Friday, March 12, 2010

Dying on the Vine part Deux

That is what happened to the F-22, the 5th Generation Stealth Fighter that the Air Force purchased from Lockheed-Martin. The original plan (way back in 1994 as the ATF program) was to purchase 750 of the aircraft. The fly-away cost of each aircraft would be at those numbers somewhere over $100 million dollars each. But reality slowly settled in and with a lot of "nickel-n-dime" creep by the Prime contract the cost for the overall development program skyrocketed. The costs became nearly un-sustainable.

There is a kind of "Death Spiral" that a weapons system in budget crisis, can get into this is when the overall program costs when amortized over the planned unit buy make the single aircraft costs too much for people to continue to support. In the case of the F-22, the unit cost ran up from a mere $100 million dollars each to somewhere near $400 million each. The result is that the service buys less and less in numbers of the system. In the beginning the Air Force wanted 750 of them but in the end, they are only getting 187. The numbers were just too much for the Air Force/DOD to buy more and with the F-35 close on the heels the idea was to terminate the F-22 and buy even more F-35's.

It looked good on paper for what, a whole year.

Now it appears the F-35 is a loop or two into that same "Death Spiral".

Reports coming out every couple of days (here is one, and another here) detail the problems within the program. Prime contractor, Lockheed-Martin (them again) now reports that the program cost will double (DOUBLE as in x2) from what was originally planned. The cost per airframe will jump from a mere $50 million a jet to a whopping $112 million. And that is before they start chopping the numbers down from nearly 2500 planned airframes (and another 700 in FMS sales). No program can sustain this kind of cost escalation without some kind of impact. Look for the number buy to drop in both the domestic and the Foreign sales.

Who is to blame, well I am sure there is a lot of that to go around. Lockheed-Martin is no stranger to screwing the goose with the golden eggs, they might be having trouble breaking that habit, a carryover from the fun they had on the F-22 program and the VH-71 (you know the Presidential Helo program that was going to be as expensive as buying Air Force One, a 747 airframe). Why oh why won't the DOD sanction them in some way? I don't know. The DOD did fire or remove from the program the Top civilian and military executives on the program, but they did nothing to Lockheed-Martin, that management team is still in place. This was supposed to be a partnership between the DOD and Industry. More than 1000 companies are involved in the development of this aircraft, yet the only ones who's feet are held to the fire are on the DOD side?

Part of the problem is that the US Aerospace business sector has undergone several decade's long contraction with the Large Prime contractors buying up their competition. Lockheed-Martin is the product of the merger of Lockheed and the old Martin-Marietta Corporation. Boeing swallowed the old McDonald-Douglass company (getting the C-17, F/A-18 and the F-15 in the process) and the once proud Northrop Corporation married Grumman Aerospace only to find themselves out in the cold in all of the recent DOD aircraft buys (losing to Lockheed on the ATF program with their YF-23 aircraft which I think was a better product). They have nothing now; well maybe not nothing they still build the E-2 and a whole bunch of UAV/UAS vehicles. Oh and ships too, they are the sole builder of Aircraft Carriers.

The point is that these big companies got even bigger by eating their competition and NO ONE tried to stop them. The SEC, FTC and the DOD which had the most to lose tried to stop all the mergers and acquisitions that went on in the 80's and 90's. Oh yeah they pitched a fit when Lockheed wanted to by Northrop but it was already too late by then but it was 1998, the contraction was already pretty much over. This is why on the recent KC-X program, the Air Force aerial tanker procurement program the only "domestically" made airframe was from Boeing. Northrop-Grumman was partnered with EADS/Airbus who was going to build the airframe in France. They promised to build an assembly line in Alabama but truth be told that facility was only going to be a finishing line because no one in their right minds in Europe was going to let their jobs move over here.

I fear the F-35 has put a leg into its own grave and soon we will be hearing about how the Navy and Marines are having to buy more F/A-18's from Boeing to cover the "fighter gap". What will the Air Force do? How about new built F-15's.

No one shoots their feet off better!!

BT: Jimmy T sends.

Hat Tip to: Defense Tech


Buck said...

I weep.

JimmyT said...

Buck, there is so much at stake here too, I mean the F-22 was important but the F-35 hits the eveyone but the Coast Guard.

We are so screwed.

BT: Jimmy T sends.