Implications of the Cancellation of the F136 Alternate Engine Program within the F-35 Joint Strike Fighter Program

Introduction
In the past four decades, the United States Department of Defense (DOD) has implemented multiple alternative engine programs for various fighter jet platforms. In development of the F-35 Joint Strike Fighter (JSF), this strategy was initially included in the fighter program. After years of development, and large investments by both the United States government and the contractors, the Department of Defense cancelled the General Electric/Rolls-Royce (GE/RR) funding for the F136 alternate engine. The Department of Defense has created long-term project schedule and cost overruns by justifying canceling the alternate engine program for the F-35 Joint Strike Fighter as a short-run cost savings. This creates a scenario where only one source is available for replacement parts over the life of the platform and where improvements to the technology will not be stimulated by a competitor.


History of Alternate Engine Programs
The first implementation of an alternate engine program was in the early 1980’s during operation of the F-15 and F-16 fighter jets. The F-15 used a dual-engine Pratt and Whitney F100-PW-200 and the F-16 used a similar, but single engine, Pratt and Whitney (P&W) F100-PW-100. While the P&W engine solution possessed a high thrust to weight ratio, it was troubled with difficulties. The two significant issues were “stall stagnation” and high maintenance costs.
“Stall-stagnation occurred under certain operating conditions, requiring the pilot to shut down and restart the engine in flight. It presented a danger in the two-engine F-15 and a serious threat to safety in the single-engine F-16. The engine’s extremely short lifetime- the period between depot overhauls- and high maintenance requirements drove up operating costs” (Camm, 1993).
These issues were not able to be resolved, as neither the Air Force nor the contractor was able to come to agreement on the responsibility for improvement.
At this time, General Electric (GE) had been unable to provide any engineering support for this operation as they had lost the bid to provide the engine for these fighters. In 1975, GE developed a demonstration engine that would be compatible with the F-16 fighter and attempted to persuade the United States to purchase these as an alternative to the P&W engines. The US Navy declined interest in this alternate design, but the Air Force was interested in the possibility of reducing their current issues as well as providing a stimulus to P&W to provide better performance. As a result, “in 1982, the Air Force initiated a full-scale development based on the F101 DFE to verify what it now called the F110-GE-100 engine;” which prompted a response from P&W to create “an improved F100, the F100-PW-220, that it could offer to compete against the F110-GE-100 for future production” (Camm, 1993). Several years later, the Air Force began purchasing engines from both manufacturers and has continued this practice through today. The result is engines that operate as expected, are on schedule, and do not contain cost overruns.
In 1984, the US Navy selected GE to re-engine its existing F-14 fleet with the F110-GE-400 engine, replacing the two P&W TF30 turbofan engines. This provided higher levels of thrust and reduced accidents drastically. At this time, design flaws were becoming evident within the F-14, as “the Navy lost a lot of F-14’s, over a hundred out of seven hundred built” (Skurla & Gregory, 2004). The switch to a GE-designed engine remedied these accidents and since the 1980’s has been the primary choice of engine for these airplanes.

Benefits of Alternate Sourcing
Using the F-14, F-15, and F-16 fighter jets as a model for the benefits of alternate sourcing programs, it is possible to obtain the following benefits:
·         Lower cost engines
·         On schedule engine development
·         Higher performing engines
·         More reliable engines
·         Additional production source to allow for increased fleet growth
Over the past thirty-five years, the United States has shown that these benefits are present when an alternative engine program is in place and competition is allowed to exist between contractors.


