concerted joint 
government industry effort to identify root cause and implement 
corrective actions. Substantial progress has been achieved 
since the release of the DOD IG report more than a year ago.
    Since then, Lockheed Martin has demonstrated a 45 percent 
point improvement in EEL performance while simultaneously 
growing the fleet by more than a third.
    This year, RFI parts have improved to approximately 83 
percent. We will accelerate two more rounds of improvements 
this year, which we expect will result in the 90 percent RFI 
threshold targets specified by our customer.
    Lockheed Martin is committed to transparency and 
partnership and the resolution of the challenges associated 
with EELs and we will continue to be compliant with our 
contractual obligations on the program and look forward to a 
continued partnership with the committee, the DOD, and the 
Joint Program Office to resolve this issue.
    In conclusion, the F-35 is performing and operating as we 
envisioned from an operational sustainment perspective. The F-
35 has proven itself in combat and is quickly becoming the 
centerpiece of the U.S. military fighter fleet and that of our 
allies.
    It is a privilege to lead the F-35 industry team and, on 
behalf of Lockheed Martin, I thank the men and women of our 
U.S. services and their families for their selfless service to 
our Nation.
    Again, thank you for this opportunity to update you on the 
F-35 program. I am happy to answer any questions you may have.
    Thank you.
    Chairwoman Maloney. I want to thank all the panelists, and 
I do want to respond to the items that my friend, 
Representative Comer, raised, and we are in person today 
because DOD insisted on testifying in person. So, the witnesses 
in person are all from DOD and we could only have three to 
conduct the hearing safely.
    We did try to work with your staff and the medical staff of 
the Capitol to have in-person hearings as you requested. It was 
very difficult to make this happen and meet the health 
standards to ensure people don't get infected.
    One thing I know from New York is we don't know enough 
about this virus. I have talked to friends and they seem fine. 
The next day they are dead.
    They told us it doesn't affect children. One day 35 
children came down with it. One of them died. And you hear the 
heartbreaking stories of medical professionals who believe they 
are decontaminated. They come home and they infect their entire 
families.
    So it is a deadly, deadly disease and we have to put health 
first. But the next hearing we could have Lockheed in person 
and have DOD remotely. I am going to instruct the staff to work 
even harder with your staff to meet the accommodations and the 
concerns that you have.
    I deeply respect the position you hold and want to work 
with you. I think we are united in wanting to have a strong 
military, a strong private sector, a strong government, all 
getting a quality product and protecting taxpayers' money.
    So, I sincerely would like to try to accommodate and next 
time we will have Lockheed testify in person and others will be 
remotely.
    So right now, I would like to recognize myself for five 
minutes.
    Ms. Hull, according to the DOD IG report issued last year, 
they said that DOD incurred more than $300 million, a 
staggering amount, in excess labor costs between 2015 and 2018 
due to Lockheed Martin not delivering spare parts that met the 
requirements of the contract.
    The IG also estimated if these problems go unaddressed that 
it will continue to pay the department, DOD, $55 million each 
year in extra labor cost.
    Your office recommended that the Defense Department seek 
compensation from Lockheed Martin dating back to 2015. Why did 
your office recommend that DOD seek to be reimbursed for these 
parts?
    Ms. Hull. Chairwoman, we recommended that DOD be--seek 
reimbursement for that because by definition in the contract 
the parts should have arrived ready for issue, which means they 
should have been ready to go on the aircraft along with an 
electronic equipment log book.
    So, to keep in terms with the contract, our recommendation 
speaks to the need for compensation.
    Chairwoman Maloney. OK. And according to the IG report, the 
Defense Department previously sought payment from Lockheed 
Martin for these electronic log defects in November 2018 but 
Lockheed Martin, and I quote, ``refused to sign the proposed 
modification on the sustainment contract.''
    Ms. Hull, is that right?
    Ms. Hull. Based on the information that we had at the time, 
that is true.
    Chairwoman Maloney. And according to the IG's report, based 
on a similar contract modification the proposed change would 
have cost Lockheed Martin $7,000 for each problem identified 
with a spare part and, according to DOD, Lockheed Martin 
refused to sign the modification because it would cost less to 
fix each individual problem than it would to reimburse the 
government.
    Is that correct?
    Ms. Hull. The range of cost per EEL issue is in $7,000 to 
$11,000 and, yes, according to what we found, as from our work, 
Lockheed Martin found that it would be cheaper to address this 
on a sustainment contract.
    Chairwoman Maloney. OK.
    Lieutenant General Fick, let us turn our attention to you. 
Congress mandated the 2020 National Defense Authorization Act 
that the departments follow the IG's recommendation by seeking 
compensation for defective parts, and I understand the 
discussion between Lockheed Martin and the Defense Contract 
Management Agency began in April and that DOD worked with 
Lockheed to identify specific problems between 2015 and 2020 
that are attributable to Lockheed Martin.
    What is the current status of the negotiations with 
Lockheed Martin now?
    Mr. Fick. Those discussions are ongoing as we speak. My 
understanding is that the team has come to an agreement 
relative to the magnitude of the issue and the problem but that 
the consideration offered or demanded has not yet been agreed 
to.
    Chairwoman Maloney. OK.
    And, Mr. Ulmer of Lockheed Martin, Lockheed Martin is 
responsible for fully executing the contract that American 
taxpayers are paying for and that our military is counting on 
your company to safely and effectively deliver.
    We don't need further delays or excuses from Lockheed 
Martin about these problems. Will you commit to paying the 
Defense Department back for every defective electronic log in 
the Defense Contract Management Agency that has been 
identified?
    [No response.]
    Chairwoman Maloney. Mr. Ulmer?
    Counsel. They lost the audio from us so you may have to 
repeat it.
    Chairwoman Maloney. OK. Mr. Ulmer, can you hear me now? He 
has left, I guess.
    Counsel. No, he is on. He is on. They are--they have 
problems with our audio.
    Chairwoman Maloney. OK.
    Counsel. Go on to the next question and come back.
    Chairwoman Maloney. OK. All right. We are going to go to 
another question. But my questions are of Mr. Ulmer.
    So, I now yield to the ranking member for his questioning.
    Mr. Comer. Thank you.
    Ms. Lord, I understand the EELs are a major issue, but what 
are some other issues in the program and how are you and the 
department responding to them?
    Ms. Lord. From a sustainment point of view, we are trying 
to look at Lockheed Martin's performance, particularly in terms 
of earning incentive fee by implementing some of the measures 
we took on the production program where we, very clearly, link 
what is goodness for the war fighter to what are those 
incentives that are paid. So, that is contractually what we are 
doing.
    Second, EELs are a significant issue, but we do have a 
challenge with visibility in parts being transferred, also in 
terms of maintaining warehouses and making sure that obsolete 
equipment is moved out. So, there are a variety of other things 
as well.
    Mr. Comer. General Fick and Ms. Lord, we have heard from 
servicemen on the ground that they are following DOD and JPO 
directives to fly aircraft that may be missing an EEL.
    I believe that--well, I trust our commanders to make the 
proper decision regarding the health and safety of our pilots 
and our jets.
    But I believe that Lockheed is incentivized to keep jets in 
the air and keep them at least partially mission capable, 
notwithstanding the directives from DOD and JPO.
    If a jet were missing an EEL, would it be allowed to fly?
    Mr. Fick. Yes, sir, it could, and let me tell you the 
circumstances under which a jet that is missing an EEL could 
fly, the circumstances in which that EEL does not contain a 
safety--is not associated with a safety-critical part nor a 
life-limited part.
    So, when I spoke with my maintenance group commanders, five 
of them on the phone on Monday of this week, each of them 
confirmed to me that if the EEL--I am sorry, if a part that is 
missing an EEL is safety critical or is life limited in any 
way, that part will not be installed on the aircraft and that 
aircraft will not fly.
    Mr. Comer. So, if a jet were not allowed to fly, would it 
count positively toward aircraft availability or the mission-
capable rate?
    Mr. Fick. It would count negatively.
    Mr. Comer. OK. Should a contractor be incentivized for 
performance that would otherwise not happen without the hard 
work of U.S. Government personnel such as allowing a plane to 
fly without an EEL?
    Mr. Fick. Sir, in general, I would say no. But at the end 
of the day, we put blue suiters and green suiters and brown 
suiters in the cockpit to fly those missions. So, no aircraft 
takes off without some form of government assistance. The magic 
is finding where in the middle--where is the--what is the right 
answer for responsibility.
    Mr. Comer. Ms. Lord, are EELs required by a contract to be 
delivered by Lockheed to the government?
    Ms. Lord. Yes, sir, it could.
    Mr. Comer. Is Lockheed delivering EELs intact 100 percent 
of the time?
    Ms. Lord. No.
    Mr. Comer. Have they failed to deliver just a few parts or 
are we talking thousands of parts?
    Ms. Lord. We are talking significant numbers of parts. I 
believe General Fick can confirm it is thousands.
    Mr. Comer. OK. Is Mr. Ulmer back online yet?
    Mr. Ulmer, can you hear me?
    Chairwoman Maloney. Mr. Ulmer, can we--can we ask you a 
question? Are you online, Mr. Ulmer?
    Mr. Comer. OK. I have two minutes left. All right. I will 
yield back until we get him back online. I had questions as 
well, Madam Chair.
    Chairwoman Maloney. Is he back online now?
    Counsel. He is on. He is on.
    Mr. Comer. Oh, he is on? OK.
    Mr. Ulmer. Madam Chairwoman, can you hear me?
    Mr. Comer. Yes, we can hear you now.
    Chairwoman Maloney. We can hear you but I can't see you.
    Mr. Comer. All right. There we go. Good deal. All right.
    Chairwoman Maloney. OK. Great. You are back. OK.
    OK. Why don't you finish, Mr. Comer, because----
    Mr. Comer. OK. Thank you.
    Mr. Ulmer, when was your last quarterly earnings call at 
Lockheed?
    Mr. Ulmer. Yesterday, Congressman.
    Mr. Comer. How much revenue was reported?
    Mr. Ulmer. I believe $41 billion.
    Mr. Comer. So, that is--what about revenue for all of 
Fiscal Year 2019?
    Mr. Ulmer. I don't have that figure off the top of my head, 
Congressman.
    Mr. Comer. How much is--how much of your revenue is from 
government accounts?
    Mr. Ulmer. I will have to get that information for you and 
provide that, Congressman.
    Mr. Comer. OK. Our research indicates it is----
    Mr. Ulmer. But it is the majority.
    Mr. Comer. Right. Somewhere around 75 percent. Do you know, 
roughly, what percentage of your revenues came from the F-35 
program?
    Mr. Ulmer. Approximately 30 to 40 percent.
    Mr. Comer. OK. With all this profit, why is Lockheed 
failing to fulfill the contract and deliver EELs intact and on 
time?
    Mr. Ulmer. Congressman, those figures are orders and sales, 
not profit, and we are very engaged relative to resolving this 
problem concurrently with our customer.
    Mr. Comer. OK.
    Well, Ms. Lord and General Fick, I look forward to working 
with you all on this issue and continuing our efforts to make 
contracting less burdensome and safeguard the American 
taxpayer.
    I mean, it is--the taxpayers want and expect us to have the 
best military in the world. The Congress is committed to 
ensuring that our troops and our military have the best and 
have everything they need and I, for one, certainly want to 
work with the private sector to ensure that we have the best. 
But we also expect the private sector to deliver on the 
contracts that the American taxpayer expects.
    So, I look forward to working with you and Lockheed through 
this process and, hopefully, we will continue to see 
improvements.
    Madam Chair, I yield back.
    Chairwoman Maloney. Thank you, and I would like to be 
associated with your comments about wanting to see 
improvements.
    We had a prior briefing with the military leaders that were 
running this program and working with the men and women who 
were flying the planes, and I have never seen a military person 
not in combat who was so frustrated, wanting to make--have a 
product that was great for our country and not having the 
support or the technology or even the parts that worked for the 
plane.
    This is a tremendous problem. So, I really want to ask you, 
Mr. Ulmer, will you commit to paying the Defense Department 
back for every defective electronic log the Defense Contract 
Management Agency identified?
    Mr. Ulmer. Congresswoman, it is a complex problem, as we 
have discussed. It is not all associated with Lockheed Martin 
performance. There are many aspects relative to not ready for 
issue.
    This is not simply--this electronic file, we are making--we 
are innovating as we go through this process with our customer. 
This has been a concurrent program. So, we concurrently have 
developed, produced, and sustained this aircraft and the 
products that we utilized to do that.
    An electronic equipment logbook contains quite a bit of 
sophisticated engineering information. It doesn't simply just 
track a part. It includes technical data, graphical data, ITAR 
data.
    It contains a lot of different information. Through the 
business process, there are--there are elements that we can 
corrupt this data. It can be presented that way or a customer 
can miss input information.
    So, there are a lot of complexities relative to the 
electronic EEL book. We have been working wholeheartedly with 
the DCMA and the JPO to resolve and understand these technical 
issues.
    We have seen significant improvement in the last six 
months, in particular--as we have mentioned, an improvement up 
to 83 percent ready for issue--and I am fully committed to 
supporting that continued engagement to resolve those issues, 
going forward.
    I am also committed to meeting with the Defense Contract 
Management Agency as well as the JPO to sit down and reconcile 
the concerns and adjudicate the cost appropriately.
