August 2008 Archives

• AFP writes: "The United States is worried that after the Georgian conflict, US strategic interests in Ukraine and Azerbaijan -- especially in oil -- could be at serious risk."
• USA Today writes: "Russian President Dmitry Medvedev threatened an unspecified military response if the United States follows through with a missile-defense system near Russia's borders in Poland and the Czech Republic."

Welcome back to 1988!

Is it also time to dust off the slides showing a NATO counter-offensive across the Fulda Gap?

How long before wargaming scenarios involving humanitarian and military interventions in Eastern Europe creep into budget justification reports for major weapons programs, taking their place along side charts depicting the Yalu, Taiwan Straits and Strait of Hormuz?

And what would that portend for the Cold War-era acquisition programs now on life support (ie, C-17, F-22)?

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With the Sikorsky X2 prototype achieving first flight yesterday, it's a good time to discuss its military potential.

The X2 is designed with a coaxial main rotor and an aft pusher propeller in order to break the conventional helicopter's roughly 170-knot/hour speed barrier.

And its fly-by-wire controls and modern avionics are supposed to defeat the high vibration and high workload levels that doomed Sikorsky's last attempt in the 1970s with the XH-59A advancing blade concept.

Sikorsky business development director Jim Kagdis, a veteran of the RAH-66 Comanche, spoke with me yesterday about the military vision for the X2.

Kagdis identified three potential missions:

 

1. Peer escort for the BellBoeing MV-22, replacing the slower AH-1W/Z Cobra. (Interestingly, Lt Gen David Trautman, US Marine Corps chief of aviation, told me last month that the MV-22 no longer required a high-speed escort.)
2. Carrier-based antisubmarine warfare helicopter, replacing Sikorsky's SH-60. As Kagdis says, when an enemy sub is on the loose near the battle group, "speed really helps you get their faster".
3. Combat support for special forces in urban environments

 

I was a little surprised Kagdis limited his vision to fairly niche roles for the X2. Wouldn't Sikorsky want to offer the X2 for the emerging 'Joint Multi-Role' (JMR) requirement to develop a single aircraft after 2020 worthy of replacing the Boeing AH-64 Apache and the Sikorsky UH-60 Black Hawk? As you can imagine, this is the Holy Grail for the world's helicopter industry after the next decade.

Kagdis replied that it was all about the requirement. "If the customer's demands are as interested in a requirement that includes significant or greater speeds than we have today with the same hover performance as a conventional helicopter, this [the X2] becomes a competitor," Kagdis said.

A media roundtable in the Pentagon yesterday about the C-130 lasted an hour, but there was so much information we could have used two or three hours. Not bad for a 55-year-old production line!

For the purposes of storytelling, I will greatly simplify the various activities into three major threads.

LM's Cool "J"

The US Air Force has bought 89 C-130Js and it is now approved to buy at least another 83. Negotiations for a multi-year procurement contract began last week with Lockheed Martin.

The C-130J is also a leading contender to replace the 115-aircraft HC/MC-130 fleet. An acquisition strategy is being developed for approval in September 2009. A mixed fleet of C-130Js and rewinged C-130Es, possibly via Snow Aviation, is under consideration. Of course, Lockheed already has a contract to supply 14 modified KC-130J tankers to replace the oldest HC-130s, but this does not oblige the USAF to purchase an all J fleet.

Again, that's not a bad outlook for the J considering it spent the first decade in development and production as the black sheep of the USAF acquisition community.

Future Shock

Two issues will force the USAF to think beyond the C-130.

1. After 2015, the Army's manned ground vehicles for the Future Combat System could outgrow the C-130 box size.
2. After 2020, the USAF must start replacing the 221-aircraft C-130H fleet. This is called the Joint Future Theater Lift (JFTL) -- formerly AJACS and AMC-X.
   

A whole range of options are being considered. One is a competition between the Airbus A400M and the Boeing C-17B for the FCS requirement in 2015. Another option is an all new development program, with the Lockheed Skunk Works/Aurora Flight Sciences All Composite Cargo Aircraft (ACCA) perhaps the model.

