Streamlining Procurement Process

April 05, 1995|By Ted Shelsby | Ted Shelsby,Sun Staff Writer

The nation's biggest defense contractor yesterday proposed to build fighter planes for the military the way other commercial companies build automobiles, refrigerators and televisions.

Lockheed Martin Corp. said that modifying its F-16 fighter plane production operations would save the Pentagon hundreds of millions of dollars by eliminating red tape and cutting documentation costs.

The company says it wants to "commercialize" the process, meaning among other things that subcontractors would work directly with Lockheed Martin rather than having to bid through a government procurement process.

The company hopes that by cutting the cost of the Falcon by 15 percent, to about $17 million each, it will open the door for the Air Force to buy an additional 120 planes.

Such an order would also be good news for the Westinghouse Electric Corp. complex in Linthicum, which supplies the main radar for each F-16 rolling off the Lockheed Martin assembly line in Fort Worth, Texas.

Producing radars for the F-16 has been one of the division's longest-running and most successful programs.

Over the past 20 years, the northern Anne Arundel County plant has produced radars for more than 3,000 of the fighter planes -- accounting for more than $5 billion in revenues.

Westinghouse spokesman Jack Martin called the Lockheed Martin move "extremely innovative" and said it represents "an important first step in reducing the cost of avionics systems. We wholeheartedly support their venture into this new arena."

He said the purchase of an additional 120 planes would sustain the current production rate at the plant and encourage even more foreign sales, potentially creating some new jobs.

Due in part to a declining Pentagon budget, Westinghouse has eliminated about 7,000 jobs in Maryland in recent years.

Under the pilot program, the aircraft maker would guarantee the price of the plane for a period of four years.

"The fighter aircraft pilot program is an opportunity for the United States to take major steps toward revolutionizing the way it procures military equipment," said Dain M. Hancock, president of Lockheed Fort Worth Co., a division of unit Lockheed Martin.

The proposal, the first of its kind for a major military procurement program, is being well received at the Pentagon.

Beverly Baker, a Department of Defense spokeswoman, said the government "looks very favorably on a move to commercialization, especially this one which has guaranteed cost savings up front."

Ms. Baker said the Pentagon still wants to look at all of the pieces of the Lockheed proposal and weigh the costs against the benefits.

As an example of how it could trim costs, Joe Stout, a spokesman for Lockheed said that the contract for the sale of the F-16 to the Air Force is a stack of papers six feet high. "We think we can cut this down to about 30 pages."

Under the current system, which has the government buying parts for the F-16, such as the radar, and supplying it to Lockheed, it takes 42 months from the time a plane is ordered before it is delivered. By having suppliers serving as subcontractors, Mr. Stout said, Lockheed officials estimate they can reduce this lead time to between 24 and 30 months.

There could be even greater savings for the Pentagon. Under the current oversight system, several hundred Defense Department employees are based at the Fort Worth plant to perform inspections and audit costs. In addition, about 400 people at Wright Patterson Air Force Base in Ohio are involved in management of the program.

Under Lockheed Martin's proposal, the need for such extensive military oversight would be reduced significantly.

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