    Chairwoman Maloney. Well, I appreciate your concern. But I 
come from a military family, and every time a pilot gets in 
those planes and flies up into the sky they are risking their 
life.
    And I know many widows and children that have lost their 
father because of faulty equipment and 85 percent isn't good 
enough for the U.S. military.
    It has got to be 100 percent, and a contract is a contract, 
and the contract says you will deliver a plane, which you have 
done beautifully.
    It is a beautiful plane. But it also says that the material 
that is needed to fly that plane has to be delivered, too.
    Our military managers don't want to be sending people up in 
the air when they don't have everything perfectly there that is 
in that contract. That is only fair.
    So, I hope that you will change your mind and at the next 
hearing have an update on how you are now at 100 percent and 
how you have worked out the understanding of this equipment so 
that it is working for the military.
    One of the most heartbreaking things to me in the last 
meeting is that one of the managers said--he said--I can't even 
repeat it. It is too upsetting.
    I would now like to say, Mr. Ulmer, I sent you a letter, or 
Lockheed Martin a letter, on June 18, 2020, and I appreciate 
Lockheed Martin's cooperation so far in producing documents and 
getting back to us with some answers.
    But many documents have not been provided. So, do you 
commit that Lockheed Martin will produce all of the remaining 
documents before the end of the month.
    I must tell you, it is upsetting to me if you can't deliver 
a document I have no trust that you can deliver a plane that is 
going to operate and that has all of the equipment.
    True, it is a complicated plane. You have complicated 
equipment. But the contract for a trillion dollars to maintain 
it, the contract calls for the supportive equipment to be 
delivered and operating, and how can you expect our military to 
respond?
    This is in peacetime. I hate to think what would happen if 
we were in a war and our men and women had to fly a plane that 
didn't have the technology working or the pieces working that 
are supposed to be working with this plane.
    So, this is really, I would say, not just a money issue. I 
think it is a life and death issue, and we have to get this 
plane--what good is a plane that can't fly, according to some 
of the managers, because all the equipment is not working?
    So, I look forward to following up with you on this request 
for the documents and also on the request that Lockheed Martin 
live up to its contract.
    The American people have paid a lot of taxes to live up to 
our contract with producing this important plane. But Lockheed 
is not responding to my requests for documents.
    It is not responding to the military's request for 
equipment that they feel that they need to fly this plane.
    So, I now yield to the distinguished lady.
    Mr. Ulmer. Madam Chairwoman?
    Chairwoman Maloney. I am going to Ms. Norton from the 
District of Columbia. OK.
    Ms. Norton. Thank you, Madam Chair, and I want to thank you 
for this hearing. I want to say, Mr. Ulmer of Lockheed, in 
explaining the cost overruns indicating innovations and the 
rest, I just want to say for the record that--can you hear me?
    Chairwoman Maloney. Yes, we can hear you.
    Mr. Ulmer. Yes, Congresswoman.
    Ms. Norton. I want to say for the record that we signed a 
contract. We didn't sign to pay for innovations. We signed--we 
didn't sign to pay for cost overruns and that is what is 
happening. We are paying for cost overruns and that is 
something that has simply got to stop.
    I have a question, beginning with Ms. Maurer of the GAO, 
because the committee staff also visited the F-35 bases and 
they pointed at that time that ALIS was the root cause of the 
problems with the electronic logs and that the--they lose 
track, the logs do, sometimes overnight after maintenance crews 
have already cleared the F-35 to fly the next day. Talking 
about dangerous.
    Is what the committee staff found in its visit, Ms. Maurer, 
consistent with what the GAO has found in its work?
    Ms. Maurer. Thank you for the question, and yes, those 
findings are consistent with what we found in our work and we 
summarized those findings in our report that was issued back in 
March as part of our audit work last year.
    Our team visited five different installations within the 
United States where they had F-35s deployed. We heard a great 
deal of frustration from pilots and from maintainers and from 
commanders.
    There was a grave amount of concern that the--and 
frustration, frankly, with the problems with EELs and with the 
problems with the interface with ALIS itself. These are 
longstanding problems.
    We have noted them in our reports going as far back as 
2014. Much of this is rooted in the fact that this is an old 
system and we hope that DOD fully implements our various 
recommendations as they move toward implementing ODIN.
    I will be watching that carefully to make sure that these 
problems do not continue in the futures. It is definitely a 
problem with the past, definitely a problem in the present.
    Ms. Norton. Thank you, Ms. Maurer.
    Mr. Ulmer of Lockheed, Lockheed, of course, has 
acknowledged flaws in ALIS and it provided the committee with a 
presentation. In its presentation, you indicated that ALIS is 
currently looking at its manpower, hardware, increased labor 
costs, decreased readiness.
    What steps--when you consider all of these flaws in ALIS, 
what steps is Lockheed taking now--this is for Mr. Ulmer--what 
steps is Lockheed taking now to improve ALIS until that system 
can be replaced?
    Mr. Ulmer. Congresswoman, we have gone to an agile software 
development process with the ALIS system. Just to let everybody 
know, ALIS is an IT infrastructure that was developed in the 
early 2000's before the iPhone existed.
    So, it is an antiquated hardware/software system. We have 
implemented agile software updates. We have improved processing 
time significantly on the order of 50 percent or more. We have 
gone to quarterly releases. It was taking us 12 to 18 months to 
provide software updates.
    We are now, concurrently with the JPO, releasing software 
updates every three months. We are receiving positive feedback, 
reduced wait times, significant processing time.
    You can get all of the information in front of you 
significantly reduced button clicks to get to information, to 
process data. So, quite a bit of improvement has occurred on 
the ALIS system recently.
    Ms. Norton. Madam Chair, I hear concern even discussed on 
both sides of the aisle. I can only hope that this hearing 
moves us ahead to at least get a new system so the taxpayers 
aren't continuing to pay for these redundant flaws.
    My time is out and I thank you.
    Mr. Lynch.
    [Presiding.] The chair now recognizes the gentlelady from 
North Carolina, Ms. Foxx, for five minutes.
    Ms. Foxx. Thank you, Mr. Chairman.
    Mr. Ulmer and Lieutenant General Fick, the DOD Inspector 
General report notes that ready-for-issue means the spare parts 
supplied by the contractor are ready to install on the aircraft 
and have an electronic equipment log, or EEL, assigned.
    Can you explain in layman's terms what an electronic 
equipment log is and its importance to overall maintenance and 
sustainment of an aircraft such as the F-35?
    Mr. Fick. Yes, ma'am, I can.
    So, an electronic equipment log I like to think of as a 
personal health record associated with that specific part. It 
follows the part digitally or electronically, and some of the 
functions we ask of that EEL are to track life limits 
associated with that part, to track implementation of TCTDs, to 
look at part number and tail number compatibility, to manage 
complex assemblies like an ejection seat that may have an EEL 
at the top level and then lower embedded, or indentured, EELs 
below that. We look at the EEL also for export control as well 
as inspection requirements for those parts.
    Ms. Foxx. Thank you.
    Mr. Ulmer, would you like to respond?
    Mr. Ulmer. Yes, ma'am. I concur with General Fick's review 
of a description of an EEL. To be clear, ma'am, it is an 
electronic file.
    In 2016, we implemented quarantines such that when we 
release materiel that we ensure the EEL is, in fact, in place 
and appropriate.
    So, here in Fort Worth, where we produce the aircraft, in 
late 2016, early 2017, we implemented we could not deliver 
aircraft without EELs being compliant. As the aircraft delivers 
and then that EEL delivers on with the airplane, it is consumed 
within the ALIS system.
    The information that General Fick described populates the 
information structure that informs the maintenance system how 
to operate and sustain the airplane.
    The business processes behind that transfer of that 
information, the communication of that information, the input 
of that information is what is resulting with the EEL issues to 
date and that is where we are very focused on creating 
solutions from an IT business process point of view to resolve 
these issues, and that is where we have seen in the last six 
months in particular the significant increase of ready-for-
issue parts.
    Ms. Foxx. Thank you.
    This question is also for both Lieutenant General Fick and 
Mr. Ulmer. What challenges are the F-35 program experiencing on 
electronic equipment logs and what is being done to identify 
and understand the root causes of sustainment issues with the 
F-35 program?
    Mr. Fick. I will speak to them in general terms, ma'am.
    I think there is, basically, three problems. One would be 
does it exist, and Mr. Ulmer addressed that in his comment 
relative to the initial existence of an EEL on delivery.
    The second would be both of those really have more to do, 
in my mind, with ALIS and with the IT systems and how the EELs 
are passed around than they do with the actual instantiation of 
the EEL itself and that is they may be corrupted or they may be 
removed or stripped inadvertently as the electronic footprint 
of that part works its way through the system from Lockheed to 
a supply point in a country and then, eventually, to a 
squadron.
    Ms. Foxx. Mr. Ulmer, if you think that Mr. Fick's--General 
Fick's answer is sufficient, then if you would just say so. My 
time is running out and I have one more question.
    Mr. Ulmer. Congresswoman Foxx, I concur with the PEO.
    Ms. Foxx. Thank you.
    Mr. Ulmer, what actions has Lockheed Martin taken to 
address the nonready-for-issue parts and ensure accuracy of 
electronic equipment logs more than what you have already 
stated--if there is something else you need to state?
    And then, Lieutenant General Fick, have you seen 
improvements in issue--ready-for-issue parts?
    If your question is yes or no, then that would be easy, 
General Fick.
    Mr. Fick. We have seen an improvement associated with RFI 
parts that require an EEL. Now, remember, EELs are only 
required in about a thousand out of the overall 50,000-part 
count on an aircraft.
    So, it is a very small number of parts that actually 
require EELs. And to that point and to my earlier point 
relative to whether an EEL is truly required, we are actively 
looking to reduce the number of parts that have EELs.
    Ms. Foxx. Right.
    Mr. Fick. So, we reduce this problem.
    Ms. Foxx. Mr. Ulmer? Mr. Ulmer?
    Mr. Ulmer. Congresswoman Foxx, we have invested $30 million 
relative to improving the ready-for-issue parts. That 
improvement, as we have described the EEL and the engineering 
content associated with that, the complexity of that content, 
we have done a very formal systems engineering approach.
    When I say we, I am talking the enterprise--JPO, Lockheed 
Martin--with our war fighter. We have conducted events where we 
have gone out to the war fighter. We have heard the concerns.
    We have witnessed the concerns. We document the concerns, 
and then we come back and go through a very formal systems 
engineering process to determine root cause and corrective 
action, and those actions then play forward relative to the 
improvements we are seeing.
    We still have two more formal initiatives this year as we 
work to raise the bar relative to issue effectiveness.
    Ms. Foxx. Thank you both.
    Madam Chair--Mr. Chair, I yield back.
    Mr. Lynch. The gentlelady yields.
    I am going to yield myself five minutes.
    Ms. Hull, at the beginning of your testimony you mentioned 
the term of the current contract with the----
    Mr. Comer. Mr. Chairman, point of order.
    It is--now it is the Republicans' turn.
    Mr. Lynch. Ms. Foxx just spoke.
    Mr. Comer. Oh, Ms. Foxx.
    Mr. Lynch. She is still a Republican, right?
    [Laughter.]
    Mr. Comer. Yes.
    Mr. Lynch. OK. All right.
    Mr. Comer. I thought you said you were yielding yourself.
    Mr. Lynch. That is OK. Reclaiming my time. We are going to 
start the clock again for five minutes. But I respect the 
gentleman's right.
    Ms. Hull, at the beginning of your testimony you mentioned 
the term or the length of the Lockheed Martin contract on the 
F-35. How long was that?
    Ms. Hull. The contracts, they are annual contracts. Some 
have gone beyond a year. As part of our review we looked at on 
the EEL issue the time period of 2015 until about April 2019--
or sorry, the 2018 contract goes until April 2019 but our EEL 
review covered a portion of 2015 through 2018.
    Mr. Lynch. OK. Is there--are there problems--and I know Ms. 
Lord and Lieutenant General Fick, you were both on board back 
in 2019 when we went with this larger contract. I think it is--
is this Lot 12 we are doing now or Lot----
    Mr. Fick. Yes, sir. We are delivering Lot 12 now.
    Mr. Lynch. OK, and that is 149 aircraft? Is that correct, 
roughly?
    Mr. Fick. It is 147, I believe.
    Mr. Lynch. OK. All right. All right. I trust you. All 
right. Close enough.
    Is there a problem with the way we have framed this 
contract that makes Lockheed Martin less responsive to issues 
like this, do you believe?
    Mr. Fick. I don't believe so. I know that on the 
sustainment contracts, starting with----
    Mr. Lynch. OK. Let me--let me--and I don't have a whole lot 
of time.
    Mr. Fick. Yes, sir.
    Mr. Lynch. But are they--is Lockheed Martin still getting 
incentives, despite the fact that they are delivering 
noncompliant parts?
    Mr. Fick. So, we assess Lockheed Martin's performance 
against the specific incentive fee criteria that we build into 
both the production contract, the----
    Mr. Lynch. But isn't that on flight time? So, if you fix--
if you fix a noncompliant part and get that up in the air, does 
Lockheed get the bonus? Get the----
    Mr. Fick. Yes.
    Mr. Lynch. Yes, they get the incentive. So, that is what I 
am getting at. Is there a way we could--and Mr. Ulmer, I would 
like you to consider this seriously.
