Comments on: HASC Calls Gates on F136

By: NIGHTSTALKER

NIGHTSTALKER — Fri, 26 Feb 2010 00:02:38 +0000

Do you really think we develop these things without the final user in mind? They are in it from the beginning, it is only in the Contractor developed aircraft that you have to worry about that situation occurring. Special Operations takes care to see that the product matches the intended user and always has — lobbyists and Congres fought us hard trying to induce their will, but we always tried to get it done fast and when in doubt Classify high and plow forward quickly.

By: Gray Eagle

Gray Eagle — Thu, 25 Feb 2010 16:55:58 +0000

Missing in this conversation: Has anyone really asked the pilots who will fly the F-35 what they really need in engine performance under combat conditions? Too often, the people who must use the aircraft get left out by the developers and manufacturers who sit back, look over the top of their glasses and remark “now, this is what you really need!!” The user’s QOR and SOR get ignored — - after all, they’re not engineers and don’t understand the problem.

By: NIGHTSTALKER

NIGHTSTALKER — Thu, 25 Feb 2010 15:39:57 +0000

I suggest as a former XO of the DET 2 Skunk Works at Carswell, that we leave these decisions up to the guys that have sought ought all the best solutions and then made the decision, to quote a famous battlefield commander, “There is no such thing as a wrong decision, you take all the knowledge you have at the time on the subject, all the training you have, search out all the diverse opinions in the time frame you have, and then by God you are the man with the authority — make the decision. You can either advance, retreat, or stay in place trying to figure out what to do — if you do the later in time the enemy will figure out your range and all will be lost.” Not sure who said that, too many 12 hour bottle to throttles and set up two shots of Everclear at the club — not enough brain cells left, I guess, but that applies to basically all decisions — never blame someone for a wrong one — choose the man who you thing is the correct person — put him in charge, and let him be in charge. Same goes for the general in Afghanistan now, you chose the man — now when he says I need 43,000 troops now — then there better be 43,000 troops en route to hi,m — and you know what — 45,00 troops where leaving Iraq just that week. Wouldn’t that have been handy, then they could have just been part of normal rotation after that as their time in Country (IRAQ/Afghanistan is up) — good luck.

By: Jerry HYndman

Jerry HYndman — Thu, 25 Feb 2010 14:55:18 +0000

May I ask if you are the John King who used to be a PCO at SA-ALC in LPKA?

By: John King

John King — Thu, 25 Feb 2010 02:59:25 +0000

Like Congress, we need to see the business case analysis. But, think about this. Say there are 3,200 aircraft planned (U.S. and foreigners), and the engine accounts for 20% of the aircraft cost, with spares over the life cycle for swap outs (say 3 complete engine replacments, with maybe 30 other engine pulls for only repair/replacement of components for an equivalent of one complete replacement engine). Then say there is a 10% profit rate. That would translate into about $20 billion in profits just for the engine over its life cycle. Now, regardless of whether two competitors went head-to-head each year, at today’s rough estimate, each competitor might take home half those profits — $10 billion. So, if the taxpayers didn’t pay for the completion of the alternative engine development, why wouldn’t it make business sense to GE/RR to throw in another $1 billion of their own money to complete the engine so they could get to the $10 billion?

Good deal for taxpayers, too.

By: Formula

Formula — Wed, 24 Feb 2010 22:43:05 +0000

John and Honorman, you guys did a great job hashing this one out. It would interesting to see if GE and RR would go that far.…maybe they would. However, that would totally change how we conduct acquisition within the DoD. One fact for sure, the USG would have to figure out how they can accept money from a contractor. Maybe, if it did go this route, GE and RR could claw back their individual investments based on the savings they would be providing to the USG and its FMS partners for sustainment support, reliability, reduced CIP costs, maintainability, time on wing and exceeding safety requirements. Additionally, the USG could also provide in the form of an Award Fee or claw back those monies that GE and RR has saved the USG and its FMS partners for the lack of any engine redesigns/upgrades to meet the additional weight that the F35 may gain…we know its coming.

By: John King

John King — Wed, 24 Feb 2010 22:20:34 +0000

Honorman,
So now that we’ve set out their strategy, let’s hear from GE/RR. GE/RR, do we have a deal or not?
;)

By: Honorman

Honorman — Wed, 24 Feb 2010 22:10:14 +0000

Well, for one, the engine won’t be 20% of the aircraft cost. But let’s put that aside. If the math as you state is correct and there are $20 billion in profits to be had, and GE/RR could go after half that if they fund the cost to develop. Then I say let them fund it and not the taxpayer. You make sense. Why should the taxpayer fund an engine that is duplicative at best? I think this gets to the heart of the matter for DoD. They don’t want to and can’t afford the up front costs but if GE/RR want to pay for it and then compete, I think that is great.

By: Honorman

Honorman — Wed, 24 Feb 2010 21:35:22 +0000

I am not saying there would be two completely different supply chains. However, these engines are completely different. Paying for SDD and production line start-up costs are what DoD says they cannot afford right now. The Secretary has said it will cost them $3 billion over the next five years alone. That is not insignificant and could be better spent elsewhere. Again, would be nice to have competition but it is not necessary or even normal. The only USG aircraft with two engine makers is the F-16. At the end of the day, those engines were split fifty-fifty with no documented savings to the taxpayer. Moreover, if you look at sole source engine costs for the F-18 and the F-22 I’ll bet you find those costs came down even in the absence of competition because the government can actually force contractors to do things like that.

