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

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.

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.

---Eagleblogger

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.