Monday, September 28, 2009

Fixed Price Claim: Another Alternate Engine Misfire

The manufacturers of the F136 alternate engine continue to manipulate the debate over continued funding of their back-up engine for the Joint Strike Fighter. Three weeks ago, the GE/Rolls team announced they had provided the Defense Department with an unsolicited “fixed price proposal”. Last week Colin Clark pointed out in his DoD Buzz blog that GE’s proposal was little more than a pledge to keep costs under control for a program – the alternate engine – that is so immature that such a promise is all but meaningless.

And today, GE/Rolls have once again announced that they are offering the government an unsolicited firm fixed price proposal. So now they are offering two firm fixed price proposals complete with the PR extravaganza that goes with such an announcement all in one month? That seems strange. GE may argue that their first offering was a “concept” and that this offering is an actual “proposal.” Why didn’t they just offer the proposal to begin with? Whatever semantics you use in naming both of these offers, it’s important to remember that both have been unsolicited by the government because the Joint Program Office has been clear that a FFP is not what they want at this stage of the program.

As GE/Rolls-Royce touts this latest “offer” as big news, they ignore an inconvenient fact – Pratt & Whitney offered the same fixed price option to the Joint Program Office several months ago, and the government decided to stay with their current acquisition strategy, which Pratt & Whitney has respected and complied with. Respecting the JPO’s wish to remain with the cost plus acquisition strategy, back on Sept. 15 – two weeks before today’s “big” announcement – Pratt & Whitney presented a proposal to the DoD that detailed significant progress in reducing costs for the matured F135 engine. The company released information on their Low Rate Initial Production Lot 4 contract proposal, which offers double digit percentage cost savings over the previous contract for Lot 3, reflects aggressive efforts to reduce costs and provides the Joint Program Office specific protections against cost growth and incentives for even further cost reduction.

And, as has already been reported for several weeks, Pratt & Whitney stands ready to offer a real fixed price contract for F135 engine production if the JPO requests one, which they have not.

The differences between how this issue has been handled by the manufacturers of the two engines speak volumes about the programs. The F135 is established and mature, with production engines set for delivery later this year after more than 12,000 hours of testing. It is also based on the proven and highly successful F119 engine powering the F-22 aircraft, meaning testing and operational performance on that fielded engine has pushed the F135 engine even further along its path to maturity. Pratt & Whitney achieved a 30% cost reduction in the F119 program (and did so without a back-up engine program in place), and because of this experience with fifth generation engine production, Pratt & Whitney can pinpoint specific savings for the government that come along with the efficiencies accompanying later stages of production. Pratt & Whitney believes similar cost savings can be achieved on the F135 engine and is working towards this goal, realizing additional cost savings with every day, week and month that passes.

The F136 alternate engine, on the other hand, is immature and unproven. It has been reported that nine months into SDD testing it has accomplished fewer than 50 test hours and has already experienced numerous challenges resulting in both test engines being taken offline, putting the program behind schedule. By comparison, P&W’s F135 had four engines running, both CTOL and STOVL configurations, and had accumulated 695 hours nine months into SDD testing. The alternate engine is not based on a legacy production design, putting it even further behind the learning curve in stark contrast to the proven F135.

As tempting as it is to see today’s announcement of an unsolicited firm fixed price proposal for the F136 engine as big news, it is important to have the perspective and context of the overall program. How can a fixed price be offered on an engine that lacks final specs or a production contract?

As I mentioned in a previous post, GE claims they have already spent 70% of the $2.4B allocated to develop their engine, yet they have only accumulated 50 hours of test with no engines currently running. In comparison the F135 Program had more than 6,500 hours and 9 engines in the test program at the same funding point.

So you have two engine programs; one has spelled out the specific cost management of engines with more than 12,000 hours of testing and in production. The other tries to make news with an announcement on a firm fixed price proposal when they don’t even have any engines running at test. The doublespeak falls flat when it is revealed the proposal is for an engine that is not running and facing daunting schedule, performance and cost risks.

-- Eagleblogger

Friday, September 25, 2009

White House Commends the Senate for Not Including Alternate Engine Funding

The White House issued its Statement of Administration Policy this morning on the Senate's Defense Appropriations bill. The statement commends the Senate for not including funding for the alternate engine, which could result in a veto of the entire bill.

