Three (More) Wrongs Still Don’t Make A Right

Poor General Electric. Sure, they generated $150 billion in revenue last year, squirreled away $79 billion in cash and equivalents, as well as boast $175 billion in backlog (which sure is a lot of light bulbs and dishwashers). But forget all that, not to mention the double-digit growth year on year. Instead, GE sheds crocodile tears over the “barrage of attacks” they’ve apparently suffered while trying to justify the unwanted, unnecessary and unaffordable F136 extra engine.

GE’s response has been swift, though it’s come from the rhetoric department, rather than engineering. While Pratt & Whitney’s F135 continues to power every F-35 flight and the F136 languishes on the test stand, GE has turned up the heat (they make nifty ovens too) through an ad campaign that sadly falls far short of the term self-cleaning. So let’s debunk three of the most egregious myths.

One frequent refrain of recent GE/Rolls-Royce ads concerns a so-called $100 billion monopoly. In fact, page 9 of a GAO report dated March 24, 2010 lists the figure at $60 billion, half of which is sustainment often performed at government depots. Of the remaining $40 billion, only about $20 billion covering initial engines and spares would be available for competition.

Another misleading claim is that F-35 competition will save $20 billion. The closest GAO comes to estimating savings is that “it may be reasonable to expect savings of” 10-12%. Applied to our $20 billion figure above, maximum savings would be $2.4 billion during 25 years of production. In reality, the extra cost of fielding two engines in a 50/50 split buy environment will likely negate any savings.

Last, but sadly not least, is the spurious charge about a $2.5 billion F135 cost overrun. The fact is $1.7 billion of this alleged cost growth comes from new scope directed by the government. Of the remaining $800M, approximately one third is attributed to the lift system hardware developed by Rolls-Royce as a subcontractor to Pratt & Whitney for the F-35B STOVL variant. The same Rolls-Royce who is partnered with GE on the F136! Wonder what that says about the future cost growth of the extra engine!

We could go on, but to read our previous myth debunking blogs about competition, risk and the industrial base, please click here.

Put aside the clever visuals, headlines and body copy and some basic facts remain irrefutable. First, the F135 was chosen through marketplace competition at the contractor level years ago. Second, its performance since that time has garnered all necessary government certifications. Third, two presidents representing both major parties, their secretaries of defense and senior leaders in the Pentagon have all advocated killing the F136. Fourth, one engine provider is the norm for DOD aircraft, a situation that has given GE roughly 75% of the military engine business from Apache helicopters to F/A-18 fighter jets.

Such a dominant position should allow GE to put away the handkerchief and perhaps discontinue using the “hot air fluff cycle” too.

– EagleBlogger