Air Force, Lockheed reach verbal deal on C-130J

Lockheed Martin confirmed Oct. 21 that it has reached a verbal agreement with the Air Force on a multiyear contract to purchase 83 C-130Js.

"We have reached a verbal agreement on the C-130J multiyear II contract," company spokesman Stephanie Stinn told Inside Defense in an Oct. 21 statement. "Our goal from now until the end of this year is to compete the remaining contract actions and certifications, including the congressional notification process, prior to award."

The contract was expected this summer, but negotiations have continued past that target. Service officials, including acquisition executive William LaPlante, remain concerned that because the contract calls for a quantity increase, a yearlong continuing resolution could disrupt the production plan.

"The C-130J multiyear plans to procure 13 more aircraft in FY-16 than in FY-15," spokesman Maj. Robert Leese told Inside Defense in an Oct. 20 email. "That increase would be prohibited under a yearlong CR without an exemption from Congress permitting an increase in production quantities."

Leese said the service does not need an exemption from the current short-term CR in order to award and begin executing the contract, but if the CR continues into next year, it would begin to disrupt the plan to increase production over FY-15 levels. In that case, the service may be forced to "break" the contract, as LaPlante alluded to in a presentation earlier this month, and renegotiate it. Leese said such a scenario "could lead to a loss of savings from the multiyear contract."

Lockheed officials have said there is a precedent for an exemption for multiyear production increases, particularly in cases where the service has already made significant investments in advanced procurement, which is true in the case of the C-130J.