Competition for Military Contracts Doesn't Lower Costs

By Joshua Foust

The military's F-35 program has been marred by excessive spending, delay, and a false assumption that two engine contractors are better than one

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Official U.S. Navy Imagery/Flickr

It is by now a cliché that the defense budget must be cut. Some of this cutting will be from canceling programs, but a decent of the expected defense cuts can actually come from cost savings. One way some defense hawks have suggested for saving money is introducing competition through redundant parts or systems.

By far the most acrimonious debate over redundancy and competition is the F-35 alternate engine (which I wrote about two months ago for The Atlantic). Part of the push for a second engine -- made jointly by congressional Republicans and an industry team lead by GE -- is that competition for the engine will lower costs. As my colleague August Cole and I explained in our analysis, the cost-savings argument rests on some shaky assumptions, might not actually reduce overall program cost, and rely on the Defense Department and US Air Force behaving like normal customers in a commercial market (which they are not).

But the other side to the argument for the alternate F-35 engine is one of redundancy. One insider to the push for an extra engine (who could not be named because of the sensitivity of the issue) had a very interesting perspective: because of what the F-35 represents, design flaws and manufacturing problems will actually have a much bigger effect on the overall fighter force than they used to. The F-35 is meant to replace the aging F-15 fleet, but also the F/A-18 fleet, the AV-8B Harrier jumpjets, and the F-16. In fifteen years, the U.S. Air Force attack fleet will basically be three aircraft: about 175 F-22s, a few hundred F-35s, and some unspecified Next Generation Bomber. That makes problems with the F-35 much more important than if they only affected a relatively small number of aircraft compared to the overall fleet.

Indeed, the argument from redundancy seems compelling give how often the F-35 fleet has been grounded recently. In January of last year, the F-35 fleet was grounded over a software problem in the fuel system. In March of this year, the fleet was again grounded over a generator failure and oil leak. And just today, Inside Defense reports another fleet-wide grounding over a problem that's yet to be announced. Having redundant systems for these problems should mitigate the groundings, right?

Wrong. The recent spate of groundings is normal in the development of a brand new aircraft. But here's the kicker: none of the parts that have forced the planes out of the air have been engines. So buying a redundant engine wouldn't actually have kept any F-35s flying recently. Which means that the redundancy argument for the F-35 doesn't make a lick of sense.

The F-35 program represents something crucial to the future of the U.S. military: A long overdue re-capitalization in an equipment heavy method of warfare that had been left idle for far too long. And just as importantly, it represents an attempt to do something that seems sensible but has turned out to be extremely difficult: have a common platform between not only U.S. military services but our closest allies, which would, in theory, introduce huge cost savings through the sheer scale of manufacturing.

Achieving all of the goals of the F-35 is a complex undertaking, and we shouldn't be surprised it's not a perfect process. But arguments for hundred-billion dollar program redundancy, like with the duplicate engine, are worse than a distraction. Misleading arguments to support more spending, more waste, and more delay are actually distractions from the much more pressing need to keep the F-35 on time and under budget. Otherwise, rather than consolidating the aircraft fleet we risk diminishing it severely as lawmakers see inefficiency and seek ways to cut funding and save costs.

The F-35 underwent a series of detailed competitions already. Let's instead look at ways to constrain future costs, rather than adding more to the bucket. And please, for the love of all that is holy, let's leave the specious arguments about engine redundancy where they belong: the trash bin.



This article available online at:

http://www.theatlantic.com/business/archive/2011/08/competition-for-military-contracts-doesnt-lower-costs/243036/