    That part of the contract, the fact that you are getting an 
incentive bonus because DOD personnel have spent approximately 
$300 million in a work around on your noncompliant parts to 
allow you to receive a bonus for work that, you know, you 
didn't do correctly.
    So, you need to--you need to go back and figure that out. 
You can work with the Defense Contracting Management Agency.
    That portion of the benefits you are receiving is not fair 
and just under the contract, and I would highly recommend if 
you want to avoid reputational damage you need to rethink the 
terms of that contract and come back to the table and work 
something out that is fair for the American taxpayer.
    Lockheed Martin has had a long strong history in the 
defense sector and we respect that. But I don't believe, based 
on the facts here, that the American people are being treated 
fairly, and that will be to the detriment--if that continues, 
that will be to the detriment of Lockheed Martin.
    So, we got to look at that really hard. I do believe that 
the F-35 is probably one of the finest aircraft out there when 
it flies. When it flies.
    And that is the problem that we have got this whole work 
around in terms of, you know, this whole program.
    So, you are on notice, Mr. Ulmer, and I would like to ask 
you some questions. Do you believe--Mr. Ulmer, do you believe 
that we are--we are in the process of fixing this problem?
    I have a report right now that tells me that the inspector 
general of DOD, in addition to the Government Accountability 
Office and the bipartisan Committee of Staff Delegation, 
Republican to Democrat--we agree on this.
    This is not a partisan issue. That because of pervasive 
problems with the F-35 spare parts, missing electronic logs, 
military personnel must be reassigned to troubleshoot problems.
    Pilots must fly F-35s on a near daily basis with defective 
spare parts, and maintenance personnel are at risk of allowing 
aircraft to fly with potentially dangerous issues.
    So, we got a problem, according to DOD, our unified staff, 
and the Government Accountability Office. So, what are you 
going to do about it and how quickly do we get this thing 
fixed?
    Mr. Ulmer?
    Mr. Ulmer. Congressman, I take--Congressman, I take this 
extremely serious. We are very focused on manufacturing and 
sustaining the F-35, and safety is at the forefront as well as 
airworthiness of the vehicle.
    And, for the record, I would like to state to the 
chairwoman to my knowledge all documents have been provided. 
So, I would like to connect with your staff to make sure that 
that occurs to your satisfaction. But my belief is we are doing 
that.
    Congressman, you asked if we are taking----
    Mr. Lynch. We will followup. We will followup on that.
    Mr. Ulmer. Thank you, sir.
    Sir, you asked me what have we done. So, I indicated we 
have spent $30 million to resolve this issue to date. We 
continue to meet directly. We have had six direct meetings with 
the DCMA since April 2.
    We were meeting with the DCMA prior to April 2 to work on 
this issue together. We continue to have regular engagements 
with the Joint Program Office.
    We continue to make adjustments to the ALIS system to 
improve the system, not just from an EELs--electronic equipment 
logbook--point of view but from an ALIS all up point of view.
    We are participating with the JPO relative to taking the 
lessons learned from the ALIS experience and informing the ODIN 
experience as we go forward. So we are taking several different 
approaches relative to problem resolution.
    We have seen marked improvement. We have more to go. We 
understand we have more to go and we will continue to support 
and you have our resolve to fix this problem.
    Mr. Lynch. OK. As you know, this is the largest single 
contract we have got. This is an important part of U.S. 
readiness and, you know, we have got unanimity here, Democrat 
and Republican, that we got to get this right.
    The chair now recognizes the gentleman from Texas, Mr. 
Cloud, for five minutes.
    Mr. Cloud. Thank you, Chairman.
    This is quite the ordeal. It is amazing to think that 20 
years into this program this is still where we are at. You 
know, no doubt the F-35 is an amazing piece of technology.
    We are glad to have it in our force and we certainly want 
to make sure that the United States stays preeminent when it 
comes to race of technology and dominance.
    But when it comes to the battle space, the battle space is 
not just collateral, and especially today, as we look to the 
threats from China, it is also economic. It is cyber. It is 
multifaceted.
    And when nations have risen and fallen through history, it 
wasn't just because they didn't have the latest technology on 
the battlefield. It is because they collapsed from internally 
through economic restraint.
    So, it is extremely important that we get this right, but 
it is extremely important that we get it efficient as well.
    We have spent $1 trillion in the last five years on this, 
and at least the estimates that we have here, and it is--you 
know, that could have gone to a lot of different places. You 
know, we have China invading our cyber and doing other 
different things, and so it is just important that we get this 
right.
    So, where we are at now, it seems we have a shipping system 
that doesn't work. I have talked to people in the boots on the 
ground and they will say that when the parts come in they are 
not even labeled correctly. You know, sometimes up to 30 
percent, half of them, aren't even labeled correctly.
    Now, I know that the system is complicated. It is not like 
Amazon where you are just delivering the part, you are trying 
to track it and all that other kind of stuff. But it seems like 
not being able to get the part to them correctly is a problem.
    As has been mentioned, we have $300 million in excess labor 
costs just since 2015 that is going in this. When Lockheed--it 
was just mentioned by the chairman when they--they are 
incentivized for having planes flying. It is a great idea.
    But when they don't fly and then we have to fix them, they 
still get paid for incentives, and so it is hard to see how 
this keeps going on. You know, it has been said that insanity 
is doing the same thing over and over and expecting different 
results.
    Here, it just seems like another day in Washington, DC. So, 
I appreciate the work that has been done to move this forward 
but it seems like we still have a whole lot of work to do. 
Seventy percent, I don't think, is a benchmark for excellence 
in anyone's.
    I know that is not--you are here and I know many of you 
came into this program. You haven't been in your positions for 
20 years, certainly.
    Recently, we paid $30 million to store and maintain six 35s 
originally destined for Turkey, which makes we wonder what is 
the general cost of not flying an F-35.
    So, when an F-35 isn't ready to fly, what cost is 
associated with this? How much does it cost? Because $30 
million to not fly six planes seems like a lot of money.
    Mr. Fick. So the--sir, respectfully, the $30 million cost 
for those six planes accounted for the induction of those 
aircraft into long-term storage and the work required to 
preserve them in that condition.
    So, that is not work that we normally would do to an 
aircraft on a flight line because, ultimately, our goal--our 
objective there is to continue to fly them.
    I can certainly get you a breakdown of the cost associated 
with that entry into long-term storage and then what the annual 
costs are associated with the storage of those Turkish jets.
    Mr. Cloud. Mm-hmm. Now, I have been surprised to find that 
we have these contracts being renewed every year and then still 
the contracts don't seem to be getting any better. Are there 
performance metrics that are required penalties for not meeting 
them?
    I mean, these are things that seem basic in the corporate 
world that we seem to have a hard time doing when it comes to 
military contracting.
    Ms. Lord. Congressman, I would like to address that. I was 
in industry for 33 years before taking this job about three 
years ago, and my primary energy has been put into rewriting 
the acquisition system for the Department of Defense. So we 
used to have one large one-size-fits-all system and we have 
broken that system down into six individual pathways.
    So, for instance, we are talking about ODIN, which is the 
upgrade from ALIS. We are using modern software techniques on 
that. So we are tailoring.
    To your specific questions about sustainment, what we are 
doing is refining the incentive fee structure, going back and 
getting the voice of the customer, understanding what it takes 
to get aircraft operational and making sure that as we write 
incentive fees there is a very clear linkage there.
    Additionally, we have said multiple times this morning that 
one of the root causes of the EELs problems and the RFI 
problems are ALIS, the software system we use to collect data 
and maintain the information.
    That is an out of date system, and what we are doing in 
developing ODIN, its replacement, is going directly to the 
maintainers and getting the voice of the customer to make sure 
we drive software requirements from the front line, the user, 
what they need, versus someone sitting in a lab deciding that 
for them.
    Mr. Cloud. Thank you. My time has expired. I will just say 
it is extremely important, that we owe it to the American 
taxpayer. It is a patriotic duty to do this right, efficiently, 
and to require Lockheed to pay penalties when they don't get it 
right.
    I yield back.
    Mr. Lynch. The gentleman yields back.
    The chair recognizes Ranking Member, Mr. Comer.
    Mr. Comer. Mr. Chairman, I ask for unanimous consent to 
clarify Mr. Ulmer's response to my questions.
    First, your second quarter profit is $1.6 billion. Second, 
your Fiscal Year 1919 profit was $6.2 billion. So, I renew my 
question which was why is Lockheed failing to fulfill the 
contract and deliver EELs intact and on time, and I ask for 
these documents to be in the record.
    Mr. Lynch. And you repeat your question, right?
    Mr. Comer. Yes.
    Mr. Lynch. OK. So, Mr. Ulmer, I hope you heard that. 
Without objection, the documents are accepted.
    [The information follows[SA2]:]
    Mr. Ulmer. Understood.
    Mr. Lynch. The chair now recognizes the gentleman from 
Virginia, Mr. Connolly, for five minutes.
    Mr. Connolly. Thank you, Mr. Chairman, and thank you to our 
panel today. I am going to try to ask a few rapid-fire 
questions.
    Ms. Maurer, what is unique about the F-35 program?
    Ms. Maurer. There is a long list of things that make it a 
unique program, but among many different things it is--one, it 
is an international program. It is not just a U.S. program.
    So, international partners including some of our closest 
allies like the British and the Dutch and the Australians have 
a voice in decisions including what is going to happen----
    Mr. Connolly. Let me interrupt. But isn't there something 
else? The J-35 is--I mean, the F-35 is replacing all our Strike 
Fighters, right?
    Ms. Maurer. Yes. It is designed to replace a number of 
legacy fighters across three different services: The Marine 
Corps, the Navy, and the Air Force.
    Mr. Connolly. Have we ever done that before?
    Ms. Maurer. We have never--we have never had a single 
system that was designed to replace three different----
    Mr. Connolly. Correct. So, that is what is unique. The 
stakes here are enormous. They affect all of our services. We 
have never done this before, and it is a critical piece of U.S. 
defense and offensive capability as well.
    GAO, Ms. Maurer, going back to 2014, provided a number of 
recommendations to DOD, the project manager, which we haven't 
focused on a lot yet, including trying to create a performance 
measurement for ALIS back in September 2014.
    Were those recommendations adopted by DOD?
    Ms. Maurer. That specific recommendation has not been 
adopted. Repeated again in our March 2020 report and sent it 
over to Congress and suggested that Congress take action to 
ensure that that happens.
    Mr. Connolly. So, why did it happen? I mean, given all the 
problems today you would think, with the stakes this high on 
this unique program, DOD would run, not walk, to make 
corrections to a system that was defective, and you documented 
it back in 2014, six years ago.
    Ms. Maurer. I completely agree, we definitely want to see 
DOD implement all of our recommendations as quickly as 
possible----
    Mr. Connolly. But my question is----
    Ms. Maurer [continuing]. And it is a concern that they 
haven't done it yet.
    Mr. Connolly. Why not?
    Ms. Maurer. Well, over the years, we have heard from them 
that they have a number of other issues to address for the F-35 
program. What we are talking about today is one of many 
sustainment challenges that they are facing.
    It is also a very difficult thing for them to do. But we 
think it is vital because--what happens they will never know 
what is good enough, when it is going to be done.
    Mr. Connolly. Yes, but now we are in a place where 
sustainment is the major problem----
    Ms. Maurer. Yes.
    Mr. Connolly [continuing]. In the F-35 program because they 
ignored it, your recommendations and those of the DOD IG.
    Ms. Hull, were your recommendations, over the years, 
implemented by the Project Management Office?
    Ms. Hull. The Joint Program Office agreed to our 
recommendations in our June 2019 report. However, we are 
waiting for supporting documentation to validate that they have 
implemented the recommendations.
    Mr. Connolly. But in your testimony, you gave us a long 
laundry list of issues that were seemingly cavalierly ignored 
by the Joint Program Office over the years. Is that not 
correct?
    Ms. Hull. Yes, I touched on the EEL issues, sir, and then 
also the incentive fees.
    Mr. Connolly. Right. And even when they were getting 
feedback from the field, from pilots, from command centers and 
the like, they still didn't implement changes that would have 
gone some way to ameliorating the problem. Is that correct?
    Ms. Hull. The Joint Program Office in October 2018 issued 
guidance allowing the parts to go on the aircraft without the 
electronic equipment logbooks and additional labor--DOD labor 
was used with work arounds to make sure the parts could get on 
the aircraft for it to fly.
    Mr. Connolly. The ALIS program we are talking about, that 
was created by Lockheed just for this program. Is that correct?
    Ms. Hull. While ALIS wasn't a direct focus of our report, 
it is my understanding that that is true.
    Mr. Connolly. Is that your understanding, Ms. Maurer?
    Ms. Maurer. Yes. ALIS was created specifically for the F-35 
program.
    Mr. Connolly. And it was approved by the Joint Project 
Office. Is that correct?
    Ms. Maurer. That is correct. It was approved nearly 20 
years ago.
    Mr. Connolly. Twenty years ago. So, has it been updated?
    Ms. Maurer. It has been updated several times. It did not 
go fully--ALIS did not go fully operational until two years 
ago, until 2018.
    They had a number of problems on the way in getting it 
rolled out. There have been a number of updates. But the 
central problem is it has never met user needs. You know, we 
have heard some comments today about how it has gotten better 
and, certainly, it is downloading faster and they can--users 
can click things faster.
    But the bottom line is there are no performance measures in 
place to assess whether users are getting what they need. So, 
until that is in place, we are not going to know when it is 
good enough.