The Gloria Gaynor Fleet: They Will Survive

The Avionics Modernization Program (AMP) will standardize and modernize the cockpits for 141 C-130H2/H2.5s and 80 C-130H3s. All 221 will also receive new center wing boxes. Both programs should enter production within four or five years.

The fate of the cockpit upgrade for 129 special mission C-130s, which include gunships, hurricane hunters, etc., is still to be determined. It requires a special version of the AMP suite that was cancelled two years ago. The upgrade requirement still exists, so the USAF will try to obtain funding in the next budgeting cycle.

Two good questions have come in about my post yesterday. I'll do my best to answer them, but I'd be interested to hear other views as well.

Keesje asks:

Two years ago GE was proposing the GENX for future A330 freighter and tanker applications, as reported by flightglobal. The A330F has more engine ground clearance then the A330. Long term this would probably be the best solution instead of the moderately outdated CF6 and PW4000 offerings. The 15%-20% better fuel efficiency of the GEnx-2B against the CF6-80E1 makes adiiference hard to ignore..

My answer: Yes, the GEnx-2B, which is in development for the 747-8, would be a great alternative to the CF6 family. Of course, you'd have to be willing to wait a few years for it to become available. The GE/Pratt & Whitney joint venture making the GP7200 has a newer offering as well. But General Electric has not been keen to jump on new Airbus freighters lately. GE had the option to offer the CF6 for the A330-200F, but declined. 

GasPasser comments:

That's the problem when you allow extra credit for exceeding requirements. We now have an arms race that if unchecked we will end up with a KC-747F vs a KC-380F contest to replace a 60 YO KC-135 fleet.

My answer: I don't think we have to fear a KC-747 vs KC-380 face-off, as thrilling as that would be, because the extra credit offer is not open-ended. Boeing and Airbus can receive additional credit for exceeding the THRESHOLD fuel offload requirement. But they get no bonus points for exceeding the OBJECTIVE requirement. I don't recall off-hand what that range includes, but I believe it stops short of the 747 level, but would include everything in the 767/777/787/A330/A340 range. At the same time, even if either team pursues the most extra credit for fuel offload, they can still be penalized for failing to meet ramp and basing goals. So it's still a trade-off versus a one-dimensional competition.

I expect EADS North America will soon amend or remove this job description, but here's the link. Check out the fifth bullet point. It confirms in print what many have already suspected: After KC-X EADS will also propose Airbus platforms to replace the E-4, E-3, E-8C and most likely the RC-135.

You can download a copy of the original job ad here: EADS_derivatives.pdf.

And you can read my quick news story about this development here.

All eyes seem focused on Boeing's next move. Do they want to delay the tanker RFP to switch to the KC-767-400ER? Or perhaps even the KC-777F?

Another interesting question is what will the Northrop Grumman/EADS North America team do to respond?

The KC-30B is based on the A330-200 passenger airliner, which, thanks to the tanker proposal process, has now been modified to serve as a freighter.

But Airbus launched the pure freighter version of the A330-200 almost two years after the Northrop/EADS team formed. Designed to be a superior freighter than a modified passenger aircraft, the first A330-200F is scheduled for delivery in late 2009.

Will the team sweeten their offer in the second round of bidding by switching to the A330-200F?

There's yet another possibility, and one that has huge ramifications for the commercial cargo market.

Airbus has been mulling the launch of an A330-300F freighter for a few years, but hasn't yet made a decision. It would compare well against the Boeing 777F on the cargo market.

If Boeing succeeds in winning a delay in order to offer a KC-777F, will that prompt Airbus to respond by using the KC-X tanker competition to officially launch the A330-300F?

These changes also have potentially major consequences for the industry teams supporting each bid, and, thus, potentially on the political landscape as well.

For example, General Electric is currently aligned with the Northrop bid and Pratt & Whitney is on the Boeing team.

