General Dynamics has agreed to pay Lockheed Martin millions of pounds after a delay in sending requirements for a turret on its scout armored vehicle. (General Dynamics)
LONDON — General Dynamics has agreed to pay millions of pounds in compensation after it failed to stick to a timetable to provide a complete set of requirements to Lockheed Martin UK for the development of a turret to be built for a key new British Army scout vehicle program.
Sources familiar with the situation, who asked not to be identified, said at the DSEi defense show in London the two sides had settled their differences and agreed to a deal after months of wrangling over the issue.
As of Sept. 10, nothing had been signed ahead of final discussions continuing over the fine details of the arrangement. General Dynamics pulled out of a DSEi briefing for industry executives and others on the scout vehicle at the last minute, saying they didn’t have an executive available.
General Dynamics UK appointed a Lockheed Martin-led team to design and deliver a turret after it signed a 500 million pound (US $790 million) contract with the Defence Ministry in mid-2010 to develop a family of Specialist tracked armored vehicles for the British Army.
The scout version carries a turret armed with the new CTA International 40mm case-telescoped cannon.
General Dynamics and Lockheed Martin declined to comment on the compensation claim.
The sources said General Dynamics had paid its sub-contractor a small amount of cash in settlement of earlier issues but Lockheed Martin had subsequently sought additional claims for a substantial amount of cash. The exact amount of the settlement is not known, but the sources said it runs into several million pounds.
The scout vehicle being developed by General Dynamics is designed to replace the aging BAE System CVR(T) scout vehicle used by the British Army.
Other variants, like a protected mobility recce support carrier, will not use a turret.
The Specialist vehicle family being developed by General Dynamics will use a common platform based on the ASCOD design provided by the European land systems arm of General Dynamics.
Despite the wrangling with Lockheed Martin, work has continued on the turret. In a statement released by General Dynamics at DSEi, the company said the first development turret for the scout variant had been built and tested.
The platform is due to form the core of the British Army’s medium-weight armored forces, although its introduction may be much later than expected.
The in-service date for the first of the scout vehicles was originally set for late 2015, but a decision on a manufacturing contract for the machines is not expected in the immediate future. General Dynamics admitted last week that development work was taking longer than expected.
“We have been conducting a number of risk-reduction efforts to help ensure the future success of this important program. While these efforts have taken longer than originally anticipated, they were both necessary and prudent steps in making sure that we deliver the British soldiers with this critical capability,” the company said in a statement.
The mobile test rig General Dynamics brought to the DSEi show has completed 1,800 kilometers of operational and tactical mobility trials since it was rolled out in June 2012. The company said it will do more than 10,000 kilometers by the time it completes accelerated life testing tests.
The sources said the scout vehicle is facing several issues, the most important of which is being overweight.
Problems on the program surfaced this year when General Dynamics’ annual report for 2012 pointed up a $32 million cost growth associated with the Specialist vehicle development for the year.
In April, the Specialist program was part of a wider restructuring exercise at General Dynamics UK, with internal ownership of the deal moving from Britain to General Dynamics Land System business in America.
In its statement to Defense News, the company said the recently announced organizational changes “were made to more effectively and efficiently leverage General Dynamics’ extensive expertise in the design, development and manufacture of combat vehicles.”
Lockheed Martin’s deal with General Dynamics is one of two British Army programs involving turrets secured by the company.
The company won a nearly 1 billion pound contract around the same time as the Specialist vehicle deal to upgrade the in-service Warrior infantry fighting vehicle with a new turret and other improvements.
The 2010 scout vehicle contract with Lockheed Martin and partners, which includes specialist turret builder Rheinmetall, will see three turrets delivered for the integration and test program of the scout demonstration phase contract.