    Mr. Connolly. And for the record, you advised the 
Department of Defense six years ago that it needed such 
performance metrics.
    Ms. Maurer. Yes, we did.
    Mr. Connolly. And----
    Ms. Maurer. We have recommended that to the department.
    Mr. Connolly. And they did not act on that recommendation?
    Ms. Maurer. They have taken some actions but it has not 
been sufficient to close the recommendation.
    Mr. Connolly. My final question, Mr. Chairman.
    Ms. Maurer, had they accepted that recommendation when you 
made it, do you believe that some of the problems we are 
chronicling today in this hearing could have been avoided?
    Ms. Maurer. Yes. I think if they had fully implemented the 
recommendations in 2015 or 2016 they could have potentially 
mitigated a number of the problems we talked about today.
    Mr. Connolly. I would just say, Mr. Chairman, we are 
focused on correctly, you know, the shortcomings of the 
contractor. But we also, as the Oversight Committee, need to 
focus on the shortcomings of the management of contracting and 
the contractor.
    And I think this hearing and this testimony we have just 
heard from Ms. Hull and Ms. Maurer certainly should give us 
pause about how competent the oversight and management of the 
single most important new fighter aircraft in the history of 
the United States has been.
    I yield back.
    Mr. Lynch. Thank you. The gentleman yields back.
    The chair now recognizes the gentleman from Ohio, Mr. 
Gibbs, for five minutes.
    Mr. Gibbs. Thank you, Mr. Chairman.
    Mr. Ulmer, I hope you are still there. Do legacy aircraft 
have EELs?
    Mr. Ulmer. I am sorry, Congressman. Repeat the question.
    Mr. Gibbs. Do legacy aircraft have EELs?
    Mr. Ulmer. No, sir. No, Congressman.
    Mr. Gibbs. So, I guess my thought is, because the F-35 is 
such a sophisticated complicated highly technological aircraft, 
is that the reason why you have the program for EELs? How do 
you--or how do you do it with legacy aircraft for parts?
    Mr. Ulmer. Yes, sir. The maintenance system for legacy 
airplanes are more segregated, not integrated systems that 
support specific platforms. So, this is an attempt at the ALIS, 
and the electronic equipment logbook approach relative to the 
technology really is about an integrated sustainment--IT 
sustainment system for a platform.
    Mr. Gibbs. OK.
    General Fick, do the EELs pose any safety concern or risk? 
Is that----
    Mr. Fick. Sir, my understanding from talking to the 
maintenance group commanders in the field that authorize their 
aircraft to fly in the event that a part is not RFI. There is 
not a safety concern associated with flying aircraft with those 
parts. They will not--they will not allow a part to be 
installed in the aircraft if that EEL----
    Mr. Gibbs. OK. OK. I got that.
    Mr. Fick. Yes, sir.
    Mr. Gibbs. So, the issue is not getting those parts readily 
available and in place so the aircraft can fly? That is what 
the issue is?
    Mr. Fick. Yes.
    Mr. Gibbs. So, I guess the next thought would be how much 
delay or, you know, F-35s have been grounded. You know, where 
are we on that because of that--because of the----
    Mr. Fick. So, we have--we have mixed data from our--from 
those commanders in the field relative to the times which they 
have allowed those aircraft to fly without EELs. We have really 
good error information from one of the installations in 
particular that we are using to kind of sort through and figure 
out what I will call an adjudication of what the real impact 
would be from a cost and incentive perspective.
    We have other information from other wings that is less 
clear, and then still other wings--I will say the Navy and the 
Marine Corps, in particular, are not allowing their aircraft to 
fly, period, with non-RFI parts. So, there is not an issue with 
them.
    Mr. Gibbs. OK. I just heard, I guess, the person in their 
office talk about the ALIS program just rolled out two years 
ago. But then I heard earlier in testimony that it was a 
program that started way before that. Is that----
    Mr. Fick. So, ALIS has been around for a long, long time. I 
don't know--I think 2000 or----
    Mr. Gibbs. Then I did hear it doesn't have the technology 
of an iPhone, you know, the newer softwares and stuff.
    Mr. Fick. Correct.
    Mr. Gibbs. So, whose fault is that? I mean, is that just 
government bureaucracy or is that--I mean, where is that--where 
had that happened at? The program has been around for a long 
time but it just got rolled out two years ago with technology 
that is 10 years outdated.
    Mr. Fick. So, the first--I can get you the exact date, sir, 
but the first ALIS versions I believe rolled out in the 2006-
2007 timeframe and have been updated on a 12-to 18-month kind 
of a cadence since then.
    We had a substantial update to the ALIS system as we 
entered IOT&E and we have continued to update from--when I 
entered the program a couple years back it was ALIS 2.0. We 
moved to 2.4. We moved to 3.0 or 3.1.
    The version in the field today that 87 percent of the units 
have is ALIS 3.5.2, which is the most recent iteration. Greg 
mentioned that we are going to quarterly releases.
    Mr. Gibbs. OK. I am out of time. I want to ask another 
question. Whoever wants to answer, I guess.
    This F-35, the whole system, as we know, is highly 
sophisticated, very complicated, high technology--
technological. Is it fair for Lockheed Martin on the contract, 
because you are in a whole new, you know, area of 
sophistication.
    You know, was it right to have a contract they couldn't do 
because there were so many unknowns, you know, bringing the 
system online?
    I guess, Ms. Lord, that might be a question to you.
    Ms. Lord. We have different contract types that correlate 
with the risk involved.
    When there is a high level of development and unknown, we 
do cost plus type contracts where we pay for what is needed and 
there is a different level of fee than when it is more known.
    When you get into full rate production, for instance, those 
are fixed price contracts with incentive fees for meeting 
certain criteria.
    So, where we are in the Department of Defense is really 
working to make sure all of our contracting officers have all 
the different techniques and procedures to deal with that.
    Mr. Gibbs. So--OK, so, since the F-35 has been developing 
for quite a while now, and they are starting to do a lot more 
planes----
    Ms. Lord. Correct.
    Mr. Gibbs [continuing]. So, are we moving in that second 
phase----
    Ms. Lord. For production.
    Mr. Gibbs. For production?
    Ms. Lord. And then what we are in the midst of doing is 
developing sustainment contracts that are better tailored to 
the----
    Mr. Gibbs. And are you seeing--are you seeing better 
results now since it has gone along with working with the 
manufacturer, Lockheed Martin?
    Ms. Lord. Well, we started out when I got involved with the 
program three years ago. Absolutely from a production point of 
view, we got much, much more fidelity around what was happening 
on the manufacturing floor.
    I will say that the Department of Defense has an enormous 
amount of data now relative to that versus where we were three 
weeks ago. I would say we are just turning our real focus on 
sustainment now and just beginning to build that robust data 
set.
    So, we have a number of teams working on the ALIS to ODIN 
transition as well as the annual sustainment.
    Mr. Gibbs. So, are you confident and optimistic that cost 
overruns and all that, things are going to get better, 
improving?
    Ms. Lord. I am confident that we are making progress. But I 
think we still have a way to go in sustainment.
    Mr. Gibbs. OK. Thank you. I am out of time. I have to yield 
back.
    Mr. Lynch. The gentleman yields back.
    The chair now recognizes the gentleman from California, Mr. 
Rouda, for five minutes.
    Mr. Rouda. Thank you, Mr.--thank you, Mr. Chair, and thank 
you to all of our participants. We appreciate your commitment 
to the security of our country.
    And I have got a few questions I would like to ask. One of 
my main concerns with the F-35 program that, if left 
unaddressed, problems with defective F-35 spare parts will only 
get worse as the fleet grows.
    If my numbers are correct, as of February 2020 the global 
F-35 fleet was about 500 aircraft. But the fleet is expected to 
double by 2023. The U.S. alone plans to purchase about 2,500 F-
35s from Lockheed Martin over the life of the program, as was 
pointed out earlier, to really replace our entire fleet.
    That growth may be great for Lockheed Martin's bottom line 
but if problems with the F-35 software such as ALIS and 
electronic logs on spare parts are not thoroughly addressed and 
fixed, of course, the headaches for U.S. pilots and maintenance 
crews will only grow.
    So, Ms. Hull, is it a fair assumption that the problems you 
identified in your June 2019 report will only get worse as the 
F-35 fleet expands?
    Ms. Hull. It is true that unless the ready-for-issue spare 
part and EEL issue is addressed, it will continue to 
perpetuate, and we have seen from the Joint Program Office, you 
know, guidance to fly aircraft with EELs.
    With the fleet continuing to grow, the problems will become 
more pervasive unless addressed.
    Mr. Rouda. Ms. Maurer, would you agree with that 
assessment?
    Ms. Maurer. I definitely agree that the F-35 program faces 
a number of challenges on the sustainment front. Those 
challenges are only exacerbated by the continued growth of the 
size of the overall fleet both here in the United States and 
with our allies.
    So, they have a lot of challenges ahead. We are encouraged 
that they have agreed with our recommendations on sustainment 
for large starting emission levels.
    Mr. Rouda. Fair enough. Thank you.
    Air Force personnel also told committee staff that, if not 
addressed, current issues with electronic logs and spare parts 
will likely compound as the F-35 fleet expands and additional 
aircraft deploy on combat missions.
    For example, when committee staff visited Hill Air Force 
Base in Utah, they were told that an F-35 squadron had received 
an immense amount of support when the squadron deployed in the 
Middle East in April 2019.
    This, in fact, was the F-35's first time flying combat 
missions and everyone wanted to see the mission succeed without 
a hitch. That deployment had only a handful of F-35s compared 
to the eventual size of the anticipated fleet and many staff 
were told that it would be difficult to maintain that level of 
support as the F-35 fleet grew and the demand for pilots, 
maintainers, and support personnel grew along with it.
    Mr. Ulmer, the most recent combat deployment of F-35s from 
Hill Air Force Base left at the beginning of June. If their 
deployment follows past ones, they should be home, I think, in 
about six months.
    Mr. Ulmer, can you commit today that the problems with 
electronic logs on spare parts will be fixed by the time that 
squadron comes home?
    Mr. Ulmer. Congressman, it will take us more than that time 
to resolve these issues. But we are focused to resolve these 
issues.
    Mr. Rouda. I appreciate your candor.
    Lieutenant General Fick, if Mr. Ulmer and Lockheed Martin 
can't meet that commitment, how will the Joint Program Office 
and Defense Department ensure our pilots are fully supported 
under future deployments?
    Mr. Fick. So, Mr. Congressman, we have put language in 
place in our 1919 and 1920--our Fiscal Year 1919 and 1920 
spares contract that requires EELs and--I am sorry, that 
requires parts to be RFI upon delivery.
    So, we have set the stake in the sand relative to the 
delivery of those parts. We are committed to working with the 
services, with Lockheed Martin and with other industry best 
partners to instantiate ODIN as the solution to the problems 
that we continue to have in ALIS, and I firmly believe that the 
instantiation of ODIN is the--is the intervention required to 
most completely address the issue with non-RFI parts.
    Mr. Rouda. Thank you.
    We all know these problems have to be fixed and they need 
to be fixed before the F-35 fleet is so large that problems 
with missing electronic logs, defective spare parts, and 
continuing software glitches are not so overwhelming it cannot 
be fixed.
    With that, I yield back. Thank you, Mr. Chair.
    Chairwoman Maloney. [Presiding.] I now recognize Mr. 
Higgins.
    Mr. Higgins?
    Mr. Higgins. Thank you, Madam Chair, Ranking Member----
    Thank you, Madam Chair.
    General Fick, Americans want air dominance worldwide from 
our military forces, and the parents and families of our pilots 
want those pilots to have total confidence in their aircraft.
    We are focused primarily today on talking about issues we 
have with the electronic equipment logbook, the EEL, and the 
classification of missing EEL data in replacement parts for the 
F-35 platform would be considered non-RFI or not ready for 
issue.
    Absent those problems, as we work through those issues, 
General Fick, do you consider the F-35 to be the platform that 
delivers air dominance for the United States of America 
worldwide?
    Mr. Fick. I absolutely do.
    Mr. Higgins. Thank you, because that is what we are looking 
for and as we address the problems we are discussing today, 
which I have complete confidence that Lockheed Martin is 
dedicated to resolve.
    So, I turn my question to Mr. Ulmer.
    Mr. Ulmer, are sustainment costs for the F-35 steadily 
coming down?
    Mr. Ulmer. Congressman, for every dollar of sustainment 
approximately $0.39 is--Lockheed Martin contributes to. About 
13 percent--$0.13--has to do with the propulsion system and the 
remainder has to do with operational sustainment costs for the 
government.
    Lockheed Martin----
    Mr. Higgins. Yes, sir.
    Mr. Ulmer, in the interest of time, let me just--America 
needs to know. You know, we recognize that there are problems 
with the full deployment, manufacture, and perfection of this--
of this world-class aircraft that Lockheed Martin is delivering 
for our Nation and for freedom's purpose across the world. We 
need to know are sustainment costs steadily coming down, yes or 
no?
    Mr. Ulmer. Yes, they are. The Lockheed Martin elements of 
sustainment cost have come down 44 percent from a cost per 
flying hour in the last five years.
    There are other contributors on the--on the government 
side.
    Mr. Higgins. Thank you, sir. And is the EEL--the EEL non-
RFI issues, is that being aggressively addressed by Lockheed 
Martin?