Rationale for the JSF
The JSF is designed to be a multi-purpose air strike platform. It will be made in the following variants:
·         Conventional Take-Off and Landing for the US Air Force (F-35A)
·         Aircraft-Carrier version for the US Navy (F-35C)
·         Short-Takeoff and Vertical Landing (STOVL) for the US Marine Corps and the U.K. Royal Air Force and Royal Navy (F-35B)
The design not only needs to meet the requirements of each of the above services, but also is required to operate in a variety of environments with a wide range of payloads and missions. It has a strong emphasis on stealth and high levels of technology.
According to the JSF Program Website (www.jsf.mil), there are four pillars on which the program is founded:
Affordable: All variants of the F-35 will be procured within their target cost range. Operation and support costs will be dramatically reduced.
Lethal: Air-to-ground precision strikes in all weather … air-to-air combat engagements – every F-35 variant will be highly effective in both arenas.
Survivable: Stealthy, high-performance, supersonic strike fighters – The F-35 successfully integrates the technologies that will make every mission more survivable.
Supportable: Reliability and maintainability – The F-35 will be setting new standards for both, enabling lower support costs and easier upgrades than legacy aircraft.
Source:(Joint Strike Fighter Program)
The rationale behind creating such a capable aircraft is that by sharing designs, multiple variants will be possible by modifying the base design versus creating individual designs for each purpose.
From the outset of the contract, the JSF was intended to have a competing engine manufacturer. The primary source was to be the P&W F135 engine, based upon the successful F-22 Raptor design. The competing source was to be the GE/RR F136. These two designs are both compatible with the F-35 fighter, but may vary slightly in design and required maintenance. The intent is not only to drive down engine price over time but also to create incentive for innovation and ongoing development over the life of the aircraft.


JSF Development Background and Funding
Lockheed Martin and Boeing were selected to present a concept for the JSF in 1997. Later that year, Northrup Grumman was added to the team. The first experimental test flight was performed in the year 2000. The last of the first wave of test flights took place in mid-2001. On October 26, 2001, the DOD announced a contract awarded to a joint venture between Northrup Grumman, Lockheed Martin, and BAE to produce the Joint Strike Fighter for $18 billion. P&W was awarded an additional $4 billion to develop the F135 propulsion system for this aircraft. Through FY2010, the JSF program overall has received “roughly $56 billion of funding in then-year dollars, including roughly $41 billion in research and development, about $14.1 billion in procurement, and roughly $227.8 million in military construction” (Gertler, 2012).


Recent JSF Spending and Procurement Plans
The program intended to produce 2,456 aircraft for the United States; these were being procured starting in FY2007. Table 1 shows the intended procurement quantities for each variant of the aircraft from FY 2007 to FY2012.
Table 1 Annual F-35 Procurement Quantities

FY	F-35A	F-35B	F-35C	TOTAL
2007	2	0	0	2
2008	6	6	0	12
2009	7	7	0	14
2010	10	16	4	30
2011	22	13	7	42
2012	18	6	7	31
TOTAL				131

Source: (Gertler, 2012) 
The total procurement amount according to Table 1 indicates that only 131 airplanes have been procured, or 5.3 percent of the total aircraft intended for production. The F-35 is intended to complete procurement by FY2034 at a total cost of about $270.6 billion in FY2010 dollars. Current funding spent totaling roughly $56 billion puts funding at 20.6 percent of total estimated budget, which leads delivery progress by a large margin. The average procurement cost of each aircraft estimated by the program was $132.8 million. 
The ongoing cost of the program is currently not a reflection of the projections, with the “procurement cost of the 19 F-35As requested for FY2013 in the Air Force budget is estimated at … an average of $176.5 million each” while the ten F-35s requested for the Department of the Navy budget “have a combined estimated procurement cost of $2,638.7 million, or an average of $263.9 million each” (Gertler, 2012). These estimates are, for the Air Force, 32 percent above the estimated average procurement cost; and, for the US Navy, 98 percent above the estimated average procurement cost.