The Administration commends the Committee for its support for the termination of programs that are no longer needed or are not performing as intended. The Administration appreciates that the Committee does not include unrequested funding for three such programs that could result in a veto – unrequested advance procurement funding for the F-22 fighter aircraft, the continued development of the Joint Strike Fighter Alternate Engine, and additional funding for the VH-71 Presidential Helicopter Program. The Congress is urged to oppose funding these programs during floor action and in conference.

As President Obama said when he presented his budget in May: "In addition, we're going to save money by eliminating unnecessary defense programs that do nothing to keep us safe - but rather prevent us from spending money on what does keep us safe. One example is a $465 million program to build an alternate engine for the Joint Strike Fighter. The Defense Department is already pleased with the engine it has. The engine it has works. The Pentagon does not want - and does not plan to use - the alternative version."

The full Statement of Administration Policy is here.

Thursday, September 24, 2009

Engine Incident Will Not Hamper F135 Program

The news that an F135 engine experienced an incident that caused damage during testing recently has prompted some questions about exactly what it means to the program.

The good news is that initial information suggests it will not negatively affect engine tests or current flight test schedules.

The first point to make is that Pratt & Whitney is conducting a thorough investigation into the incident, working closely with the Joint Program Office to figure out exactly what caused the incident.

It is also important to note that this is exactly the type of thing you expect and want to find during the advanced stage of testing that the F135 engine is undergoing at this point so it does not become an operational concern. Because the program is so mature – more than 12,500 hours of ground and flight testing – the engine is being put through extremely rigorous testing, pushing the engine much harder than during earlier testing phases. The engine which experienced the incident had the equivalent of eight years of use on it, and the test being performed was in conditions simulating extended supersonic flight at high altitude.

As we have mentioned before, the F135 engine is based on the F119, which is powering the F-22 aircraft, and has more than 100,000 successful operational flight hours. Because the F135 is derived from such a proven engine, we have been able to retire more than 90 percent of the risk associated with the engine. In contrast, an entirely new design, such as the alternate engine, is likely to have a high rate of incidents; much higher than the F135 program has seen. Defense Secretary Robert Gates himself expressed this opinion in relation to the alternate engine. In fact, when you look at the F135 program as a whole, there have been relatively few problems over the more than eight years of development and testing of the engine.

One reason we can say the recent incident is not likely to affect the program schedule or overall flying operations is because the testing was on the second generation of the engine rather than the first. Again, this is a benefit of the maturity of the F135 program. The hardware on the first generation of the engine has already been fully tested and qualified, and is right now safely meeting program schedule requirements. These are the engines being used on the current flight test program.

There’s an important technical point to make about the incident. It was contained in the fan and high compressor sections of the engine and did not affect the turbine section, which had been redesigned after previous testing revealed an issue.
Testing is done for a reason – to find issues before the engine is put into production and ensure the highest possible operational reliability. No rational person would argue that it should be any different.

So how does this affect the alternate engine debate? It has been reported that the F136 has suffered three test failures, and has fewer than 50 hours of SDD test time, since commencing SDD testing in January.

By comparison, P&W’s F135 had four engines running, both CTOL and STOVL configurations, and had accumulated 695 hours nine months into SDD testing. It should also be noted that GE claims they have already spent 70% of the $2.4B allocated to develop their engine, yet they have only accumulated 50 hours of test with no engines currently running. In comparison the F135 Program had more than 6,500 hours and 9 engines in the test program at the same funding point.

This isn’t to say that the competition makes bad engines. To the contrary, they make excellent products. The fact is, as even GE freely admits on the record, that all high performance jet engines will experience issues in the development phase. The F135, however, since it was derived from the proven F119, would be expected to have fewer problems in development and history has proved that. That is one of the reasons it was chosen initially. And, that has proven to have been what has happened. Having an alternate engine doesn’t provide insurance against these issues, it just means the there will be additional risks and issues associated with that second engine. And, that drives up costs and puts the schedule at risk – risks we can’t afford now.


Wednesday, September 23, 2009

When is a fixed price offer really a fixed price offer?

Colin Clark at DoD Buzz has some interesting news on the recent "firm fixed price offer" touted in the media by alternate engine proponents.

We spoke with a source over the weekend who read us some emails which were apparently from Pentagon officials claiming that General Electric and Rolls Royce, makers of the F136, had not actually made the government a fixed price offer...

So I sent the Pentagon folks a series of questions, trying to get a firm fixed handle on the question. It turns out GE offered “what they called an F136 Fixed Price Concept,” one that the Pentagon folks said they believed “was presented in good faith.” The concept “included Not to Exceed values for Low Rate Initial Production Lot 5 (which equates to the 2011 timeframe),” according to the air warfare acquisition people.

