The F-35: A Case of Unwanted Competition
Source: The Atlantic, 5/27/2011
ASP fellows Joshua Foust and August Cole author a piece in the The Atlantic.
What the Pentagon’s largest-ever contract teaches us about market forces in the defense industry
By Joshua Foust and August Cole
We are about to enter an era of defense austerity. Two years ago, President Obama famously said the days of giving defense industry a “blank check” are over, and Defense Secretary Robert Gates made good on the pledge. But we’re not there yet.
Case in point: The F-35 Joint Strike Fighter, the Defense Department’s largest contract ever, is challenging a basic assumption that competition is better, and feasible, in every case.
The F-35 has been plagued with cost overruns, is behind schedule, and the government is pulling out all the stops to find ways to cut the price. General Electric and Rolls Royce have been developing an alternative engine for the fighter, and earlier this month they offered to put up about $100 million of their own money to finish key work on it, as the project has come under criticism.
What’s remarkable about this is that the Pentagon doesn’t event want a second engine, having already contracted one from Pratt & Whitney. In 2006, the Pentagon decided to stop funding the development of the second engine for the aircraft, citing a spiraling price tag. For the next five years Congress overrode the DOD’s wishes and spent billions of dollars on this extra engine anyway.
In a recent op-ed for the Wall Street Journal, the Chairman of the House Armed Services Committee, Rep. Buck McKeon, praised the initiative as a positive step for the process of defense acquisitions, as it reduced the monopoly power of defense firms. With GE-Rolls Royce paying out of pocket, Rep. McKeon argued, Pratt & Whitney would have a competitor for work that will be worth as much as a hundred billion dollars in the coming decades.
There’s little doubt that the defense industry could benefit from more competition. The Pentagon has precious little choice when it comes to the costliest weapons programs like warships or fighter jets, and the result is often outrageous project overruns and lost years of stalled development…