Government Accountability Office Reports on the JSF
Given the lackluster performance in delivery and increasing costs, the Government Accountability Office (GAO) has issued several key reports over the past half-decade relating to this program. These reports have offered both support and criticism for the alternative engine program. In 2010, while reporting on the financial outlook for the engine development contract, the GAO reported that the primary contract with P&W is “estimated to cost about $7.3 billion, a 50 percent increase over the original contract award” (United States Government Accountability Office, 2010). This has been due to higher costs of materials and labor, as well as rework from design deficiencies and issues arising during testing. This same report also handed criticism to the alternative engine source (GE/RR), stating that “the government has invested about $2.9 billion in development through fiscal year 2010… and about $1.6 billion would be needed to complete F136 development in 2016” (United States Government Accountability Office, 2010). Although GE/RR required much less in expenditures than the P&W effort, their work was not within budgetary constraints at this time.
However, this is not to say that the GAO was not in support of an alternate engine program. In fact, for several years they published reports indicating the likelihood of long term savings as a result of the program. These reports were largely focused in the 2009-2011 time period. During this period, the DOD published reports citing that the long term cost savings of the alternate engine program would not compensate for the large initial investment. The GAO contradicted the DOD reports by noting that “the price of the alternate contractor’s engine actually becomes competitive with the price of the initial contractor’s engine after only one year of noncompetitive procurements” (Sullivan, Sept 2011). The DOD report outlining high continuing costs for the alternate engine program and projecting the need for nearly $3 billion in additional funding was a primary reason for the program cancellation. This report, however, used inappropriately in making this decision as the GAO points out, “would be characterized as a ‘rough order of magnitude’ cost analysis… typically developed when a quick estimate is needed and limited information is available” (Sullivan, Sept 2011).  Yet this report was delivered to Congress and to the President, who subsequently agreed upon cancellation of the alternate engine program.


Justification for Cancellation
The DOD’s report to Congress dealt the final blow to the alternate engine program in 2011, projecting a need for an additional $2.9 billion from FY2011 to FY2016. The DOD reasoned that P&W already had a proven engine in the modern F-22 Raptor aircraft and would be able to apply this development to the F-35. Additionally, the amount of testing already performed on the F135 engine was much greater, with “only 200 hours of testing compared to the more than 13,000 hours for the F135 engine” (Gates, 2010). The short term cost saving rationale appealed to Congress in 2011, when the United States faced budget shortfalls and was looking to trim wasteful spending. 


Subsequent Results
In the wake of the cancellation, many members of Congress strongly urged the DOD to reconsider its decision. GE opted to self-fund continued development of the F136 engine starting in May 2011. They intended to complete development on the engine, given that “with F136 engine development almost 80 percent complete; the US DOD terminated the program” (Clark, 2011). This would continue until the end of 2011, when GE and Rolls-Royce would be reminded by the DOD that they would not be considered for competition for the F-35 engine. At this point, both companies cancelled any internal funding programs in order to focus on other prospects.
Just three months after this cancellation, the GAO released a report discussing the conclusion of the project restructuring. The report summarizes that “since June 2010, the total cost estimate increased about $15 billion” and that “compared to the current approved baseline from 2007, total costs have increased about $119 billion, full-rate production has been delayed 5 years, and initial operational capability dates are now unsettled because of program uncertainties” (United States Government Accountability Office, 2012). Some of the other program progress indicators were as follows:
·         Overall performance in 2011 was mixed as the program achieved 6 of 11 primary objectives. Developmental flight testing gained momentum and was about one-fifth complete with the most challenging tasks still ahead.
·         Management and development of the more than 24 million lines of software code continued to be of concern and late software releases had delayed testing and training.
·         Only 4 percent of the mission system requirements for full capability had been verified.
·         Testing of a fully integrated JSF aircraft was now expected in 2015 at the earliest.
·         Cost overruns on the first four annual procurement contracts total more than $1 billion and aircraft deliveries are on average more than one year late. Officials said the government’s share of the cost growth is $672 million; this adds about $11 million on average to the price of each of the 63 aircraft under those contracts.
Source: (United States Government Accountability Office, 2012)

Implications of Cancellation
While time will tell as to the true impact of removing the alternate engine program from the supply chain of the F-35, there are several telltale indicators that the decision was poorly made. It appears that the project as a whole has become far behind schedule and over budget. The mismanagement of this project, both financially and technically, by the DOD discredits their recommendation to Congress on the cost savings of cancelling the alternate engine program. The entire run of F-35 production is intended to last into 2035, although based upon current schedules this could extend into 2040 or beyond. Given that the entire approximate cost of the alternate engine development totals roughly $2.5 billion with development expected to be complete in 2013, over the twenty year production span planned, this would equate to roughly $125 million per year in savings required to break even on the alternate engine program’s initial investment. Of the 2,325 F-35s remaining for procurement, over a twenty year span this savings per year would equate to roughly $1 million per aircraft, or just 0.7 percent of the total estimated cost per aircraft. A savings of this magnitude is easily attainable and would include additional benefits such as increased ongoing development effort as well as an additional supply source for engines and replacement parts. Eliminating the ability for one contractor to hold a monopoly on this supply provides a natural decrease in the price of these goods, which reduces the long-term maintenance costs of the program, extending decades beyond the 2035 delivery deadline and saving immeasurable taxpayer dollars.