So what has to happen for any of this to mean anything, beyond being clever maneuvers by powerful companies eager to convince lawmakers to give them money. GE/RR would have to offer — tah dah! — a proposal. Why, you ask? The air warfare folks said “a proposal would provide much more detail in order to properly analyze its value and ability to deliver to the specific requirements.”

Full post is here.

United Technologies foresees 30% cost drop for F-35 fighter engine

WASHINGTON, Sept 23 (Reuters) - United Technologies Corp (UTX.N) expects to pare costs as much as 30 percent over time on the engine it is building for the world's biggest fighter aircraft program, the board chairman told Reuters Wednesday.

The cost of the F135 engine being built by the company's Pratt & Whitney unit is at the heart of a battle with rival engine team General Electric Co (GE.N) and Rolls Royce (RR.L).

At stake is a potential $100 billion market to power Lockheed Martin's F-35 Joint Strike Fighter, the Pentagon's costliest arms-buying program. The Obama administration is seeking to terminate the GE-Rolls Royce competitor engine on the ground that it is superfluous and would not yield any cost savings.

Full story here.

Examiner Op-Ed: Congressional boondoggle would cost American taxpayers billions

Keith Phillips writes in today's San Francisco Examiner:

Because of this, Obama and Defense Secretary Robert Gates have made overhaul of defense procurement a priority. An example of their efforts is the debate about engines for the new F-35 Joint Strike Fighter.

The military is in the process of replacing its aging fleet of fighters with the F-35s. A Pratt & Whitney engine will power this plane. Despite objections from military officials, an alternate engine is also being developed. There’s no need for this alternate engine and Congress should not put it in the budget, as it has done previously via earmarks.

This alternate engine development is a massive $6 billion program that’s unnecessary and wasteful. That’s why Obama cut it from his budget, saying, “They do not want — and do not plan to use — the alternate version. That’s why the Pentagon stopped requesting this funding two years ago. Yet, it’s still being funded.”

Resources are limited. American taxpayers work hard for every dollar and the government must be prepared to justify how every dollar is spent.

If the alternate engine program continues, it will mean $6 billion thrown away. That means fewer airplanes, fewer training hours for our troops and less medical care for returning veterans.

Not only is the cost extraordinary for the unwanted engines, it could make the F-35 less reliable. These complex machines need thousands of spare parts. A second engine would likely double the number of parts, creating greater complexity and additional burdens on ground crews. These increased burdens will come without saving money or improving performance.

Full column is here.

Friday, September 18, 2009

Early results show little or no impact on cost and schedule

Reuters reports on preliminary findings that show engine incident will have little or no impact on cost and schedule.

NEW YORK (Reuters) - A worn-down component in the forward section of United Technologies Corp's F135 engine for the F-35 fighter jet may have caused the tip of a fan blade to break off during testing, the company said on Friday.

A spokesman for Pratt & Whitney, the United Technologies unit doing the work, said the modifications will be minor and would result in little to no disruption in cost or schedule.

The company said earlier this week that the engine, which it builds for the Lockheed Martin Corp F-35 fighter jet, was damaged during a qualification test last week.

The engine had been tested for five hours at "supersonic conditions" and endured the equivalent of 8 years of use, a Pratt program expert told reporters Friday.

Full story is here.

Wednesday, September 16, 2009

Pentagon Not Wavering on Alternate Engine Cancellation

At a press briefing yesterday, Pentagon spokesperson Geoff Morrell poured cold water on the notion that recent problems with a test F135 engine might cause the DoD to rethink its position on the alternate engine.

Excerpts below and a full transcript here.

DoD News Briefing with Geoff Morrell from the Pentagon
September 15, 2009

Q (Off mike.) The second engine, this long-running saga; you know, there was a failure Friday of the Pratt engine in durability testing.

Does that raise cautions within the Pentagon here that their approach to stressing just a single engine might not be the prudent approach while this investigation is going on?

MR. MORRELL: No. Not at all.

Q Why not?

MR. MORRELL: There is -- there is no wavering among anybody in a decision-making position here at the Pentagon about the preference to proceed with a single engine rather than an alternate engine as well. Listen, the mishap that took place, I guess over the weekend, involving the F-135 is unfortunate, but not expected. We're in the test phase, development phase of these engines, and those things happen.

