Lockheed renews effort for multiyear contract on cargo aircraft

Lockheed Martin Corp. is renewing its efforts to secure a
long-term contract from the Pentagon for one of its workhorse cargo aircraft —
the C-130J.

Lockheed Martin, for several years now, has wanted to clench
a multiyear contract for the C-130J and has submitted unsolicited proposals to
the Air Force. So far, however, no
agreement has been reached.

{mosads}That could all change in a matter of months. The defense
company is in negotiations with the Air Force to finalize the price for 65
C-130J. That price and the result of that negotiation are going to serve as a
starting point for a multiyear contract negotiation, said Jack Crisler,
Lockheed’s international vice president for air mobility business development.

“What we will have to demonstrate is a business case that
shows a 10 percent savings from that,” Crisler said.

Sometime in September or October, Lockheed plans to propose
a five-year contract, Crisler said. The Air Force manages its own C-130J buys
but also those of the Marine Corps.

The discussions of a multiyear contract could also include
planes for Special Operations Command and the Coast Guard.

If the Pentagon accepts the multiyear proposal, Lockheed
could see money for the planes as early as fiscal year 2012.

David Van Buren, the Air Force’s acquisition executive, said
Friday that so far those in charge of the C-130J buys have done “quite a good
job” negotiating a good price for the regular C-130J contracts with Lockheed
Martin. But when it came to discussions of another multiyear, Van Buren said
that in “prior discussions” Lockheed “was unable to show savings from a multiyear
contract, which would have made everybody enthused to go forward.”

But Van Buren indicated the Air Force is willing to carry on
the discussions.

“If Lockheed had a different approach to cost structure, or
had some thoughts or ways that they felt that they could give the Air Force —
from where we are right now — a 10 percent reduction for a multiyear, or
greater, then I think the Air Force would take it very seriously,” Van Buren
told reporters on Friday.

One C-130J costs about $60 million. The “fly-away” cost of one C-130J
varies based on quantity and configuration. According to the Air Force,
the contract price for one C-130 J delivered in 2010 is $57.6 million,
without government furnished equipment or spares.

The C-130J is the successor to the C-130 Hercules E-H models
that form the backbone of America’s tactical airlift. Lockheed developed the
newer J-version as a private venture.

The C-130J flies farther, faster, with more cargo and higher
reliability than the older aircraft versions, the company contends.

The C-130J had its share of critics within the Pentagon, who
almost succeeded in cutting the contract with Lockheed Martin short. But
congressional pressure from Georgia and West Virginia lawmakers, where the
plane is built, has kept the program going.