Competition has been at the core of US defence procurement for decades, but faced with mounting budget pressures the Pentagon its trying to limit or even eliminate competition in key programmes.
Arguing it cannot afford to operate two of everything, the Department of Defense wants to "sole source" the US Air Force's KC-X tanker and the engine for the Lockheed Martin F-35 Joint Strike Fighter - business worth billions of dollars.
The DoD's claims that competitive procurement will not produce promised savings have met with scepticism in a Congress lobbied heavily by the potential losers. The result is a war of words between incumbents and insurgents.
KEY COMMITTEES
So far three of four Congressional committees have restored funding for the General Electric/Rolls-Royce F136 alternative to Pratt & Whitney's F135 primary engine for the F-35, but they have yet to weigh in on the USAF's plan to award a winner-takes-all contract to Boeing or Northrop Grumman for 179 KC-Xs.
With one key committee still to mark up the 2008 defence budget the lobbying is intensifying. Influential defence analyst Loren Thompson has put his weight behind the DoD's effort to cancel the F136, while respected former Pentagon acquisition chief Jacques Gansler is advocating competitive procurement of both JSF engines and KC-X tankers.
In both cases the issue is whether the additional cost of developing two competitors will pay off by reducing procurement costs, improving performance, enhancing safety and maintaining the industrial base for future competitions - or whether it will derail USAF modernisation plans.
The F136's future will be decided first, and could influence the KC-X decision. Both sides use the "great engine war" between GE and P&W to power Lockheed F-16s as justification for their opposing positions. Gansler, GE/R-R and Congressional supporters say competing engines made the F-16 cheaper, better and safer. Thompson, P&W and the DoD argue repeated analyses have not substantiated the benefits claimed.
"Four out of five independent assessments found that savings from competition across the lifetime of the programme are unlikely to match or surpass the added cost of maintaining a second source," says Thompson. And rather than promoting safety and reliability, he says, two engines increase the complexity of supporting the aircraft.
Those analyses were flawed, Gansler argues, as they assumed the same learning curve would be present in both the competitive and sole-source procurement scenarios. The steeper the learning curve on the production line, the quicker unit costs come down. But "without competition, there is no learning curve", he maintains.
Without the stimulus of competition there is no incentive to drive down costs, Gansler argues, or to innovate and improve the product to get an edge over the competitor. The GE/R-R team is already touting performance advantages over the F135 because the F136 design is newer.
Normally the DoD would welcome competition, but with more of its budget consumed by operations in Iraq the Pentagon is looking to its procurement account for near-term savings. And while the scale of F-35 procurement should justify competing engines, if Congress takes funding for the F136 from elsewhere in the programme, the DoD says it will hit development and production, drive up costs and threaten numbers.
UPFRONT COSTS
When it comes to the KC-X, the US Air Force says it does not have the money upfront to carry competing tankers through development and into procurement. And although Boeing and Northrop have been asked to submit fixed-price bids for an initial 80 aircraft, the USAF is adamant it does not intend to split the order.
Acquisition chief Sue Payton has said it would cost billions more to split procurement, with the resulting duplication of logistics and training, at a time when the service is trying to balance modernisation across an ageing inventory. Gansler argues the cost would not be that great, because Boeing's KC-767 and Northrop's KC-30 are modifications of in-production commercial aircraft, supported by active commercial supply chains.
Source: Flight International