    Mr. Ulmer. Yes, sir. We are aggressively engaged to resolve 
that issue with our--with our customer.
    Mr. Higgins. All right. And a part or component that is 
missing EEL data and considered non-RFI--my colleagues have 
referred to it as defective--does the part work? Will the plane 
fly if that technician manually updates that data?
    Mr. Ulmer. Congressman, there is no issue with the part. 
The part is not defective. The issue is with the electronic 
file associated with the part.
    Mr. Higgins. Understood. We are just--yes, sir, and we are 
clarifying for America. It is important that we know.
    Regarding the progress that Lockheed Martin has made, can 
you clarify? According to my research, production since 2017 
has shown the ability to consistently deliver zero-defect 
aircraft since 2017?
    Mr. Ulmer. Yes, sir. We have a very strong track record, 
actually multi years relative to zero-defect deliveries. We are 
less than one defect per delivery for the last several years.
    Mr. Higgins. And thank you for that response, sir.
    And General Fick, in his--in his opening statement, and I 
quote. He said, ``The bottom line is we need parts delivered on 
time with all required electronic identification markings and 
records right upon arrival.''
    Mr. Ulmer, when can we get there? Are you optimistic that 
we are moving in that direction and getting there quickly?
    Mr. Ulmer. Sir, we are optimistic we can get above 90 
percent by the end of this year. As General Fick alluded to, we 
are going to be challenged to achieve 99 percent ready for 
issue and we are taking the actions necessary to support that 
metric and requirement by our customer.
    Mr. Higgins. Thank you for your response.
    Madam Chair, let me say that my father was a Navy pilot in 
World War II. I am a veteran, and yesterday I spoke with a dear 
friend of mine whose son is a pilot for the Navy, and he shared 
the concern of parents and families across the country that 
their concern is that their--that our pilots are flying planes 
that they can depend upon.
    I thank you for holding this meeting today. I thank the 
ranking member and I thank the witnesses for testifying today. 
We are working through these issues and I have total faith in 
the F-35 jet and Lockheed Martin.
    And I yield.
    Chairwoman Maloney. I thank the gentleman for his questions 
and his statement, and I now yield five minutes to 
Congresswoman Speier--Jackie Speier.
    Ms. Speier. Thank you, Madam Chair. Thank you all for 
participating today.
    Let me ask you a question. Lieutenant General, there is no 
question that the ALIS system has underperformed, correct?
    Mr. Fick. Yes, ma'am.
    Ms. Speier. Ms. Lord?
    Ms. Lord. Absolutely.
    Ms. Speier. Mr. Ulmer, is it true that it has 
underperformed?
    Mr. Ulmer. Ma'am, it is not meeting our customer war 
fighter requirement.
    Ms. Speier. It has underperformed. It has been anticipated 
that there is $183 million that Lockheed Martin owes the 
taxpayers of this country for this underperformance.
    How much time has been spent negotiating with Lockheed 
Martin and how long and how much time?
    Lieutenant General Fick?
    Mr. Fick. So, my recollection, ma'am, is that the 
negotiations specifically associated with the consideration on 
EELs began in earnest in April of this year and it continues, 
marching forward.
    Ms. Speier. How many hours have been put into it?
    Mr. Fick. I don't have that number off the top of my head.
    Ms. Speier. Ms. Lord?
    Ms. Lord. I would estimate tens of hours.
    Ms. Speier. Tens of hours?
    Ms. Lord. By the government.
    Ms. Speier. By the government?
    Ms. Lord. It is DCMA that is doing that for us.
    Mr. Fick. Yes.
    Ms. Speier. Thank you.
    Mr. Ulmer, you continue to say you are negotiating on 
something that is, clearly, established that--you have 
underperformed.
    It has been estimated that it is $183 million. The U.S. 
Government, the taxpayers of this country, are paying 75 
percent of your budget and your profits.
    I want to know when you are going to pay the $183 million 
and stop nickel and diming the U.S. Government and the 
taxpayers.
    Mr. Ulmer. Congresswoman, as we have identified in this 
testimony, the number has changed from $303 million to $183 
million, which is a new number to me today. So, I think we have 
due diligence to do amongst ourselves relative to the 
contributors that influence the issues associated with 
electronic EELs. We know that it is not all Lockheed Martin.
    Ms. Speier. All right. Sir, I have very little time.
    How much time are you going to take before we are going to 
have an answer as to whether or not you are going to repay the 
government?
    Mr. Ulmer. Congresswoman, we continue to negotiate in good 
faith across the table ongoing.
    Ms. Speier. All right. Let me--let me move on.
    Are we absolutely committed to doing ODIN?
    Ms. Lord. ODIN?
    Ms. Speier. Yes.
    Ms. Lord. Absolutely. We have the dates rolling out right 
now. We will have----
    Ms. Speier. All right. Let me ask you this question. As I 
calculated it, if we continue to just do work arounds over the 
course of the next 66 years, it will cost us $3.6 billion to 
just do work arounds with the existing ALIS system. Are we 
going to end up paying more for ODIN than $3.6 billion?
    Ms. Lord. We are developing ODIN so that we don't have to 
do work arounds where you can----
    Ms. Speier. I understand that. But----
    Ms. Lord. So, we are doing it for the same amount that we 
had budgeted just for baseline ALIS.
    Ms. Speier. How much is it going to cost?
    Mr. Fick. So, ma'am, there is $547 million across 1921 
through 1925 in the budget associated with ODIN. I am sorry--
associated with ODIN. We believe there is also on the order of 
about $70 million a year between now and 2022 that we will 
continue to put into ALIS.
    Ms. Speier. OK. Who is going to own the intellectual 
property of----
    Mr. Fick. The U.S. Government.
    Ms. Speier. No question?
    Mr. Fick. No question.
    Ms. Speier. And that will then allow us to have others fix 
it so we are not negotiating with the prime contractor over 
easily $183 million when we pay a half a billion dollars for 
every plane we purchase from them.
    I would like to say to Mr. Ulmer you are not a good actor 
in this. This is just one component. We already know that there 
are nine flaws on the F-35 that are identified as critical, as 
priority ones, that, to my knowledge, have still not been 
addressed.
    So, we are looking at one component of the F-35. We have 
had lots of problems of the F-35. We have had problems with the 
seats. We have had problems with the oxygen system. And for you 
not to come to the table and negotiate this $183 million really 
aggravates me and should aggravate every taxpayer in this 
country.
    Owning this system outright should have been the case 
initially and we wouldn't be in this situation, and for all 
those that think that somehow the F-35 is the safest plane 
around, I have got news for you.
    We have had problems with this plane and we continue to 
have problems with this plane, and we should be very concerned 
about this EEL system not being accurate because it draws that 
whole issue into question.
    With that, I yield back.
    Chairwoman Maloney. I thank the gentlelady for her passion 
and knowledge on this issue.
    And I now would like to call on Congressman Hice.
    Congressman Hice?
    Mr. Hice. Thank you, Madam Chair.
    I think it is important that we state that the end result 
is we want to see this program succeed, and the purpose of 
oversight is to ultimately get to that end.
    And there are some glitches in the road here, so to speak, 
and we need to address those issues. But we want to thank you 
for your work and acknowledge the purpose of oversight is to 
get some of these issues resolved. So, I just want that on 
record.
    Let me ask you, Ms. Lord, within that context, a lot of the 
argument is that we need to see Lockheed write a check and go 
from that perspective.
    Unfortunately, if that were to happen, the check just ends 
up going to Treasury and it does not help the program. It 
doesn't help anything. Are there other forms of compensation 
that might be more beneficial?
    Ms. Lord. Absolutely. We are now negotiating the next 
annual sustainment contract and the two-year options after 
that. We could very well look for consideration in that 
contracting?
    Mr. Hice. OK. So, there are other options here and I think 
those other options need to be on the table. They need to be 
considered.
    Also, I do have another concern that I want to bring up for 
IG Hull, and let me just say, as I understand this we have got 
about 353 of these jets that have been built out of about 500 
since 2015 and, yet, ballpark of a trillion dollars has been 
spent on operation and sustainment.
    Now, I just did a little math. That comes to $566 million 
per plane per year. That is a staggering amount to me. If we 
are talking a trillion dollars in five years for these planes, 
again, that is just my math but let us--can I get some 
clarification on this?
    Mr. Fick. Sir, we are going to have to go back and help you 
with the math. I don't understand where the trillion dollars 
over the last five-year quote came from. I don't understand 
that number.
    The most recent life cycle cost estimate for the entirety 
of the program over 60 years is $1.6 trillion. So, I find it 
hard to believe that we spent a trillion dollars in the last 
five years.
    Mr. Hice. Well, that figure is out. In fact, the Selected 
Acquisition Report actually didn't--I don't recall seeing that 
number but they did say that the amount of spending now going 
per year per plane is going to strain future service operation 
and sustainment.
    I mean, so whatever the actual cost is, this is an 
enormously expensive program here. So, I want to know kind of 
how does the annual O&S cost compare to other fighter jet 
programs in the past?
    Mr. Fick. So, I can't speak specifically to the O&S cost of 
other fighter jet programs but I know that we are aggressively 
targeting, getting our O&S cost to $25,000 per flight hour by 
Fiscal Year 1925. That is our--that is a--that is a stretch 
goal that I am working hard----
    Mr. Hice. So, are we--are we trending in that direction? 
Are we trending to cost savings?
    Mr. Fick. We are. We are making--we are making deliberate 
progress. To get to $25,000 by 1925 will be a huge--will 
require significant----
    Mr. Hice. If you could provide some comparison of past 
programs to where we are now as well as the goal. Goals are 
great----
    Mr. Fick. Yes.
    Mr. Hice [continuing]. But I want to know the trends to get 
to those goals.
    Ms. Lord. Excuse me. That should approach the fourth-
generation sustainment cost.
    Mr. Fick. Yes.
    Ms. Lord. That was the way we derived the target of $25,000 
per flight hour.
    Mr. Hice. OK. I would like--if you could provide that to 
me, I would appreciate that.
    Ms. Lord, let me go with you, and I appreciate the 
conversations we have had in the past. We have got problems 
with the ALIS system, the transfer to the ODIN system.
    Can you kind of walk us through some of the expectations of 
ODIN and how this is going to play out?
    Ms. Lord. Absolutely.
    First of all, ODIN is going to be deployed on much more 
modern hardware. So, for instance, the ALIS system today for 
one system you have about 891 pounds of hardware. For ODIN, you 
are going to only have about 50 pounds of hardware.
    So, the footprint is very different and, in fact, as we 
move toward the first deployment of ODIN in September 2021 an 
interim step is this fall to actually move ALIS onto the new 
hardware as the first step.
    We will own all of the data rights in the government for 
ODIN versus ALIS. It is going to be deployed in the cloud. It 
is being developed using requirements in large part from the 
actual maintainers.
    So, for instance, I was on the phone yesterday with the 
maintenance unit leads at five different locations making sure 
that their voice had been heard by the actual team doing the 
coding for ODIN.
    We also, as opposed to using the old waterfall software 
development techniques, we are using agile and DevSecOps to do 
that. So we are, in essence, coding every night--I am sorry, 
coding every day and testing every night.
    We have deliverables from the team, the government and 
industry team, every single day so we can measure those 
deliverables and we can measure them against the baseline 
requirements. So a very, very different system than ALIS's.
    Mr. Hice. OK. Thank you.
    And Madame Chair, I will yield back. But I do want to just 
say to Mr. Fick I do have some more questions particularly that 
I would like to get some answers for specific to modified 
training that we are seeing at Hill and Luke Air Force Bases 
and why that is happening. So, I will get with you later on 
that.
    But thank you, Madam Chair. I will yield back.
    Mr. Fick. Absolutely.
    Chairwoman Maloney. I thank the gentleman and now recognize 
Representative Wasserman Schultz.
    Ms. Wasserman Schultz. Thank you, Madam Chair.
    Madam Chair, I want to ask my questions through a fiscal 
lens as a senior member of the Appropriations Committee because 
I am deeply concerned about what I am hearing and seeing. The 
waste and mismanagement of Federal dollars is really--seems to 
be paramount here.
    There have to be oversight mechanisms in place to keep 
costs in check as DOD and Lockheed Martin are moving forward on 
replacing ALIS, which is, as we know, the main F-35 software 
system.
    So, Ms. Lord, in 2016, the Defense Department told GAO that 
the ALIS software system would cost an estimated $17 billion, 
and GAO found that estimate, quote, ``not fully credible,'' 
since the department had not performed a full analysis of these 
costs.
    What is DOD's current estimate of how much money has been 
spent on ALIS?
    Ms. Lord. We are spending on ODIN the same amount that we 
are spending on ALIS, and if you give me a moment here, I have 
the amount over the next five years.
    Mr. Fick. It is $547 million for the next five years. But 
the tenet of----
    Ms. Wasserman Schultz. So, what has already been spent on 
ALIS? What has already been spent on ALIS? I am not asking you 
for a cost projection.
    Ms. Lord. Oh, sunk cost?
    Ms. Wasserman Schultz. I am asking you what has already 
been spent.
    Ms. Lord. We don't have that right here but we can, 
certainly, get that to you very shortly.
    Ms. Wasserman Schultz. OK. Suffice it to say is it more 
than $17 billion?
    Ms. Lord. I don't believe so. That seems like a very large 
number. But we can get that for you shortly.