Q So where's the leverage on Pratt Whitney (sic) if they know they're the single engine maker? And -- you can read them the riot act, but if they know they're the monopoly, what's their incentive to get their act together on cost and schedule? I --

MR. MORRELL: Well, listen. You know, reputations are at stake here, Tony. I mean, there are -- there are other contracts. There are other programs in the future, no doubt, that they'd like to be a part of...I think all the talk of a second engine, an alternate engine, is wasted energy. The second engine is not going to fix the problems with the first engine. I mean, buying two of everything is not going to be the solution to all of our problems and development programs across this department.

Tuesday, September 15, 2009

Duplicate defense spending a big waste

Associated Industries of Florida CEO Barney Bishop writes in today's Florida Sun Sentinel that:

With a national deficit of $1.6 trillion - three times higher than last year - something has to give. If we are to get out of this, our government needs to spend smarter and cut where cuts can be made
Bishop goes on to highlight the alternate engine for the Joint Strike Fighter as a place where cuts can be made. Bishop explains:

While the Joint Strike Fighter has experienced proven success with its current engine, and the alternate engine has been called "unnecessary" by the Department of Defense and several independent studies, funding for this project persists. In fact, Congress has already spent more than $1.6 billion on this program, and an additional $5 billion will be needed over the next several years to have a tangible, working alternate engine. President Obama has threatened a veto if the final defense authorization bill includes funding for the alternate engine.
Full column is here.

JSF Program Deputy Director "Not Losing Sleep" Over Engine Incident

An update since our last post:

According to a report from Reuters, Deputy Program Executive Officer for the F-35 Lightning II Program Office Major General C.D. Moore told reporters a problem with the F135 engine should not delay a planned flight test schedule.

"Moore said he was optimistic about resolving the issue because an earlier version of the engine had already passed the certification testing. 'I'm not losing sleep over it,' he told Reuters after the news conference" according to the story.

Moore also said that he was confident that the program can meet its cost and schedule requirements.

He said he was optimistic about resolving the issue because an earlier version of the engine had already passed the certification testing.

Full story here.

Monday, September 14, 2009

F135 testing to remain on track

During a recent qualification test on an F135 CTOL engine, an incident occurred resulting in damage to the forward section of the engine. The damage is limited to the fan and high compressor sections of the engine. A redesigned turbine section of the F135 engine installed on this engine was unaffected and not involved.

Reuters reports on the story here.

Pratt & Whitney is currently conducting a thorough review and inspection of the engine to determine the root cause of the damage and minimize impact to ongoing engine testing.. According to Graham Warwick of Aviation Week, primary contractor Lockheed Martin has confirmed that the incident will cause no delay to flight testing.

Second generation hardware designs were being evaluated in this test and are not installed in the F135 engines currently powering the flight test program. As Reuters reports, at the time of the incident, the engine had run through 2455 cycles, an amount equal to eight years of operation. The first generation hardware installed on existing flight test engines has already completed this testing and continues to perform well. The affected engine was a system, design and demonstration engine, and identifying issues is not unusual and is part of the process of retiring risk before the engine becomes operational.

These types of incidents occur on all engine programs at this stage of development. Because the F135 is derived from the proven F119, we have had relatively few incidents. In more than 12,000 hours of ground and flight testing we have already retired more than 90 percent of the risk associated with the F135.

Even for a high quality engine manufacturer like GE, an entirely new engine like the alternate engine is likely to experience similar challenges. This has already occurred with at least a couple of incidents on the GE alternate engine. As Reuters notes, Secretary Gates has said there is “there's no reason to believe that that prototype engine, or that that new engine would not encounter the same kinds of challenges and issues that other developmental engines on this aircraft as well as others have encountered in the past.”

Our focus remains on continuing to support a successful flight test program, continuing to work aggressively towards our cost goals, and continuing to retire the remaining risk in our system, design and demonstration engines.

Wednesday, September 9, 2009

Project On Government Oversight offers a reality check on competition

POGO (Project On Government Oversight) offers a dose of reality on the requirements of the Weapons System Acquisition Reform Act (WSARA), which alternate engine proponents have been trying to use to make their case for continued funding.

While the WSARA calls for competition on major defense acquisition programs in most cases, there are some important exceptions---which alternate engine proponents have ignored. As POGO writes:
Well, not exactly.
The law acknowledges that in some cases, competitive prototyping should be waived
(1) when the cost of producing competitive prototypes exceeds the expected life-cycle benefits, or
(2) when not issuing a waiver would undermine the ability of the Department of Defense to meet critical national security needs.
They go on to explain:
(P)roponents of the alternate engine may question the propriety of these waivers, the terms under which the White House has opposed the funding for an alternate engine are as follows: "Expenditures on a second engine are unnecessary and impede the progress of the overall JSF program" (ding ding, undermining critical national security needs). The Air Force has said they would have to cut 53 F-35s to continue funding the second engine, and in some cases it appears that the alternative engine would draw its funding from the program's management reserve, which could directly undermine the development of the program."

