House Armed Services Committee Chairman Adam Smtih (D-WA), who will help shape the upcoming defense policy bill, said today he wants the Pentagon to change the way it does business with defense contractors, especially with intellectual property arrangements, so the government can lower costs and promote greater competition.
Smith, who spoke during an event hosted by the American Enterprise Institute, said one of his top priorities is ensuring the Pentagon is "getting better at purchasing equipment, both large and small," specifically the F-35 Joint Strike Fighter manufactured by Lockheed Martin.
Smith, who has called the F-35 a "rathole," said he does not believe Lockheed Martin and subcontractors are incentivized to help the government cut the program's costs.
"I know how important the F-35 is," he said. "For all those people out there trying to educate me on it -- I have been to the classified briefings. I know what the Chinese have as well as anybody. But at $38,000 an hour to fly with an availability rate sub-50%, and an engine that is apparently going to become very difficult to fix past about 2030 so that even fewer of our planes are available, I think we can do better. I think we can get it below that number."
The Pentagon is currently reviewing the program and the Air Force has launched a study to determine the best fighter force mix including the F-35, the Boeing-made F-15EX and a future replacement for the F-16.
Smith, meanwhile, said he wants to counter "vendor lock," in which defense contractors own the intellectual property, often software, required to maintain and modernize a weapon system.
"What I want to do is I want to change the incentives so that we start getting our money's worth," he said. "I think it's really important."
Smith said he wants to "get creative" in the upcoming defense authorization bill about ways the Pentagon can introduce new competition to programs and negotiate for intellectual property, not just on future contracts, but existing ones.
"Contractors are really good at figuring out how to get paid and we're going to fight that battle," he said.
For future contracts, he said, DOD needs to spend "extra money" up front so it can own intellectual property and avoid long-term vendor lock.
"The more fun question in my mind, and my staff disagrees with me on this, is what about the contracts you already have?" Smith said. "What I want to try to get creative about is how do we incentivize some of those companies to change those contracts in a more favorable way."
Smith said he has "ideas" about how to do that but was asked by his staff to not discuss them publicly.
"I promised," he said.
Smith said he was recently briefed on the Air Force's secretive B-21 bomber program and was pleased to hear how well it was going. He said the program should be an example for DOD.
"They learned the lessons from the F-35," he said. "They're actually on time, they're on budget, they're making it work in a very intelligent way."
Smtih also said he is having positive discussions with congressional appropriators about the need to reduce spending on some legacy systems, despite the impact it could have in lawmakers' districts.
"I think your district wants you to spend their money wisely, not just spend it in their district," he said. "I think there is more value in making those right decisions than your average member of Congress understands."