The F-35 Joint Strike Fighter is being developed to meet the future needs of three U.S. military services and eight foreign allies for an agile, affordable multi-role aircraft. It is expected to be the biggest military aircraft program in the world during the first half of the present century, and will play a key role in sustaining U.S. dominance of global aerospace markets. Each F-35 will be powered by a single high-performance turbofan engine designed to deliver exceptional thrust and reliability at relatively low cost. Following direction from Congress, the Department of Defense plans to buy the engines from two different sources, competing purchases annually to assure the best price and performance. It does not plan to buy the aircraft or any other on-board component from competing sources.
Competition is a powerful driver of progress in free markets, disciplining the price and performance of products. However, military procurement is not a free and open market, because there is only one customer — the government — and a handful of potential suppliers for any given product. That means all the costs of sustaining two engine suppliers must be paid by that one customer, from design to development to production to in-service maintenance. The government must pay for duplicate engineering teams, production tooling, assembly sites, parts inventories and repair centers. Each of these areas of required investment will function less efficiently if there are two engine designs rather than one because workloads will be smaller, and excess capacity must be carried that can absorb additional work that might be won in future competitions. Studies conducted by government agencies and outside experts have found that price discipline resulting from competition will not cover the additional costs required to sustain two engine suppliers, so there will be no net financial benefit to the government.
Competition also will not enhance the safety and other performance features of Joint Strike Fighter engines, because the cost and complexity of operating two different engine designs will make it harder rather than easier to introduce improvements. In order to meet design requirements the competing engines must be functionally interchangeable, so performance features such as thrust cannot be upgraded in one design unless equivalent improvements are made in the other. Not only will the higher cost of modifying two designs deter improvements, but in some cases it may not be feasible to make parallel improvements to both engines, forcing users to forego the enhancement entirely.Moreover, the second or “alternate” engine for the F-35 will debut on a single-engine fighter, unlike the primary engine which was matured on the twin-engine F-22 fighter; past experience indicates this will result in the alternate engine being less safe than the primary engine, with adverse consequences for aircraft and pilot alike.
Using two different engine designs on the Joint Strike Fighter will be detrimental to American industry. Splitting the manufacture and sustainment of engines between two teams means that each company participating in the program will get less work than they would have if all the engines had been purchased from a single source.When workloads shrink, the potential for economies of scale are reduced. Fixed costs must be spread over a smaller business base and there are fewer opportunities to extract price reductions from vendors on big orders. Thus industry becomes less efficient. In addition, the decision to fund a redundant “alternate” engine is an industrial subsidy to the dominant military-engine supplier, weakening its main competitor despite the fact that competitor’s product was deemed to be superior in past comparisons. None of these consequences is likely to help U.S. industry in its struggle to remain competitive in global markets.
This report was written by Dr. Loren Thompson of the Lexington Institute staff as part of the Institute’s continuing effort to analyze military technology requirements and acquisition practices.
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