Lockheed Payments Held by U.S. Increase to $195 Million

The U.S. Defense Department has withheld $195 million in payments from Lockheed Martin Corp. (LMT) because of flaws in the company’s system of tracking costs and schedules for F-35 jet contracts.

The amount held back through August is equal to as much as 5 percent of periodic billings by the Bethesda, Maryland-based company. It has swelled from $47 million in 2012, when the Pentagon started holding back the funds.

The Defense Contract Management Agency first raised concerns in 2007 about internal company data generated for Lockheed’s fighter programs -- the F-35, F-22 and F-16 jets. The agency decertified the Pentagon-mandated Earned Value Management System for the contractor’s aircraft operations in October 2010.

Payments will continue to be withheld until the agency determines that Lockheed’s Fort Worth, Texas-based aeronautics unit demonstrates that its corrective action plan approved in March works, according to the agency.

The agency has scheduled a review that will take place by Dec. 30, Jacqueline Noble, a spokeswoman for the Defense Contract Management Agency, said in an e-mailed statement.

Lockheed Martin spokeswoman Laura Siebert didn’t have an immediate comment on the increase in withholding or the company’s progress in correcting deficiencies with the system.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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