Conclusion
Cancellation of the alternate engine program was done under the pretense of short term cost savings. However, this decision did not accurately capture the long-term effects of having a single source for the engine technology, future parts supply, and any ongoing development efforts. The intent behind this action is not unique to the DOD, but is an ongoing trend that uses short term measures to correct current-year budgets while passing the true problem to future administrations. This mentality works against the better interests of the taxpayers and increases costs over the life of the program.
Another important lesson to be learned from review of the program thus far is that the schedule was poorly developed, the budget was incorrect and overly optimistic, and the engineering effort is clearly ineffective as product performance has been low. The former two points likely would have resulted in this program being denied funding from the outset if they had been accurately projected. In order to efficiently use taxpayer money, a less impressive technical solution or specialized designs for each target Armed Forces branch may have been more effective.
Using the rough estimate presented in this paper, an approximately $1 million of savings per aircraft must be realized in order for the alternate engine program to break even. The project is ongoing and subject to change, but the current trend lends confidence to the notion that this savings would easily be achieved by allowing for competition on the highest cost system within the JSF.


Works Cited
 BIBLIOGRAPHY Camm, F. (1993). The Development of the F100-PW-220 and F110-GE-100 Engines: A Case Study of Risk Assessment and Risk Management. United States Air Force. Santa Monica, CA: RAND.
Clark, C. (2011, December 2). F136, Rest in Peace, GE and Rolls Formally Declare It's Over.
Gates, R. (2010, May 25). Letter to Rep Larson Re: JSF Alternate Engine Program.
General Electric Aviation. (n.d.). Model F110-100/-400. Retrieved from GE Aviation: http://www.geaviation.com/engines/military/f110/f110-100-400.html
Gertler, J. (2012). F-35 Joint Strike Fighter Program. United State Congress, Congressional Research Service.
Joint Strike Fighter Program. (n.d.). F-35. Retrieved from http://www.jsf.mil/f35/f35_background.htm
Skurla, G., & Gregory, W. (2004). Inside the Iron Works: How Grumman's Glory Days Faded. Annapolis, MD: Naval Institute Press.
Sullivan, M. (Sept 2011). Joint Strike Fighter: Assessment of DOD's Funding Projection for the F136 Alternate Engine. United States Government Accountibility Office, Acquisition and Sourcing Management.
United States Government Accountability Office. (2010). Joint Strike Fighter: Additional Costs and Delays Risk Not Meeting Warfighter Requirements on Time.
United States Government Accountability Office. (2012, March 20). Restructuring Added Resources and Reduced Risk, but Concurrency is Still a Major Concern.

How I Bought A Stolen Car

Not to spoil the ending, but I didn't really buy a stolen car. For a day or so I was led to believe this, however.

From the beginning: As many of you know, I recently purchased a 2002 Honda S2000. The seller had a lien on the car, so I paid this off in cashier check to her bank and was told I would need to wait the requisite 10 day period for the title to be released by the bank and transferred to the seller, who would sign it to me. I was concerned about paying for something and having nothing but a bill of sale to show for it. The seller, upon no influence from me, volunteered the keys and let me drive off with her plates and registration still on/in the vehicle. Note: I did have a notarized power of attorney over the vehicle at this time. So, while I waited I enjoyed the S2000 for a little over a week. Of course, I fell in love with it and was eagerly awaiting putting my own tags on the car and being free and clear a new owner.

Last week, the seller contacted me to arrange for exchange of her tags with the title. I was able to get over on Friday night to perform this. As I expected, the title matched the registration, her ID, and the VINs all matched the car. I planned to go to DMV in the morning and sit for several hours in order to get this done.