    Ms. Wasserman Schultz. Respectfully, that is the amount 
that the Defense Department told GAO that the ALIS software 
system would cost and that was deemed not fully credible 
because the department had not performed the full analysis.
    So, my suspicion is that it has cost more than that already 
and now you are projecting another $547 billion.
    Earlier this month on July 10 the department announced it 
would pay Lockheed Martin $87.5 million to begin the 
development of ODIN and start the transition from ALIS.
    What will--I want to ask you a series of questions at once 
and then if you would answer those. What will that initial work 
by Lockheed Martin include? And the $87.5 million contract to 
transition from ALIS is really only the beginning.
    You expect, I would imagine, ODIN to cost a lot more than 
that. You just said it would be $547 million. And since this 
program has had cost--significant cost overruns in the past, 
how do you plan to ensure that the cost of ODIN is not 
excessive?
    Ms. Lord. The way ODIN is being contracted for is very 
different than what we have done in the past. We are actually 
defining the architecture and releasing app by app. We just 
released the first contract to Lockheed Martin in July, and the 
work is actually being done in a government-owned cloud 
environment and we have total visibility to what is delivered 
every day.
    Ms. Wasserman Schultz. OK. Just interrupting--OK. If I can 
ask you to pause for a moment. My initial question was the 
$87.5 million contract to transition from ALIS is just the 
beginning. You expect it to cost more than that, don't you? And 
what will the initial work by Lockheed Martin include?
    Ms. Lord. Well, we have about $550 million over the next 
five years and the initial work is a series of codings done by 
app. But I am going to pass to Lieutenant General Fick for more 
specifics.
    Mr. Fick. Ma'am, that is accurate. Lockheed Martin will be 
coding three specific applications for ODIN and this is the 
early work associated with those apps.
    Ms. Wasserman Schultz. General, do you think the DOD should 
move forward with any of the design plan without knowing how 
much the plan or any component of that plan will cost?
    Mr. Fick. Ma'am, my team continues to refine the cost 
estimate for ALIS and ODIN, moving forward. The $547 million 
was money that had been previously allocated to an ALIS 
rearchitecture effort.
    We believe that we can fully instantiate ODIN over the 
course of the next five years within that budgetary cap. But we 
know that over the course of the 50 years remaining in the 
program that to remain viable we will need to continue to 
update the software as issues are found, as the program 
evolves, and as maintenance practices change.
    Ms. Wasserman Schultz. Thank you. Before my time expires--
--
    So, I do anticipate more funds will be required beyond the 
FYDP.
    Ms. Wasserman Schultz. GAO's March 2020 report recommended 
that Ms. Lord, in consultation with you, General, develop a 
detailed strategy.
    Ms. Maurer, can you comment on my question about the 
uncertainty that is looming on how much this is going to cost 
for the redesign of ALIS that includes the costs of redesigning 
the whole system?
    Ms. Lord. Well, we----
    Ms. Maurer. Yes.
    Ms. Lord [continuing]. Plan to have ODIN deployed fully by 
December----
    Ms. Wasserman Schultz. I am sorry--I am sorry. The question 
is for Ms. Maurer.
    Ms. Maurer. Thank you.
    Yes, we share your concern about the ability to track the 
overall approach on the strategy for implementing ODIN as well 
as the costs associated with that.
    ODIN is a relatively new initiative. It is designed to 
replace something that has been around for almost 20 years and 
there are going to be significant challenges and significant 
costs associated with doing that, and it is important that it 
be done right and be done in a cost effective way.
    Ms. Wasserman Schultz. Thank you, Madam Chair. I yield back 
the balance of my time.
    Chairwoman Maloney. I thank the gentlelady for her 
questions.
    And we now recognize Representative Norman.
    Mr. Norman. Thank you, Madam Chairman.
    Inspector Hull, in your testimony you stated the quote, 
``While a missing EEL does not mean a part is defective, it can 
create life and safety concerns for air crews.'' Yet, you also 
state that, quote, ``The DOD's use of local guidance and ad hoc 
manual processes allowed aircraft to fly and complete missions 
instead of the DOD grounding the aircraft.''
    This suggests to me that if anyone put lives at risk it was 
individuals at the DOD, not Lockheed Martin. Is this your 
opinion?
    Ms. Hull. The staff, the maintainers, and the commanders at 
the depot had a very difficult decision. They either had to 
conduct a work around to get parts onto the aircraft so they 
could continue their training and operational missions or they 
had to quarantine a part and, potentially, impact that ability.
    So, we--although you said earlier that for quality and 
safety we were aware of a part that was a seat survival kit 
assembly that was--that is a critical safety item that was 
flown and tracked through manual processes such as a white 
board.
    Mr. Norman. Thank you.
    General Fick, do EELs pose a safety concern or is it a 
risk, in your opinion?
    Mr. Fick. Sir, my opinion--the answer is it depends. There 
are some parts that are safety critical and are life limited, 
and those parts have EELs. And those EELs must be in place for 
that part to be installed on an aircraft.
    So, in those cases, yes, it is safety critical. For other 
parts who also have EELs, those parts are not safety critical 
and those parts are not life limited. It is those parts we are 
actually looking at to try to find a way to remove the 
requirement for any EEL so that this discussion of EEL or no 
EEL comes off the table.
    Does that make sense?
    Mr. Norman. Yes. Can you give me an example of a part 
that--to demonstrate what you are talking about?
    Mr. Fick. I don't have a specific part number or 
nomenclature for you. But I know that as of right now we are 
looking at eliminating close to 600 of them across the airplane 
that have EELs. But they are not safety critical nor are they 
life limited parts. So, a thousand. Roughly, 600.
    Mr. Norman. OK. So, there is a distinction?
    Mr. Fick. Yes, sir.
    Mr. Norman. Ms. Lord, and, I guess, General Fick as well, 
how quickly will we get the ODIN operational and what is the 
estimated cost to develop and deploy the ODIN?
    Ms. Lord. So, the initial delivery of the system is 
targeted for September 2021 and to develop it will be several 
hundred million dollars over the next couple years, and then a 
couple hundred million dollars for the few years after that to 
continue that deployment.
    Mr. Norman. OK. General?
    Mr. Fick. So, we intend to declare what we call initial 
operational capability, which is the capability at one 
squadron, in September 2021.
    By December 2022, our intent is to have ODIN spread across 
the entire fleet with the exception of units that might not 
decide to transition because they are currently deployed or 
otherwise need to continue to use the legacy ALIS system. We 
will get those as soon as operational constraints allow.
    Mr. Norman. Thank you.
    Mr. Ulmer, what has Lockheed Martin done to ensure that the 
F-35 sustainment meets the war fighter needs?
    Mr. Ulmer. Congressman, there are several avenues relative 
to sustainment. So, we have been working on reliability, 
maintainability, improvements on the platform.
    We have been working to improve the prognostic system on 
the platform. We have gone advance of contract requirements to 
procure materiel to ensure that we have the spare parts when 
the customer needs them.
    There are just several different aspects. We have been 
working to improve the ALIS system. So, there are many 
different levers across the enterprise that we apply to improve 
sustainment performance on F-35.
    Mr. Norman. Well, thank you. And I think, like Congressman 
Hice mentioned, that the--what we need to be doing is looking 
at the--to solve the issue. I know the question about the money 
has come up to be paid back but also the question that, in 
fact, that that doesn't solve any problems.
    Lockheed Martin does a great job of producing airplanes and 
I think will continue to and we are trying to find any problems 
that exist and you all are trying to find a solution to them.
    I am out of time. I yield back.
    Chairwoman Maloney. I thank the gentleman, and now 
recognize Congressperson Steube.
    He is online. OK. He was online.
    Congressman, are you with us?
    [No response.]
    Chairwoman Maloney. We are going to go to Congress Member 
Keller as we wait for Mr. Steube. OK.
    Congress Member Keller?
    Mr. Keller. Thank you, Madam Chair, and I would like to 
thank the panelists for being here today, or the witnesses.
    A couple questions that I had but I want to sort of 
followup on some questions that my colleague from Georgia was 
asking regarding the cost per hour of--or flight hour is that 
you say by 2025 we want to get to $25,000 per flight hour?
    Mr. Fick. Sir, we consider that a stretch goal. Yes, sir.
    Mr. Keller. OK. What is the current cost?
    Mr. Fick. I believe current cost per flight hour is on the 
order of $35,000 per flight hour.
    Mr. Keller. OK. So, there is a schedule each year to get to 
that?
    Mr. Fick. So, I mentioned in my opening comments that we 
have--we have pivoted the program office into lines of effort 
associated with five different divisions to include the air 
vehicle, the engines, the maintenance systems, the combat data 
systems and the training systems.
    I have allocated cost savings targets to each one of those 
offices that they need to pursue to get to that overall cost 
per flying hour goal.
    Mr. Keller. And when did we start this goal or when was 
this goal established and we started to begin work on it?
    Mr. Fick. So, the $25,000 by 1925 goal first, I think, hit 
the Program Office about two years ago we started to talk about 
it, and move the program in that direction. Looking 
holistically across a number of initiatives from--principally 
from a sustainment perspective but also respecting the fact 
that development influences sustainment cost as well, looking 
at those opportunities.
    Mr. Keller. So, two years ago was it at $35,000 a flight 
hour or what was it when you started?
    Mr. Fick. No, sir. It was--it was higher. I don't know the 
number off the top of my head.
    Mr. Keller. So, we don't know what we gained, or could we 
find out what we gained----
    Mr. Fick. Absolutely.
    Mr. Keller [continuing]. In the first two years to make 
sure we are on track of hitting that goal?
    Mr. Fick. Absolutely.
    Mr. Keller. I realize it is a stretch goal, but I think it 
is important to know where we are.
    Mr. Fick. Yes.
    Mr. Keller. So, if we could get that information I would 
appreciate it.
    The other thing I wanted to sort of followup on, we all 
know that it is important--an important program and looking at 
what we are doing, but I want to go back to the EELs and we 
know there has been reported issues, and I guess this would be 
for Ms. Lord.
    There is, you know, issues associated with the electronic 
equipment logs and some of the data inaccuracies is due to 
human interface and, you know, some of those items, and we know 
that is going to happen no matter what you are doing when you 
are dealing with that.
    Are there any strategies that have been identified that 
might help cut down on the manual inputting of data so that 
there might be accuracy, any kind of reducing the human 
interface?
    Ms. Lord. Absolutely. There are two different pieces to 
that. One is ALIS has been relatively user unfriendly, a lot of 
training to get--to be able to learn how to use it. Our latest 
release helps that significantly.
    However, in ODIN what we are doing is making sure it is 
much more automated in terms of data feeds and also prompting 
the user to input. So, those two things should be very helpful.
    Mr. Keller. And that is--you are going to be having this 
totally implemented or is there a phase in that we can see how 
this is working? How soon do you anticipate being able to see 
the benefits of this?
    Ms. Lord. We will have the first system deployed in 
September 2021. A lot of testing will go on before that point 
in time, and then it will be throughout the fleet by December 
2022 except for units that might be deployed on aircraft 
carriers, for instance, who are in very remote austere areas.
    Mr. Keller. OK. Also, there has been a lot of talk about 
different things, but can you speak to actions the department 
has taken in response to Section 192 of the fiscal 2020 NDAA 
related to the relief from failure to deliver ready-for-issue 
spare parts?
    Ms. Lord. Absolutely. What we have done is put a whole team 
together to look at that. We have worked with the contractor. 
We have really gone back to look at what is the root cause, 
what is the fundamental issue.
    And we believe, although there are many, many issues it 
fundamentally comes down to ALIS and that is part of what has 
really incentivized us to accelerate to the ODIN transition.
    Mr. Keller. OK. So, when we are talking about ALIS and the 
issues we are having, have these been issues that we have 
experienced since the beginning of the implementation of the 
ALIS program?
    Ms. Lord. Yes.
    Mr. Keller. So, over time, we should have--when we look at 
moving away from that, we should not be repeating the same 
issues or----
    Ms. Lord. No, we should not, and in fact there actually 
have been large gains made with ALIS. There have been multiple 
releases, and if you talk to the maintenance units they will 
tell you that particularly 3.5.2 that we just put out has made 
a lot of difference. But, still, it is not as streamlined as it 
could be. It is not as easy to use.
    Mr. Keller. So, when did we begin using ALIS, if I can ask 
that question?
    Ms. Lord. ODIN will start in 2021. We have an updated 
version of ALIS that just went out about a month ago.
    Mr. Keller. But when did the department start using ALIS? I 
mean----
    Ms. Lord. Back in 2012 or--I defer to the program office.
    Mr. Fick. I thought it was prior to that. Earlier, I said 
2006. I will confirm, sir, for reference when we started 
actually operationally using it.
    Mr. Keller. I am just sort of----
    Ms. Lord. It has been at least 10 years.
    Mr. Keller. Yes. I am just sort of curious of how quickly 
we can implement procedures, and if it has taken us this long I 
want to make sure that when we go over--you know, when we 
transition over that it doesn't take us that period of time.
    Ms. Lord. But there are----
    Mr. Fick. So, we will actually have the benefit, in this 
case, with ODIN of understanding what we don't like and using 
that to build what we do.
    So, as the team collects metrics from the users associated 
with the performance of ALIS, we are using that to inform the 
capability needs statement associated with ODIN. So, we have a 
better idea, to the point that was made previously, of what--of 
what good looks like and what we really need ODIN to look like 
from a maintainer's and a war fighter's perspective, and we are 
driving that train this time. We are not leaving it up to 
somebody else.
