Wednesday, April 27, 2011

Truth: An Unfortunate Casualty of the GE Ad War?

Defense industry sage Dr. Loren Thompson of the Lexington Institute recently followed up a article critical of the F136 extra engine with another entry on his own site, this time chastising GE for their increasingly desperate advertising tactics.

Thompson applies his keen eye to GE’s misleading portrayal in a recent print ad about a single Government Accountability Office report that purports to suggest “total savings of about 21 percent in overall life.” In fact, he states, “The 21 percent savings are unsubstantiated claims about an earlier program that GAO acknowledges it has not analyzed in depth. The actual savings GAO thinks possible from the current program are in the 10-14 percent range -- but you wouldn't know that from reading the ad because GE has cropped the picture so you can't read the full text on that page of the report.”

No other authoritative source in the government is projecting such savings from a so-called competition and with good reason. Moreover, a $62 billion GAO figure is magically rounded up to $100 billion by GE, further obfuscating the fact that the actual amount up for grabs in a dual-source scenario is much smaller. Why? Because as Loren Thompson notes, “Most of the money in the lower figure would fall outside any competition, because it consists of spare parts and support that only one company can supply.”

Saving roughly 10 percent of $20 billion would only net $2 billion and that just isn’t worth another $3 billion to finally complete the F136’s protracted development. This gamble looks even worse when you consider it would really just create a forced split buy scenario, primarily burdening the U.S. Air Force since the Navy and Marine Corps have repeatedly said they only have room on their ships for one engine, the Pratt & Whitney F135 that’s already government certified and in production.

Thompson concludes that the Pentagon “already have an engine that works fine, and that's all they need -- just like on every other plane the military services have developed for the last quarter century. But at least GE is honest about one thing: if Congress wants to keep developing its unneeded engine in the near term, it's going to cost taxpayers money that won't be available for more pressing needs.”

No wonder the White House and Pentagon have rightly opposed the F136 under both Republican and Democratic administrations. Their unwavering leadership, recently augmented by a new generation of fiscally conservative legislators, culminated in separate decisions by the House and Senate this year to defund the program. The Department of Defense directed the F136 team on March 24 to halt work, stating “The stop work order ended the expenditure of $1 million per day on an extra engine that the DoD has assessed as unneeded and wasteful.” Now, one month later, the program has been officially terminated. The truth is that powerful.

– EagleBlogger