But GE is the sole-source supplier for the 777 with the famous GE90. Will the Ohio delegation suddenly shift to Boeing's side?

P&W, meanwhile, is the sole US-based engine supplier for the A330-200F and would be likely to compete with Rolls-Royce for a similar role on the A330-300F. So does Connecticut suddenly switch its vote to the KC-30?

Bell Helicopter's struggles to perform on all three of its major military contracts (V-22, H-1 upgrades and Armed Reconnaissance Helicopter), and on virtually every military contract it has touched since the late 1950s, prompted this blogger to name the manufacturer as the George Costanza of the US defense industry (see below for links).

And I stand by that claim.

But I did receive some good news about the company's progress yesterday from one of its most important customers, Col Keith Birkholz, program manager for the H-1 Upgrades project, which behooves me to pass it along.

The source of such good tidings is itself surprising. Bell's struggles in its attempt to deliver the UH-1Y and AH-1Z has prompted four major restructurings since the program began in 1996. The AH-1Z is still mired in technical problems, having failed to pass the operational evaluation phase II last spring.

As my story on FlightGlobal.com reports today, the program is now headed for a fifth restructuring that -- here's a first! -- actually adds aircraft to the program.

I asked Birkholz, a straight-shooter like any marine, why he trusts Bell Helicopter to come through this time after such a clear track record of poor performance? Here's his reply:

"Bell put together a very detailed corporate growth plan and I'm pleased to report that they are executing to their plan ... [But] they have a ways to go," Birkholz said. "Of course, we're going to continue to watch them. We're not going to take it on faith. For the last year they have been executing to their plan, and I have confidence that they can continue to do so."

See also:

• Who is the George Costanza of the defense industry?
• Costanza update
• Costanza update: Kevin wins
• The wrong George?
  

BF-2 rolled off the F-35 Joint Strike Fighter assembly line in Fort Worth last Saturday. Completing the fourth prototype came about one week late, but, Lockheed Martin says, still well "within the noise" of the overall production schedule. More significantly, Lockheed is still pumping out one aircraft per month, a rate that must be sustained through the end of 2009 to finish off the prototype fleet on time to support an aggressive flight test schedule.

So far, so good.

But what happens when the annual output rate basically triples from 2010 to 2012 (12 to 32 + a few foreign orders), then almost quadruples from 2012 to 2014 (32+ to 118+)?

F-35 program manager Lt. Gen. Charles Davis, who I interviewed last month, told me he already is seeing the strains of simultaneous ramp-ups for both JSF and the 787 as he visits production sites worldwide. "I'm fighting for space in the plant that's for 787 stuff," Davis said.

Davis also takes a philosophical view on the causes of recent production system meltdowns for any aerospace program, including the 787. The increasing sophistication of tools for designing aircraft has simply outpaced the progress in manufacturing technology and capacity, creating an unhealthy imbalance as programs transition from the development to the production phase.

The JSF program is hoping to cope with this phenomenon by investing an extra $1.5 billion in upfront tooling, mainly to bring second-source suppliers, such as TAI in Turkey and Terma in Denmark, up to quality and rate standards for the F-35 program, Davis said. He describes the $1.5 billion investment as a necessary cost growth in the beginning of the program that will pay huge dividends by the sixth and seventh years of production, as the monthly production rate exceeds 10 aircraft.

Behind the scenes, the US and UK industry partners are working intensely with other foreign manufacturers that will serve as second source suppliers on critical parts in the full-rate production phase. Northrop Grumman's Randy Secor, a vice president for the F-35 program, told me earlier this month that TAI's employees have been trained on the production line with Northrop's mechanics and assemblers. "Lack of a critical part at a single supplier will stop you dead in your tracks," Secor said.

But F-35 industry officials are also realistic about the difficulty of staying on track as the production rate escalates after 2012. Secor told me that he expects "huge challenges" with meeting the one aircraft per day target after 2016, but it is achievable if the entire industry team works together to solve the problems that arise rather than pointing fingers.

