Tuesday, February 23, 2010

Caveat emptor: The cost no taxpayer should bear

You might think that consensus in Washington is rarer than snow at this month’s Winter Olympics, yet there is at least one topic that has consistently elicited a surprising level of unity among objective policymakers and analysts: the need to avoid billions of dollars of wasteful taxpayer spending on the alternative F136 engine for the F-35 Joint Strike Fighter program.

Two successive administrations representing both major parties and two of three congressionally mandated studies in 2007 have all reached the same conclusion: a so-called competition between the proven F135 engine now soaring in flight as it powers the F-35 Lightning II flight test program and the redundant F136 alternate engine will cost far more than it might ever save, even under the rosiest of scenarios. (The third study concluded that savings would be possible, but only under highly favorable conditions that do not exist today.)

On top of the $3 billion invested since 1996 to create a developmental F136 engine that has suffered four failures in fewer than 100 hours of testing, the alternate engine team says it needs “less than $1 billion” more, while Pratt & Whitney agrees with the Department of Defense estimates that it will cost an additional $3 billion over the next five years. The DoD can explain their models, but suffice it to say that ours are based on the experience of developing and now delivering our second fifth generation fighter engine, including the proven F119 that powers every F-22.

What the F136 manufacturer does not wish to highlight, is that this additional $1-3B (depending on whose math you believe) will still not result in an engine that is ready for competition against the F135. The additional billions will only fund the F136 through development. But the escalating costs of the F136 won’t end with development. Production and sustainment, another area for which Pratt & Whitney can comfortably speak from a position of experience, will cost the F136 team – and by extension every U.S. taxpayer – hundreds of millions of dollars more.

Meanwhile, Pratt & Whitney continues to bring the F135 price down, not because of a perceived “competitive threat” from a notional F136, but because program maturation and rigorous supply chain management will deliver lower prices with increasing quantities of fielded engines, just like it did on the F119. In fact, our most recent proposal to the government for F135 engines offers them a double digit percentage drop in price, as well as reduced risk of cost overruns.

In addition to misrepresenting the costs remaining to fund the alternate engine to the point of being "competitive", advocates for an alternate engine would also have Congress and others believe that if engine orders were split between two suppliers, the cost of these highly engineered power plants, built with the most sophisticated materials to the tightest tolerances, would decrease even faster than the already proven economies of scale derived from a single, successful design, as was proven on the F119. This misleading notion is also tethered to what the alternate engine proponents refers to as a $100 billion market for the F-35 engine. This is a gross exaggeration and includes spares and sustainment costs that simply can’t be competed.

Again, all of this could be considered conjecture were it not for the reasoned analysis of two presidential administrations, the Department of Defense and numerous other independent studies. And whether the additional cost of the F136 is “just” another billion or more like $2.5 billion, increasingly scarce taxpayer funds will bypass countless worthy causes for an unwanted, duplicative engine with absolutely no military requirement.

The snow may have returned to Vancouver by then, but the Games will be long gone.

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