By Emelie Rutherford
With the military services’ fiscal year 2011 budget hearings set to kick off this week, lawmakers are sorting through claims and data regarding whether there is a solid business case for extending the F-35 Joint Strike Fighter second-engine program.
Defense Secretary Robert Gates, congressional aides said, pledged to deliver to Capitol Hill data tied to his stance that the General Electric [GE]-Rolls-Royce effort should not be continued. Any such information had not been received as of yesterday on Capitol Hill, where there is strong support for the alternate engine.
Pentagon spokesman Geoff Morrell said congressional defense leaders asked Gates to “get to a common baseline on how much it would cost to get the GE engine to the point it can compete with the (primary Pratt & Whitney [UTX]) engine.”
“We will be providing this info to the Hill so hopefully everyone can work off a common baseline/methodology,” Morrell told Defense Daily, adding some lawmakers are using a figure the Pentagon believes does not reflect all engine costs.
The fight over the alternate-engine program, which the Pentagon has tried unsuccessfully to kill in recent years, is expected to be particularly acrimonious this year on Capitol Hill. House Armed Services Committee (HASC) leaders and Senate Armed Services (SASC) Committee Chairman Carl Levin (D-Mich.) have continued to advocate for it; Gates has pledged to strongly encourage President Barack Obama to veto Pentagon budget bills if the engine effort is included, and SASC Ranking Member John McCain (R-Ariz.) has called for Obama to take a strong stance against the second engine.
What the forthcoming data to be sent to Capitol Hill entails remains to be seen.
Gates told the HASC Feb. 3 that “the reality is, the most optimistic analyses and models that we have run show that there is little advantage to the taxpayer of having a second engine.” He pledged to provide the Pentagon’s data to Congress, something he is said to also have promised privately to lawmakers.
HASC member Rep. Jim Marshall (D-Ga.) told Gates lawmakers would like that data because they are continually referred to a 2007 analysis by the Pentagon’s Cost Analysis Improvement Group (CAIG). Some lawmakers and aides maintain the CAIG study, on the lifecycle cost of the second-engine program, shows no compelling cost difference between having one or two F-35 engines. “And then there are many people who think that there are operational advantages to having two engines,” Marshall told Gates during a budget hearing.
Gates said continuing the F-35 alternate engine would cost $2.5 billion over the next five years, a cost he said the Pentagon cannot afford; F-35 second-engine backers have said the five-year pricetag would not be as high as $2.5 billion.
Gates argued no foreign customers and all but one U.S. military service–the Air Force–would buy only one of the two F-35 engines, and maintained the primary engine effort, which has hit snags, is doing well.
Levin has lamented since last year troubles he has had securing undisputed data on costs of the F-35 second engine from the Pentagon.
Levin asked Gates Feb. 2 to ask the Institute for Defense Analyses to update a study it did earlier this decade that detailed second-engine costs, including previous and future investments and possible benefits.
Levin argued the business case for continuing the second engine may be stronger today than it was four years ago, when the Pentagon stopped requesting funding for it.
“At the time of the original decision, the Institute for Defense Analyses (IDA) assessed that the F136 alternate engine would have to achieve savings of roughly 18 percent to make economic sense, a figure in excess of the historical averages achieved in previous procurement programs, which IDA assessed as being 14.6 percent,” Levin said in written testimony for the Feb. 2 budget hearing. “With the additional investment that we have made since that time, it would appear that the required savings threshold would now be closer to 13 percent, or a figure below the average that procurement competitions have yielded in the past.”
McCain, meanwhile, stands with Gates and Obama in opposing the second engine, and holds the program is wasteful and diverts resources from other military needs.
Defense analyst Loren Thompson, the chief operating officer at the Lexington Institute in Arlington, Va., in a research brief issued yesterday argued having second sources for military programs is not affordable.
“As Secretary Gates has noted in the case of General Electric’s proposed alternate engine for the F-35 joint strike fighter, the high cost of sustaining a second source isn’t likely to be covered by any savings that the resulting competition produces,” Thompson wrote. “Instead, the presence of a (subsidized) second source weakens the primary source while leading to collusive pricing when both sides realize they are guaranteed some portion of the market for their product.”
Thompson said policymakers should “learn how to elicit price and performance discipline from sole sources.”
Air Force Secretary Michael Donley and Chief of Staff Gen. Norton Schwartz are scheduled to testify before the HASC this Thursday on the FY ’11 budget, for what will be the first service-specific hearing since the Pentagon sent Congress its budget request Feb. 1.