But more importantly, no one has come out to definitively say that the competition would result in overall cost savings. (emphasis added)
And, POGO notes, the argument has not been persuasive with two of WSARA's most ardent supporters.
To the degree to which competitive prototyping is a measure to result in savings for taxpayers, the case for an alternate engine has not been made. Moreover, a chief author of the Weapons Acquisition Reform Act, Senator John McCain (R-AZ), and Defense Secretary Gates remain strong opponents of an alternative engine.
The full post is here and is worth a read.

Senate appropriators decide against cash for F-35 Joint Strike Fighter engine

The Hill newspaper's Roxana Tiron writes about Senate appropriators deciding not to include funding for the alternate engine.

Senate defense appropriators on Wednesday decided not to add funding for the F-35 Joint Strike Fighter alternative engine.

Appropriations Committee Chairman Daniel Inouye (D-Hawaii) said that he decided against funding the engine made by General Electric and Rolls-Royce because he was concerned about the floor vote on the entire 2010 defense appropriations bill.

The Obama administration has threatened to veto the defense bill if funding for the second engine — which it did not request — is seen to jeopardize the entire F-35 program.

Read the full article here

Tuesday, September 8, 2009

Gates Got It Right: F-35 Extra Engine Unneeded

Defense analyst Loren Thompson writes today on the Early Warning Blog that Secretary of Defense Gates got it right: an extra engine for the F-35 is unneeded.

Let's set aside the fact that the money for the second engine is being taken out of other F-35 accounts in a manner detrimental to the overall effort, and just look at the merits of the alternate-engine concept. There has only been one major effort to buy competing engines for military aircraft -- which also pitted a winning Pratt engine against an alternate GE engine -- and in that rivalry, the GE product never managed to match the safety record of the Pratt offering. Proponents of repeating that process point to savings, but those materialized only after the government had paid all the costs for designing, developing and producing the rival engine. The government has to spend more money to get to the point where competition generates savings, because it is the only customer for either engine so it has to foot the whole bill for both powerplants.
The full post is here.

Thursday, September 3, 2009

Alternative F-35 engine is wasteful

An opinion piece in the Witchita Eagle urges federal officials to avoid wasteful spending and protect military readiness by opposing funding for the F-35 alternative engine.

Mike Pompeo writes....At a time when the federal deficit is projected to soar to nearly $1.6 trillion this year, we need to look for every opportunity to cut wasteful spending…. The military needs Lockheed Martin's F-35 Joint Strike Fighter but does not need to waste money on an alternate engine for this warbird, as some in Congress seek to do. The current engine, the F135, is in production and is exceeding expectations.

Read the full opinion piece

Tuesday, September 1, 2009

Secretary Gates on Bloomberg TV

powered by
COOK: All right. Let me ask you about a couple other controversial programs, again, programs that members of Congress keep pushing for, you're pushing against. An alternative engine for this plane, does it make sense to build a second engine for this plane? You say no.

GATES: Well, we've done the business case, we've looked at it a number of times. It would be an additional cost of several billion dollars. It would start three to four years behind in terms of where we are with the F- 135 engine and there's no reason to believe that that prototype engine, or that that new engine would not encounter the same kinds of challenges and issues that other developmental engines on this aircraft as well as others have encountered in the past. At this point, based on the business case, we don't think it's necessary.

Gates renews White House veto threat over engine

Associated Press reporter Anne Gearan writes about Gates' strongly worded message that there is no need for two engine makers during his visit to the F35 manufacturing plant yesterday....The Obama administration renewed a threat Monday to veto a $680 billion defense spending bill if it includes money for two separate engines for the next-generation jet fighter, a luxury the Pentagon says it cannot afford.

Defense Secretary Robert Gates, touring the Lockheed Martin Corp. plant where the first of the $100 million planes are being assembled, said there is no need for two engine suppliers.
"We have looked at the business case a number of times," Gates said. "The general conclusion is that it would cost several billion dollars in addition," and cause headaches for production down the road.

In an era of defense penny-pinching, Gates said, "we feel strongly there is not a need for the second engine."