Lockheed to get U.S. spy-plane scrapping fees

[Robb]

WASHINGTON (Reuters) - The U.S. Army likely will pay Lockheed Martin Corp. tens of millions of dollars in contract termination fees for a botched attempt to produce a spy-plane meant to serve the needs of both the army and the navy, a senior army official said Monday.

Bethesda, Maryland-based Lockheed Martin, the Pentagon's No. 1 supplier, was not at fault in the scrapping of the initial, $879 million contract announced Thursday, said Edward Bair, the army's program executive officer for electronic warfare and sensors.

The total estimated production value of the program had been $8 billion, with the army expected to buy 38 aircraft and the navy, 19.

The army killed the deal because problems with the aircraft, the Aerial Common Sensor, were too pricey to fix. This set the stage for Lockheed to negotiate a settlement.

(more)

The ACS, courtesy globalsecurity.com:

[htuttle]

1. Whoa, whoa, wait a minute!

They say they cancelled it because of this? "problems with the aircraft, the Aerial Common Sensor, were too pricey to fix. "

But wasn't it Lockheed that submitted the initial bid and design for the aircraft? (designed to fulfill a set of specifications set forth in the bid process, I'd assume). So since they submitted a bad bid, they get paid for doing nothing?

Sheesh! That's sure the exact opposite of my experience working with city and state contracts...If you screw up on the bid, YOU pay (by having to lose money doing it, etc...), not the state or city...