General Atomics Aeronautical Systems Inc (GA-ASI) has grown very quickly into a powerful force within the US defense industry. Their stable of products based on the Predator/Reaper/Sky Warrior family have dominated almost every competition they've entered.

Almost, but not all.

The US Navy passed over the Lockheed Martin/GA-ASI team offering the Mariner version of the Predator B for the Broad Area Maritime Surveillance (BAMS) contract, instead handing the program to the Northrop Grumman RQ-4 Global Hawk.

And now we know why: GA-ASI has a huge customer relations problem with the US Department of Defense, according to a decision statement released today by the US Government Accountability Office (GAO). The GAO became involved because Lockheed protested the BAMS decision.

It turns out that the poor past performance record of GA-ASI, and, to a lesser extent, Lockheed Martin, largely offset a 33% cost advantage compared to the Northrop bid.

The Lockheed/GA-ASI team's record on previous contracts made them a "high risk, giving rise to substantial doubt that the team could perform the proposed contract effort," the GAO says. By contrast, Northrop had stumbled on past programs, but had also "demonstrated systemic improvement" to receive a moderate risk rating.

How bad is GA-ASI's past performance, in particular? Well, the GAO answers that question in vivid detail. The decision quotes most of a letter written by US Army official who is buying the GA-ASI MQ-1C Sky Warrior. Here's what it says:

[GA-ASI] continues to struggle as the systems integrator.

[GA-ASI] has resisted hiring adequate engineering and technical staff to address all of the tasks they are currently contracted to perform.

The common theme within the delivery/schedule problems appears to relate back to the acceptance of contractual commitments which are physically beyond production capacity.

A major contributor is [that GA-ASI's] senior management continues to obligate the company without fully reviewing and understanding the current workload and commitments.

Management task saturation coupled with [GA-ASI's] highly centralized management structure both contribute towards the delays with the integration testing and coordination efforts.

The engineering staff appears to be technically [competent], but in most cases are not empowered at the appropriate levels to make the necessary decisions to push the task forward in a timely manner to maintain schedule.

[GA-ASI] has made limited corrective actions and usually not without Government PMO insistence.   

For the small army of production managers around the world assigned to build F-35 Joint Strike Fighters (JSF), no other sequence of numbers can be more important:

2-12-19-32-47-118

This is the projected rate of F-35 production during the first six years of low rate initial production phase (LRIP), which actually started in 2007.

My previous two posts explored the recent past of the Lockheed Martin F-35 and Boeing 787 and the similarities of their darkest moments. This post and a follow-up later this week will explore the challenges common to both programs as each seeks to overcome their troubled development phase and dramatically boost production output starting next year.

Here's a scary thought: the F-35's production rate listed above is just the baseline.

Dan Crowley, Lockheed Martin's executive vice president for the F-35, told me there is a lot of "upside" in the last two years in the LRIP phase. The US Air Force has recently mused about increasing their order in LRIP-6 from 48 to 110, and then sustaining that order rate for several years. Israel also is likely to soon place an order for 25 aircraft, of which the bulk could be delivered during LRIP.

If funding and order profiles hold -- and assuming no show-stoppers emerge in flight test phase -- full-rate production for F-35 starts in five years. Factory output is currently expected to increase to one aircraft per working day as early as 2016, an astonishing pace for a fighter with low-observable characteristics.

It's all a familiar tune to my ears.

Boeing's 787 program, both blessed and cursed by insatiable demand for its next-generation airliner, at this time last year planned to be well on its way toward a "low-rate" output of 10 aircraft per month by 2010, perhaps jumping to 16 per month by 2012. No previous commercial widebody was built at a faster monthly rate than 10 even at its peak.

We know how well the original plan worked out for the 787. Boeing's production system breakdowns revealed over the past year not only delayed first delivery by at least 15 months. The production ramp also has been slowed from a sprint to a crawl.