As scheduled, last Saturday I stood in line outside the DMV for an hour in the cold and then for another hour inside. I finally got my name called and went to the window. Everything proceeded as swimmingly as is possible for DMV until the agent told me that she could not title this vehicle in my name because it had a "stolen stop" on the record. I tried to get more information, but they told me "We cannot help you today because it is the weekend. Call again on Monday. It probably was a clerical error." Feigning surprise that the DMV could possibly commit an error of any sort, I turned tail and went home.

On Monday I called the DMV and after a half hour or so of waiting was informed to speak with the state police. Three phone calls and several redirects later, I got to the desk of a special agent who took my information and did research. He said the stolen claim was recorded in Maryland in 2009, but said there was an error somehow because the record shows the vehicle registered in VA and NY simultaneously. The seller had purchased it in 2009 just a few days prior to this claim, so my attention was raised. The agent gave me the number in Maryland to call for the local precinct of the state police. So, I called. The agent up there repeatedly refused to give me information over the phone despite me having the information on the Virginia registration, the previous registration and plates from other states, the VIN and the title in my hand. Eventually she conceded and said she would speak with the special agent in the VA State Police.

An hour or so later the Maryland State Police called me back and said that "indeed the vehicle is stolen, it will need to be impounded." I told her to calm the hell down, as this problem has festered for years now and I need some time to sort this out. Immediately I ran for help at the bank who gave me my loan and told the loan officer the entire situation. After listening to the story, which apparently was a first for him, he called the corporate office for help. In the meantime he tried to sell me CD's and an IRA, which I felt was good salesmanship but a bit inappropriate in that I may have a loan placed on stolen property and would be on the hook for it. Eventually he got the information he needed and recommended I contact the seller and tell her I want to reverse the sale, and to let her deal with this. I called back the VA State Police agent and he agreed with this, saying that if the seller had been duped she has the real rights for a case. I called her and she said she is already taking action into getting this investigated and would call me later. At this point I could do no more until the next morning as offices were closing.

About this time, I had to leave work to go on a first date. In hindsight, I don't think the scheduling could have been better as it was a total blast and a great way to forget about the fact that I might have to deal with returning a sold car and give up something I had fallen in love with. More about the date later, but just know that it was excellent.

After I got home, I called back the seller and she had a dearth of information. Her mother (who was a cosigner on the title) had contacted the police and DMV and the dealership she had purchased the car from. All parties were investigating because something was awry. I confirmed all of the VINs on the body panels for her and sent her a copy of the most recent CARFAX report. She has been very cooperative and helpful the entire time, so discussing this with her I knew she was just as confused and feeling just as helpless as myself. Another interesting thing to note: not only did she register the vehicle, the state passed her title back and forth from her bank when she originated and ended her lien; but she also said she had been pulled over several times and no police had ever mentioned that it was reported stolen. Odd, you might say, and odd it was. The plot thickens..

I start my day today (Tuesday) wondering what sort of interesting events may occur, and in the midst of dealing with the worst customer we probably have ever had and ever will have, I missed a call from DMV. The voicemail stated: "Mr. Carpenter, this is Mr. Grant at the Chesapeake DMV. We have resolved all of the issues with your car and you may register the title at any time. If you have any questions, please call me back." Yeah, I may have some questions... but the number you called me from is not a direct line! After an hour or so of holding I decided I would see him in person after work.

During the day I called the seller and she explained that apparently a repossession was listed as a theft. Clearly it is not so in real life. I got a similar story after waiting my requisite hour in DMV this afternoon, but at the end of it all- I got tags and a registration! This blog post will stand as a partial testimony to the events that occurred. Although in retrospect this seems relatively straightforward, I honestly spent hours dreading that I would have to take someone to court over selling me stolen property and fight just to get the money I paid back. In retrospect, I am glad that I took out a loan with Wells Fargo and paid everything in cashiers checks of exact amounts to the bank and seller. I am glad I stored every shred of information about the vehicle, and am most of all glad that the seller was helpful and motivated to solve this problem. At the end of 36 hours from Monday morning, I had a car that I couldn't register, then was considered stolen and likely to be impounded, then needed to possibly seek legal help to undo an auto sale, then it was back to a clerical error, and finally solved. Along the way I lost all patience for our worst customer and had a great time with a really fun girl who maybe one day I could take out in my NOT stolen car!