    Ms. Lord. But there were----
    Mr. Keller. So, in other words, we have learned from our 
past history of things we have done inappropriately to make 
sure that we don't repeat those same failures?
    Mr. Fick. Yes, sir.
    Mr. Keller. All right. Thank you. I yield back.
    Chairwoman Maloney. Thank you very much.
    I now recognize Representative Tlaib, and she is remote, 
online. Are you with us?
    Ms. Tlaib. Thank you. Yes, thank you.
    Chairwoman Maloney. OK. Great.
    Ms. Tlaib. Yes, I am. Can you hear me OK?
    Chairwoman Maloney. Yes, we can.
    Ms. Tlaib. Thank you, Chairwoman. Thank you for allowing me 
to serve my residents in a safe environment, and I just want to 
appreciate everyone being available to us.
    I know, and I apologize if some of this was asked but I 
think it is really important, especially these are things that 
I am hearing from my community, but only about two days ago the 
House adopted my amendment to the NDAA focused on care for crew 
members who have experienced unexplained psychological episodes 
while operating the F-35.
    So, Lieutenant Fick, do you know what is causing these 
psychological episodes? And, again, if you would answer because 
I think it is really important for folks to understand that.
    And then the second question, what has Department of 
Defense done to protect the service members from some of these 
safety issues?
    Mr. Fick. So, we are working very closely with the services 
and with the medical community to understand each and every one 
of the physiological events that occurs.
    We have seen over the course of the last three years I 
think I would characterize as a decrease in the occurrence of 
PE within the F-35 enterprise. But to say there is a common 
root cause between all of them I think--I don't think that we 
have come to that--to that conclusion at this time. More work 
to go.
    Ms. Tlaib. Ms. Lord, as we know, the F-35 sustainment 
contracts included a clause that said the government may 
require the contractor to replace or correct any supplies that 
are nonconforming at the time of delivery.
    So, Ms. Lord, problems with the electronic logs--this is 
really important here--can happen through the life cycle of a 
part, correct?
    Ms. Lord. Yes, and that is why we need to look at contract 
language and make sure it reflects the experience that we have 
had so that, as you point out, at the time of delivery is not 
the entirety of the time it goes through the EEL system. We 
have to recognize that.
    Ms. Tlaib. Well, if a problem developed following delivery, 
would it be even be possible for the Department of Defense to 
reject that spare part or would DOD need to keep that part and 
wait for Lockheed Martin personnel to fix it?
    Ms. Lord. We have ongoing discussions about those kinds of 
issues. But if it is after the point at which we initially 
accept it that becomes more complicated.
    Ms. Tlaib. Well, in order to be cleared for flight, F-35 
policy states that an aircraft must be electronically 
complete--quote, ``complete''--in ALIS, meaning that all the 
electronic records from each installed F-35 part must be 
functioning in ALIS.
    When a part missing its electronic log, ALIS signals that 
the aircraft should be grounded. According to Joint Program 
Office officials, quote--this is what they said--``On any given 
day, over 50 percent of the F-35 fleet is flying with non-RFI 
spare parts.''
    Do you find that concerning, Ms. Lord?
    Ms. Lord. I have faith in our maintenance unit leaders who 
look at each part and determine whether the aircraft is fit to 
fly. They are well versed in safety and would never make any 
safety compromises.
    All of that being said, I have faith in all of our 
maintainers. I would like our systems to be 100 percent correct 
and effective.
    Ms. Tlaib. Yes. No, and I think the American public would 
agree.
    Ms. Maurer, in March the GAO reported that it is common for 
F-35s to fly with over 20 inaccurate or missing electronic 
records, even though ALIS signals that the plane should be 
grounded.
    So, Ms. Maurer, briefly, how can service members be 100 
percent sure that ALIS signals are due to defective electronic 
logs and not a potentially dangerous issue within the aircraft?
    Ms. Maurer. I think that gets to the heart of the matter. I 
think what we found is when we talked to folks, maintainers on 
the flight line who work on the aircraft in the flight line is 
that they are--I agree with Under Secretary Lord on this--they 
are doing their level best to ensure that the plane--that the 
plane is safe to fly.
    Having said that, when the system that we have spent 
hundreds of millions of dollars to develop and deploy, that is 
designed to help tell them with the system the plane can be 
allowed to fly, isn't trusted that is the problem.
    So, we are using these cuff (?) records. We are using 
spreadsheets. It injects another level of risk into those 
decisions, and that is one of the many reasons why ALIS needs 
to be improved.
    Ms. Tlaib. Well, I think it is--so, essentially, our pilots 
are being forced to fly aircraft that neither the DOD or 
Lockheed Martin can verify are 100 percent safe due to 
electronic log problems and ALIS, coupled with potential or 
human error and work around the tracking.
    I simply think it is outrageous that after spending 
millions of dollars and thousands of hours in manpower that our 
pilots are still being asked to risk their lives because of 
malfunctioning equipment.
    So, in case anything here wasn't clear, fix this now, I 
think my chairwoman would agree, before you have blood on your 
hands. I think it is really important that you have actual 
lives, human beings, that are behind these flights that we 
are--it is our responsibility to make sure they are safe.
    With that, I yield the rest of my time, Chairwoman. Thank 
you so much.
    Chairwoman Maloney. Thank you so very much for your 
important observations.
    I would now like to recognize Congressman Steube.
    Congressman Steube--is he here or online? Pardon?
    Mr. Steube. Yes. I mean, I am virtual.
    Chairwoman Maloney. OK. Great.
    Mr. Steube. Thank you, Madam Chair.
    Mr. Ulmer, first, I would like to give you the opportunity 
to respond to what Ms. Tlaib just said as it regards to the 
safety of the aircraft.
    Mr. Ulmer. Congressman, as we have mentioned, the parts are 
not of concern. It is the electronic file associated with the 
part. So, we have processes in place. The maintainers have 
processes in place relative to part integrity.
    We are--each part is delivered, DD-250'd. It goes through a 
formal inspection process relative to that. The aircraft also 
has diagnostic systems onboard relative to the health of the 
platform itself once the parts are installed. So, there are 
several layers of protection relative to part integrity.
    Mr. Steube. Can Lockheed Martin ARRW solve the EELs 
functionality and data issues on its own or is that a broader 
issue?
    Mr. Ulmer. It needs to be done as an enterprise and I think 
we collectively have engaged that issue relative to we need to 
listen to the war fighter, how they operate, sustain, and 
maintain the aircraft. We need to incorporate that information, 
that learned information, relative to the implementation within 
ALIS and as we go forward into ODIN's system.
    So, those requirements need to be defined by the user and 
then industry and government needs to understand that 
requirement and then we can--we can work to solve that problem. 
We will be able to do that.
    Mr. Steube. The F-35 program has been referred to as a 
concurrent development program. How does concurrent development 
affect the sustainment portion of the program?
    Mr. Ulmer. So, as the product has been developed, we have 
also begun production. So, in the early phases of the program, 
development was ongoing while we still produced the aircraft.
    Just two years ago, we received what is called full war 
fighter capability with a 3-F capability. So, as that 
capability was released, the fleet has grown approximately 300 
aircraft in the last three years.
    So, there has been a lot of planning, of how we plan to 
sustain the aircraft, and now there is a lot of learning as we 
actually implement and sustain the airplane in the fleet.
    We then take and apply that learning, relative to the 
experience that has occurred, and update the system 
accordingly, and we have seen significant improvement.
    I made comments in my opening remarks the sustainment from 
a mission capable rate in the last two years has increased from 
the low 50's to the mid-70 percentile from a mission capable 
release, and we also see the other sustainment metrics in terms 
of health of supply and maintenance activities also 
significantly improved.
    So, we can measure our performance at a system level 
relative to how the system is improving.
    Mr. Steube. General Fick, can you--how do you feel about 
our pilots being safe and flying the F-35?
    Mr. Fick. Sir, I have full faith and confidence in our 
maintenance group commanders and the troops that they command 
and giving a ready-for-flight aircraft to our aircraft.
    I mentioned in my opening remarks I have a son who is 
flying for the Air Force. He doesn't fly F-35s, to his dismay. 
But I know that he trusts his maintainers implicitly and 
explicitly to deliver to him an aircraft that is safe to fly.
    I believe that as the maintenance group commanders assess 
the parts that are put onto the aircraft they are making sure 
that any aircraft they clear to fly is safe to fly.
    Mr. Steube. General, can you please provide to the 
committee an overview of how the F-35 is performing when 
deployed and talk to the capabilities that the aircraft is 
providing to the men and women in uniform?
    Mr. Fick. So, as a fifth generation Strike Fighter 
platform, the F-35 relies upon stealth, sensor fusion, and 
interoperability to allow it to penetrate and persist and to 
punish in a way that no other air system is capable of doing 
today.
    I think if you talk to a war fighter who flies the F-35 in 
operations or in training you will find that they are very, 
very happy with the plane. They are very, very happy with the 
system that they have got.
    They always want more, and we need to give them more 
because the threat is not slowing down. The threat is not 
stopping. We need to continue to move the program forward from 
a development perspective, from a production perspective, and 
from a sustainment perspective.
    Mr. Steube. And what do you think can be done to take on--
to ensure that the F-35 is ready to take on emerging threats?
    Mr. Fick. So, sir, we are deliberately moving the program 
into a new paradigm for development that you may have heard of 
referred to as continuous capability development and delivery, 
working to transition a legacy departmental or a legacy 
industry style of development and delivery in huge tranches 
into a more incremental and agile focus development paradigm 
where we bring capabilities to the war fighters faster.
    That is going to be important as we work our way forward, 
and the threat continues to change. Our ability to be agile or, 
to not overuse that word, to be nimble in the things that we 
can do with and on the platform will be critical.
    Mr. Steube. My time has expired. Thank you, General, for 
your service to our country.
    Chairwoman Maloney. The chair now recognizes Congresswoman 
Porter.
    Ms. Porter. Hello. Mr. Ulmer, does Lockheed Martin owe the 
government money--the Federal Government money?
    Mr. Ulmer. Congresswoman, we are negotiating that today 
with the Defense Contract Management Agency relative to the 
issues associated with electronic EELs.
    Ms. Porter. You are negotiating today. How much does 
Lockheed Martin owe taxpayers?
    Mr. Ulmer. Congresswoman, we are going through that. The 
figures that were provided, $303 million, have been reduced--
$183 million I heard today. So, I think we are collectively 
working to understand from an accountability point of view what 
those numbers are.
    Ms. Porter. Why were the figures reduced? The Federal 
Government found that the F-35 defective parts cost the 
government $300 million. Why is that amount being reduced?
    Mr. Ulmer. I don't know the specifics, ma'am. But I do know 
that not----
    Ms. Porter. Is it the government's idea to reduce the 
amount you owe them or is it Lockheed Martin's idea to try to 
pay less?
    Mr. Ulmer. Ma'am, that came from the government. It came 
from the government.
    Ms. Porter. OK. Then I will ask Ms. Lord about this in a 
minute.
    So, you are negotiating over what was $300 million to $350 
million but has somehow been reduced to about half that. How is 
Lockheed doing financially?
    Mr. Ulmer. Ma'am, we just released our quarterly earnings 
yesterday. So, net sales $16.2 billion, net earnings $1.6 
billion, and our cash $2.2 billion.
    Ms. Porter. OK. I want to make sure I have this right. From 
that quarterly investor call, which we also listened to, profit 
is up 15 percent over this time last year, more than $3.5 
billion in profit so far in 2020. Ten times that $3.5 billion 
in profit is ten times what you owe the taxpayers.
    One recent headline--I hope you saw this good publicity for 
your company--one recent headline called Lockheed Martin a 
pandemic star for your ability to be earning money even as 
taxpayers and everyday families and small businesses struggle.
    So, I am not sure why the amount is being reduced. I am 
going to ask Ms. Lord about that. But I also want to know more 
about why, given that Lockheed is a pandemic star, Lockheed is 
writing a letter to the White House--just wrote a letter to the 
White House asking taxpayers to give Lockheed bailout funds.
    Mr. Ulmer. I am not aware of that letter, Congresswoman.
    Ms. Porter. So, you are telling me that it is Lockheed 
Martin's statement on the record that there is no request for 
additional money related to things like the Main Street Lending 
Program or the money set aside specifically in CARES for 
national security companies?
    Mr. Ulmer. Ma'am, I am not aware of a specific letter. I am 
aware relative to COVID-19 in the CARES Act, relative to the 
disruption to aerospace and defense.
    I don't know the specifics of the letter you are 
mentioning, ma'am.
    Ms. Porter. Did Lockheed Martin request money under the 
CARES Act?
    Mr. Ulmer. Yes, ma'am.
    Ms. Porter. Why?
    Mr. Ulmer. Because of the disruption associated with COVID-
19.
    Ms. Porter. Because of the disruption that caused you to 
have a profit of 15 percent over the prior year when we didn't 
have COVID-19?
    That doesn't--maybe making gobs of money is disruption for 
you, but I think for most everyday Americans if they see their 
income go up 15 percent this year, if they were making--if they 
were making $3.5 billion in profit in 2020, they wouldn't call 
that a disruption.
    They would call that a miracle and they would not be coming 
to the government trying to take more taxpayer dollars at the 
same time that you are failing to pay the U.S. taxpayers back 
what you owe for breach of contract with regard to the F-35 
Joint Strike Force.