Details are sketchy, but Boeing has disclosed a goal to reach the previous low rate of 10 per month in 2012, or two years later. Opening a second production line has been discussed, but it's not entirely clear if that step would help exceed the low rate pace or merely reach it.

Commercial programs certainly face their own set of pressures, but the manufacturer at least has full control of setting aircraft design requirements and the funding profile that dictates the production rate. A defense contractor, by contrast, enjoys some protection from pure market forces, but lacks those two key advantages.

If Boeing's 787 ramp-up proved far beyond the capacity of its chosen industry team, despite all of the management advantages of a commercially-driven program, how does the F-35 program hope to avoid the same fate?

The two aircraft are AA-1 and ZA001.

The former is the first F-35 Joint Strike Fighter prototype completed in December 2006.

The latter is the first 787 prototype that was originally supposed to enter flight test about eight months later, yet remains in the late stages of final assembly and 15 months behind schedule.

Both aircraft must be spectacular disappointments so far for Lockheed Martin and Boeing, respectively.

Consider that the F-35 program's AA-1 required 65,000 more labor hours to build than planned, a roughly 35% overrun, according to a March report by the Government Accountability Office. Most of the delays were blamed on the wing and final assembly, both firmly controlled by Lockheed in the Team JSF industrial partnership.

But final assembly was the least of the worries for AA-1. Lockheed realized in 2004 that a major redesign was required to shed about 2,100 pounds from the airframe. Further changes in production methods, propulsion output and operational requirements were needed to offset another roughly 2,700 pounds. In all, AA-1 is almost 5,000 pounds too heavy, which equates to about one-eighth of the aircraft's maximum weight.

Nonetheless, Lockheed and the joint program office decided in 2004 that assembling AA-1 would still be worth the cost, even if the first prototype would become an instant anachronism. Subsequently, its limited value as a non-production representative flight test asset has been eroded by frequent groundings, including one that remains ongoing.

The story of ZA001 is only slightly less tragic. After all, Boeing at least expects this perpetual resident of hangar 40-26 in Everett, Washington, to one day enter operational service, albeit more than a year late and after one of the most severe production system meltdowns in the company's deservedly proud history.

The full story of ZA001's tormented upbringing has been superbly told from the perspective of true insiders by my blogging colleague Jon Ostrower, master of the ever-fascinating Flightblogger site on FlightGlobal.com.

But, to summarize, what Boeing first portrayed as a slight delay caused by shortages of key parts and software mushroomed into a system-wide industrial breakdown. On top of that, Boeing discovered that the centre wing box would have to be redesigned. Continued production snafus, such as poor drilling by a single mechanic, have plagued Boeing's recovery timeline.

Both manufacturers have since moved on from their disaster-prone prototypes. The next roughly 20 F-35s and 787s are each in various stages of assembly, with Lockheed having completed its first four flight test aircraft and Boeing still working on completing ZA001.

See also:

• F-35 vs 787, part 1: Rise, fall and recovery

Covering military aviation is a big part of my job, but it's not the only part. I also write about commercial aviation. So I've had a front-row seat to observe the rise, severe fall and ongoing recovery of the once-celebrated 787 production system.

Relating commercial and military aircraft programs can be very tricky, but I can't help make connections between the 787 and that other major aircraft production programme with global aspirations also launched earlier this decade: the Lockheed Martin F-35 Joint Strike Fighter (JSF), which is also called the Lightning II by the US military.

For those who are not airliner watchers, Boeing's more-electric, mostly-composite 787 (pictured) is innovating beyond mere systems and materials. In the aerospace industry, the 787 is also a fascinating experiment in globalization. Six major structural producers in three different countries - Italy, Japan and the USA -- are not just building up parts and shipping them to Boeing's final assembly center north of Seattle. Boeing's Tier 1 suppliers are endowed with the unprecedented responsibility to design, build and certificate complete aircraft sections, to include the electronics, software and computers embedded in the structures.

