Tuesday, May 18, 2010

Separating Myth From Fact

With lobbying intensifying over the wasteful extra engine for the Joint Strike Fighter on Capitol Hill, it’s worth addressing a few of the more outrageous claims being made by supporters of the alternate engine with some facts from the Department of Defense's paper on the issue

Myth: “Past experience shows that two engine manufacturers competing drives down costs, spurs technological innovation and improves contractor performance.”

Fact: The Pentagon says the alternate engine would still require a further investment of $2.9 billion, and there is no guarantee that having two engines will create significant enough long-term savings to outweigh the additional costs and the burden of maintaining two logistical systems. In the middle of two wars, DoD has other higher priority uses for $2.9 billion.

Many proponents of a second engine cite the “Great Engine War” of the 1980s – when the DoD purchased engines for Air Force F-15 and F-16 fighters from two manufacturers. While much has been made of this example, the facts tell a more nuanced and inconclusive story. According to the Department of Defense, while the competition did appear to improve contractor responsiveness to Air Force needs, there were only minimal reductions in the acquisition unit price of the engines. Accordingly, it is difficult to cite this example as proof that substantial savings will occur as a result of having two engines.

In addition, the current engine contractor achieved savings of about 40% on the F119 engine on the F-22 without an alternate engine. Instead, the savings were the result of aggressive government management, improvement in the manufacturing process, and investment by both the government and the contractor. Pratt & Whitney is prepared to duplicate these results on the F135 engine for the Joint Strike Fighter.

Myth: The extra engine is 70% complete and only needs an additional $1.3 billion over the next five years

Fact: According to the Pentagon, the alternate engine would still require a further investment of $2.9 billion. Some have suggested that the necessary additional investment is much less; however, they are only looking at the cost to complete development of the second engine. The investment of $2.9B includes the costs to finish the development, conduct directed buys to prepare the second source for competitive procurement beginning in FY 2017, and create the necessary logistics support to operate and sustain engines on deployed F-35 aircraft. In short, $2.9B is the total additional cost required to take the alternate engine to full competition. The $1.3 billion figure only gets you part way there.

Myth: The Joint Strike Fighter will be the primary military fighter in the future, replacing many existing aircraft. It will represent 90% of our fighter power for 30 years. So, to not provide for an alternate engine to the sole sourced primary engine would have us assume a risk for much of our country's active fighter power that we never have before.

Fact: According to the DoD, the Department currently maintains two tactical aircraft programs, the F-22A and the F-18, which utilize a single source engine provider. Both programs have enviable safety records, and DoD is satisfied with the engines for both programs. Over the years, significant advancements in engine design, testing, and production have enabled DoD to manage the risks associated with single engine systems without having to ground an entire fleet.

Myth: General Electric’s new fixed price contract proposal for the alternate engine requires the contractor to assume all the risk for cost overruns.

Fact: According to the DoD, the fixed price for the engines would require GE to assume the normal amount of risk for a fixed price contract. The price is contingent upon a fixed configuration, so any changes to that configuration would require modification of the contract price. The remaining portions of the contract may be cost-type line items, which shift the risk for performance of those line items to the Government.

Myth: The second engine is not very far behind. It will start production after only 100 of the current engines are produced.

Fact: The DoD says A direct comparison shows that the F-136 Initial Service Release (ISR) dates are at least 2-3 years behind the F-135 ISR dates. The F135 Conventional Take-off and Landing/Carrier Variant achieved its ISR date in February 2010, and the same ISR date is planned for the F-136 in December 2012. The planned F-135 Short Take-off and Vertical Landing ISR date is fourth quarter of FY10 and the same ISR date for the F-136 is planned for fourth quarter FY13. There is also no guarantee that a second engine program will not face the same challenges as the current program has already faced and be forced to delay its own program.

1 comment:

  1. Thank You! I have been wanting to post this same blog forever!
    Well said!