    I am unable to understand why you need this additional 
money when your profits are up and you have breached your 
contracts with regard to producing defective parts. Why should 
the taxpayer foot the bill the help Lockheed Martin at this 
time?
    Mr. Ulmer. Ma'am, the disruption associated with COVID-19 
requires many different aspects relative to health and welfare 
of employees, the supply base associated with----
    Ms. Porter. Use--pardon me. Reclaiming my time.
    Use your 15 percent increase in profit to pay to protect 
your workers during COVID.
    Mr. Ulmer. Congresswoman, we are doing that.
    Ms. Porter. Why are we footing the bill to help a company 
that is having an uber profitability moment and is a pandemic 
star?
    Mr. Ulmer. Congresswoman, no funds have been provided 
relative to the CARES Act.
    Ms. Porter. But you have asked?
    Mr. Ulmer. Yes, just like many aerospace and defense 
companies.
    Ms. Porter. One wrong doesn't make a right.
    With that, I yield back.
    Chairwoman Maloney. The gentlelady yields back.
    And I now recognize Representative Grothman.
    Mr. Grothman. Ms. Hull, we will start with you.
    Your report found that as a result of receiving not-ready-
for-issue spare parts, the Department of Defense spent $303 
million in labor costs since 2015.
    If that figure is right, that is kind of a big number. Can 
you explain how you arrived at that number?
    Ms. Hull. The $303 million is just the cost of DOD labor. 
So, it costs about $7,000 to $11,000 per issue to fix or to 
resolve. So, that figure is just for the labor attributed to 
the action request at the time.
    Mr. Grothman. So, it is really a larger number in cost 
overall?
    Ms. Hull. Yes. It only reflects DOD labor. It does not take 
into account the additional amount that Lockheed charged back 
to the government to get the parts that--you know, back ready 
for issue.
    Mr. Grothman. Do you know how much that was?
    Ms. Hull. Unfortunately, because of the way data was not 
tracked regarding that, we were unable to obtain that 
information.
    Mr. Grothman. OK. Hmm, are you trying to get it or they are 
just--would Lockheed give you the information or----
    Ms. Hull. We requested the information from Lockheed Martin 
during the course of the audit. But they did not provide it.
    Mr. Grothman. Hmm. Do you have recourse or you just got to 
tolerate it?
    Ms. Hull. Lockheed Martin shared with our audit team that 
they do not track the information in a manner in which they 
could provide that cost to us.
    Mr. Grothman. Well, they are--I guess they are saving 
costs, huh. In the year since your report has been released, 
have you continued to monitor the delivery of non-RFI parts?
    Ms. Hull. Since our issue--since our report was issued, we 
are currently tracking the recommendations that we made to the 
Joint Program Office.
    The Joint Program Office agreed with all four 
recommendations and we are in the process of waiting for 
information to validate the actions taken.
    Mr. Grothman. Do you have any update for us or just we got 
to keep waiting?
    Ms. Hull. Currently, we are waiting for documentation to 
validate actions taken.
    Mr. Grothman. OK. We will give General Fick a question 
here.
    What has your office done to address that problem and what 
type of changes do you think we need as we move forward?
    Mr. Fick. So, relative to the EEL issue and non-RFI parts, 
we have worked very, very closely with the field and with 
Lockheed Martin to put process and practice in place to ensure 
that the number of parts that are arrive are--that require an 
EEL actually have that EEL.
    One of the specific technical moves that the group made was 
to provide what they call an advanced shipping notice that, in 
some ways, significantly reduces the errors associated with 
manual entry of data when a part arrives at a base.
    So it, effectively, prepopulates the system to allow for an 
easier transmittal of the EEL and the easier acceptance and 
arrival of that EEL on the base.
    That is a large part of the reason that we are now at an 83 
percent EEL RFI number.
    Mr. Grothman. OK. Well, can I ask a similar question, Mr. 
Ulmer? From your perspectives, have the issues that were raised 
on non-RFI spare parts in the June 2019 Inspector General 
report seen improvements?
    Mr. Ulmer. Yes, sir, they have. As we alluded to in the 
opening comments, ready-for-issue effectiveness rate has 
increased from, I believe, 43 percent--45 percent to about 83 
percent the last six months.
    Mr. Grothman. OK. Thank you very much.
    I yield the rest of my time.
    Chairwoman Maloney. The gentleman yields back, and the 
chair recognizes Congresswoman Miller.
    Mrs. Miller. Thank you, Madam Chairman and Ranking Member 
Comer, and thank you all for being here today to testify before 
our committee.
    As all of my committees today understand--all of my 
colleagues today understand, the F-35 program is one of the 
most essential tools in our Nation's armed forces disposal.
    I strongly support the continued investment in the F-35 
program and I believe that it will play a major role in 
defending the United States and our allies for decades to come.
    I applaud the work that the Department of Defense, Lockheed 
Martin, and the thousands of suppliers around the country, 
including those in my home state of West Virginia, have done to 
ensure that the F-35 program will continue to be cost 
efficient, mission capable, and effective.
    I am encouraged by the progress that has been made, 
especially in the last year, to reduce the cost per flight and 
to ensure ready-for-issue parts compliance are at a much higher 
rate.
    Again, I want to thank you all for being here today for 
questions and showing the committee and the American people the 
importance of the F-35 program.
    Mr. Ulmer, how has the coronavirus pandemic and the 
shutdown and the sustained economic shutdown impacted the 
supply chain for the F-35 program?
    Mr. Ulmer. Congresswoman, it is a bit of a mixed bag. So, 
we have suppliers that have shut down for periods of time. I 
think weeks, I think a month. We have had suppliers that have 
had little impact. We have had suppliers that their work force 
has been significantly impacted.
    For example, we have had a supplier that have reduced their 
work force for periods of time from 100 percent down to 20 or 
30 percent.
    So, it has been a bit of diverse impact to our supply base. 
We have also had suppliers that provide commercial material as 
well as military hardware to the platform. So, from a 
commercial aviation point of view, they have been significantly 
impacted from a finance health point of view.
    There are just many different aspects of how COVID has 
impacted supply base and industry across the aerospace and 
defense sector.
    Mrs. Miller. Thank you.
    General Fick, how does the mission-capable rate for the F-
35 fighters compare to a year ago or even six months ago?
    Mr. Fick. Ma'am, the mission-capable rate of the F-35 over 
the course of the last year has come up from, as I recall, in 
the mid-50's to the low to mid-70's.
    As I look back at the data today, it actually seems 
relatively flat in the mid-70's at the fleet level. Below the 
fleet level, as we look individually at the F-35A, which is 
doing a little bit better than the B and the C, which are doing 
a little bit worse, we do see variations caused by differences 
in the--in some of the systems on the aircraft, and we see the 
impact of different fleet sizes as well on the mission-
capability rates.
    We are taking a wide variety of initiatives and issues that 
are articulated in our life cycle sustainment plan to drive 
mission-capability rates and to drive F-35 sustainment outcomes 
in the right direction.
    Fixing ALIS is only one of those issues. We have 12 
different lines of effort that we are undertaking to include 
the establishment and the accelerated standup of organic 
depots; the use of increased maintenance authorities on the 
flight line and a wide variety of other issues that all 
together will continue to move the needle in the right 
direction.
    Mrs. Miller. Good. General Fick and Mr. Ulmer, what does 
the future look like for the F-35 production and how does 
Lockheed and your suppliers think you will be able to scale?
    Mr. Fick. So, we are--as you are aware, ma'am, we signed 
the Lot 12 through Lot 14 production contracts over the course 
of the last fall and we are currently entering negotiations for 
the Lots 15 through 17 contracts.
    I can't talk to the specific details of those negotiations. 
But I will tell you that, overall, as you look into the service 
budgets and as you look into the service spend plans, we see 
the numbers of aircraft in those years are not rising as they 
did over the course of Lots 10 through 14. But they are a 
little bit more flat.
    Some of the flatness of the profile in those years is going 
to challenge our ability to continue to drive price down by 
tail. But we are committed to continuing to work hard with the 
department to establish the best value for our taxpayers and 
war fighters.
    Mrs. Miller. Thank you.
    Mr. Ulmer?
    Mr. Ulmer. Congresswoman, over the last three years we 
really have been ramping upward. So in 2017, we delivered 61. 
In 2018, we delivered 91. Last year, we delivered 134.
    This year, prior to COVID we were on track to deliver 141 
aircraft. So, you can see the progression of production rate, 
and then we will actually continue that production rise as we 
go forward to approximately 165 aircraft, and then, as General 
Fick alluded to, we will see a slight decline in production 
quantities, probably around 155 or so in the three lots coming 
after that.
    So, just kind of an overview. Within that production rate, 
we have been able to reduce the price of the airplane 
significantly. So, we were on a plan or a trajectory to get to 
what we call an $80 million aircraft by Lot 14.
    We were able to achieve that one lot early in Lot 13, and 
what that really--what that allows is we are now able to 
produce and deliver a fifth gen capability aircraft really at 
the price of what a fourth gen legacy fighter would cost.
    Mrs. Miller. Thank you. I yield back.
    Chairwoman Maloney. Well, I want to thank everybody. This 
is the last questioner, and I want to thank our panelists for 
their remarks and I also want to commend my colleagues on both 
sides of the aisle for their really informed and passionate 
concern and for participating in this important conversation.
    I would like to yield to my colleague and good friend, 
Ranking Member Comer, for his closing remarks.
    Mr. Comer. Thank you, Madam Chair, and again I want to 
thank all of our witnesses who were here.
    Our side of the aisle here has been focused on oversight. 
It is good to have a bipartisan hearing where we all share the 
same goals and those goals are, No. 1, to ensure that our 
troops have the absolute best.
    No. 2 is to ensure that the taxpayers get their dollar's 
worth, and you will find no group in Congress more in support 
of the private sector than our side of the aisle.
    We know that parts and contracting and aircraft can be 
produced in the private sector significantly more--
significantly cheaper than the government could.
    Having said that, we expect the private sector to deliver 
on their end of the bargain. And with respect to Lockheed 
Martin, I appreciate the fact that Lockheed Martin has a 
significant footprint in America.
    Lockheed Martin employs a lot of people and they pay 
excellent wages to their employees. It is a great place to 
work. I appreciate that.
    But, Mr. Ulmer, we have had this discussion about the 
issues with the EELs and the issues with the F-35s, and 
considering the significant percentage that this product is 
with your total sales for Lockheed Martin, I certainly hope 
that, moving forward, we can get these issues resolved for the 
sake of our military, for the sake of our servicemen and women, 
and for the sake of the American taxpayer.
    So, I am confident that we can get this resolved. But I 
will look forward to continued discussions with Lockheed 
Martin, with our United States military, and with the majority 
in this committee.
    With that, Madam Chair, I yield back.
    Chairwoman Maloney. Well, I really want to thank you and 
your staff and all of your members for joining us in a 
bipartisan way to work on this challenge, and I join my 
colleagues in saying that I am very pleased that Lockheed 
Martin has said they are dedicated to resolving these 
challenges.
    And Mr. Ulmer mentioned that he or, rather, Lockheed Martin 
had already spent over $30 million trying to correct this 
problem.
    But I want to point out that that is just a small 
percentage of the cost of one plane, especially when you add 
the $50 million that they say is needed to maintain the program 
yearly now because of the challenges.
    I do want to say how pleased many of us are to learn about 
the ODIN contract that the government will be putting forward 
and that the intellectual property and the data components will 
be owned by the American taxpayer and the American government.
    I believe this should be the standard for any military 
contract, going forward. I consider this a national security 
challenge because there have been so many reports that the 
information has been stolen from our contractors through 
hacking, including allegations that the F-35 has been 
compromised and the information stolen.
    So, to have it controlled by the government to protect this 
information, I believe, is a very good step in the right 
direction.
    We are looking forward to learning more about the ODIN 
program and the contract and exactly how you are going to spell 
it out so that these challenges do not happen in the future in 
order to, first of all, protect the safety of our men and women 
in the Air Force but also to protect the dollars of our 
taxpayers.
    Our next meeting will be held in September on the F-35 and 
I am hopeful that the DCMT, who reported that there was $183 
million owed to the American taxpayers, that the report said 
they are in negotiations.
    I hope by September this issue will be resolved and that we 
can learn more about what DOD is doing to modernize our 
military contracting process.
    It is important, first and foremost, for the safety and 
security of our men and women in uniform but also the safety 
and security of the tax dollars in this country.
    I really want to thank, again, all of the panelists for 
their life's work, for their dedication, their testimony today, 
and I must say I believe this is the best participation of any 
hearing this year that I have seen on both sides of the aisle, 
showing deep concern and commitment to resolving this issue in 
a positive way for the private sector, the military, the 
government, and the taxpayer.
    I yield back. And I thank the staff on both sides of the 
aisle. This was a joint effort. Every single meeting was held 
in conjunction with both parties. Every interview, every report 
has been a bipartisan effort on this important issue.
    In closing, I want to thank our panelists for their remarks 
and I want to commend my colleagues for participating.
    With that, and without objection, all members will have 
five legislative days within which to submit additional written 
questions for the witnesses to the chair, which will be 
forwarded to the witnesses for their response.
    I ask our witnesses to please respond as promptly as you 
are able. This hearing is adjourned.
    [Whereupon, at 1 p.m., the committee was adjourned.]

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