By comparison, the F-35 industrial blueprint seems modest, but is nonetheless a great leap even for an international defense program. The F-35's three major structural producers are the USA's Lockheed (nose and wings) and Northrop Grumman (center fuselage) and the UK's BAE Systems (aft fuselage). The international production system will expand as annual orders begin to escalate from handfuls into dozens starting in 2010. Turkish Aerospace Industries (TAI) is responsible for delivering center fuselages after 2012. At the same time, Italy's Alenia Aeronautica, an acknowledged key culprit in the 787 production meltdown, will be ramping up production of wings for the F-35.

Both aircraft are being initially packaged as a family of three variants built on the same production line. (Interestingly, the fate of the short-takeoff-and-vertical-landing F-35B is yet more secure than even the short-haul 787-3, which has now drifted off Boeing's public delivery schedule.) Both aircraft were selected by their respective industries to embrace globalized supply chains in new and radical ways.

After each program began after 2001, both have experienced roughly equal setbacks: first delivery of the F-35 has slipped 18 months after a weight problem forced a redesign; first delivery of the 787 has slipped 15-18 months after the experimental production system basically had a meltdown. Weight remains a design "challenge" for the 787, but the problem has not been severe enough to force Boeing to redesign the jet.

Most importantly perhaps, neither airframe has proven itself in flight. Although the first non-weight optimized F-35 prototype flew in December 2006, Lockheed has still only scratched the tiniest surface of a 6,000-hour flight test phase. The first 787 flight test aircraft is now scheduled to fly in the fourth quarter of this year to launch a roughly 3,000-hour flight test phase.

Over the past two months, I've interviewed the head of the US government's F-35 joint program office and the lead production executives for Lockheed and Northrop. In each conversation, a key theme was the lessons learned for the F-35 from the perspective of the 787 experience. After all, the F-35 flight test phase and production rate increase is less urgent (read: slower) than Boeing's commercially-funded program, but is less than three years away.

How well Lockheed's industrial team applies the 787's lessons and avoid its mistakes will soon be determined. The F-35 must soon prove itself in the air. But, if Lockheed fails to execute, even an effective fighter can be sabotaged on the ground by a 787-like production meltdown.

Has everybody seen this week's poll on FlightGlobal.com? Here it is:

Will the USAF KC-X tanker competition result be reversed this time?

Yes - Boeing will win		39%
No - Northrop Grumman/EADS will win again		61%

Total Votes: 1708
Poll ends on: 15 August 2008

No disrespect to our truly wonderful and hard-working dot-com staff, but I can't vote in this poll. That's because I think picking either answer would be incorrect, or at least incomplete. It's not an either/or question. I think it's more like both/and.

Boeing's ultimate goal for its rapidly growing modeling and simulation enterprise is no longer to eventually become fully interoperable with similar networks operated by other major defense contractors.

Guy Higgins, vice president of Boeing Advanced Systems' analysis, modeling, simulation and experimentation group, said that most models and simulations do not required detailed data about competitors' platforms, rendering firm links between proprietary corporate laboratories unnecessary.

"Most of the time we just need to be accurate and by accurate it just needs to be about right," Higgins said. "It doesn't need to be precise."

Higgins' remarks come four years after the Network Centric Operations Industry Consortium (NCOIC) was formed expressly to create the standards that would allow the defense industry's various wargaming centers to communicate with each other.

Since 2002, the US defense industry has stood up vast modeling and simulation networks, to include the Boeing Integration Center (BIC), Lockheed Martin's Center for Innovation Lighthouse and the Northrop Grumman Cyber Warfare Integration Network (CWIN).

Their purpose is to provide a service to military weapons buyers and internal decision-makers, exposing the strengths and weaknesses of new technologies and operational concepts in the digital world to help inform investment decisions.

As each proprietary network was formed, Boeing spearheaded the effort to establish the NCOIC to address concerns that the industry was creating "stovepipe" modeling and simulation centers that would feed into the military's interoperability problem.