By: John King

John King — Wed, 24 Feb 2010 20:56:35 +0000

Honorman,
What makes you thing there are two completely different supply chains below the prime manufacturer level? As in the car industry, usually the same suppliers supply both main manufacturers. Which is how Formula’s competitive dynamics worked for the F110 and F100 engines. The subvendors might have been the same, so there were no start up costs from production discontinuities.

By: Honorman

Honorman — Wed, 24 Feb 2010 20:49:02 +0000

No one is agruing whether competition works. The question is should the taxpayer foot the bill now for something that is nice to have but not necessary? There are billions left to be spent on the alternate engine that the Department of Defense would rather spend on other needs. The F-22 and F-18, along with thousands of H-60s, and Apaches all have one engine supplier and have not been grounded due to engines or had any complaints over cost issues. I would be nice to have two engine suppliers for all those platforms but we could not afford the upfront costs. The Department is simply saying this is the case now as well. Let’s not waste money now that can be better spent on the warfight.

By: Formula

Formula — Wed, 24 Feb 2010 20:44:18 +0000

Honorman, look at the F110 and F100 production numbers over the past 10–15 years. Both GE and P&W have gone from feast to famine in terms of engine production. In other words, it can be done in the engine business and each manufacturer still made a manageable profit doing so.

By: Formula

Formula — Wed, 24 Feb 2010 20:32:04 +0000

To John Kings point, the Korean AF purchased the F110 for there first buy of F-15K’s. A few years later the competition resumed for another buy of F-15K’s and P&W won that buy. Cost was a major factor in each competition.…..Competition works!

By: Honorman

Honorman — Wed, 24 Feb 2010 20:27:29 +0000

John, I don’t disagree with your overall argument on competing the whole program, however as you know, we can’t afford the upfront costs and the same applies to the engines. It would be nice to have two of everything but it is unaffordable.

As for the missiles and torpedoes, glad you were able to do that with that industrial base, but building engines for tactical fighters is a little different. Given the state of the economy, the dowturn in the business, both military and commercial, you cannot have one manufacturer build 70% one year then 30% the next. You simply can turn on and off your workforce and supplier base like that. Glad you were able to do that for missiles and torpedos but this is a different industry and a different time.

By: John King

John King — Wed, 24 Feb 2010 20:15:07 +0000

Sorry, Honorman. But Tomahawk missile competition had swings every year for the five years I set prices, and the differential was 10% below the average unit costs for the 70% low bid winner, and 20% above the average unit cost for the 30% high bid loser. As each loser drove their next year cost below the prior year winner’s low bid, the average unit costs trended downward, saving about 30% for the program total. This happened repeatedly on all Navy and Marine Corps missile, torpedo, and gun programs in the late 1980’s and early 1990’s.

So, let’s have some engine competition. And better yet, with maybe 3,500 aircraft including our foreign partners, let’s re-compete the whole program and have two producers with annual competition. That shoud save about $60 billion and get everyone their aircraft sooner!

By: Honorman

Honorman — Wed, 24 Feb 2010 19:43:33 +0000

You would never get a 20% savings on a $10 million engine. You see, if you have a split buy, one engine maker bids high and one bids low. Say $9.5 million for 55 % of the engines and $10.5 million for 45%. You could not change the percentages much beacuse the makers couldn’t swing production wildly on an annual basis. Therefore, savings from competition only really applies to the 10% in between.

By: John King

John King — Wed, 24 Feb 2010 19:33:19 +0000

A 20% savings from competiting two engines head-to-head each year should save about $6 billion.

By: Formula

Formula — Wed, 24 Feb 2010 19:16:02 +0000

General Schwartz, do you also realize that it was P&W engines that caused the Great Engine War that ultimately created having dual engine sources for our F16 fighter aircraft and it created the path for the F110 engine to be in the F15 which is being purchased today by our FMS allies? Our Military Chiefs, Mr. Gates, the Congress, Senate, and Mr. Obama need to understand that with as little as 1.2Billion dollars more we can add the insurance we need to keep our Air Force lethal for decades to come. Disregard for history and lessons learned can cripple our American Fighting Force.

By: Formula

Formula — Wed, 24 Feb 2010 19:15:55 +0000

It’s only prudent we have two engines for this critical platform. I’m also discouraged how our Military leadership is not well versed in the technology of the F119 (F22 power plant) and the F135 (F35 power plant). Our leadership is willing to accept this manageable risk of having one engine for the F35. General Schwartz, are you willing to add more risk to your Air Force by having basically the same engine power your F22 and F35 fleets? General Schwartz, do you realize the F135 is a “derivative” engine of the F119? General Schwartz, do you realize that a technical issue if it were to arise would cripple or severely reduce the lethality of your ONLY two Air Force Fighters in the inventory (projected around 2030 timeframe)?

By: John King

John King — Wed, 24 Feb 2010 14:16:04 +0000

(1) The original F135 engine came in at 25% greater thrust than the peformance specs called for. But that might have been offset by the weight issue, which wasn’t supposed to be an issue because of the plug-and-play nature of the components. Obviously, this was a government management issue (lack thereof) on keeping the contractors in line on the promises they made.

(2) As I’ve seen in DoD history, competition can drive the “excess costs” out of the price to the government. Something on the order of 20 to 30%. If we go sole source, the taxpayer pays for all those defense contractor bonuses and vacations.

(3) If we don’t get better results from a government-private sector partnership, and we keep seeing poor results, why not just nationalize them and save the taxpeyers from paying corporate taxes and exorbitant profits? That would probably knock 25% off the price of any procurement.