However, Boeing's philosophy on the value of interoperable networks since 2004 has shifted. Networking concepts have until recently been guided by Metcalfe's Law, which states that the value of a network is proportional to the square of the number of nodes.

New research appearing in 2006, however, claimed that this principle was incorrect, Higgins said. Instead of increasing at such a high rate, new research suggests the increase in value by adding additional network users is significantly more modest, he said.

Nonetheless, Boeing is continuing to dramatically expand the network its network of modeling and simulation centers in the US and abroad. Boeing has teamed with Qinitiq in the UK to open "The Portal" center. In September, Boeing also plans to open a 7,500ft-squared facility in Suffolk, Va.

New modeling and simulation capabilities will be opened in South Korea in 2009, even as the company expands similar efforts in Japan and India.

In the beginning, there was just the Boeing Integration Center (BIC). And then there was the Lockheed Martin Center for Innovation Lighthouse. That was followed by the Northrop Grumman Cyber Warfare Integration Network (CWIN), and so on and so on.

What are these things? And, more to the point, what value do they provide?

I can answer the first question fairly simply: Proprietary modeling, simulation and analysis networks created during the last decade by each of the major defense contractors.

The question of their value is more interesting to me. Here's an excerpt from an article I wrote in Flight International in 2004:

[The Pentagon's] ultimate goal is to connect the BIC with simulation networks owned by other companies, such as Northrop Grumman's Cyber-Warfare Integration Network. "We all have that same goal," says Northrop Grumman.

After all, the customers' money would be wasted if each corporate modeling network was unable to use a competitors' products. The Armed Forces Journal put it this way in a 2005 article:

"In the stampede to build M&S labs and explore the future through modeling, there lurks a danger that the future systems that emerge from this technology's crystal gazing could end up being interoperable only with those other systems developed out of the same labs. In other words, each lab with its own modeling tools and languages would spawn the proprietary, stove-piped systems that the armed forces are insisting are no longer acceptable."

Indeed, only a month ago I attended a presentation at Lockheed's grandiose Lighthouse facility in Suffolk, Va. Lockheed's engineers presented a simulation of a combat search and rescue mission. All of the aircraft involved in the simulation were made by, of course, Lockheed. All of them, that is, except for one: the one aircraft in the entire simulation that was shot down!

So has the dream of an interoperable, interconnected network of corporately-owned modeling and simulation labs been lost, despite the taxpayer's indirect investment in them through higher corporate overhead charges?

I'll have the chance to investigate that today when I visit Boeing's advanced modeling, simulation and evaluation division's headquarters in Los Angeles. I'll let you know what I find out.

Breaking up the five "super primes" in the US defense industry - Boeing, General Dynamics, Lockheed Martin, Northrop Grumman and Raytheon -- into smaller chunks is not a good idea, according to Jacques Gansler, who chaired the Defense Science Board task force on the defense industrial base.

"In general, where we are, relative to the horizontal part, we're pretty much down to two [competitors] in each sector and two is enough for competition -- particularly if you inject foreign companies," Gansler said in an interview yesterday.

Vertical integration, however, is a different problem. It happens when one of the major primes abuses its power and proposes a "system" consisting mainly of in-house components. This forces the Pentagon sometimes sub-par technology at high mark-ups.

"A senior official at DOD who I won't identify even recommended that" we should break up the vertical integrators, Gansler said. His task force, ultimately, rejected that proposal.

Instead, the task force recommended that the military customer flex its own power and force its contractors to use the best technology.

The military buyer "can get involved in the 'make or buy' decisions after they pick the prime if they want," Gansler said.  "The government will say to [the vendor]: 'You didn't do an adequate job. Review it. Make a different choice.' A monopsony buyer can do a lot of those things. They tend not to but they can and should."

See also:

• The Gansler interview, part 1: The coming crisis
• Time to unbreak the defense industry
• How the defense industry subverts competition, the small guy and the taxpayer
• Defense Science Board: Tanker competition is perverted
  

The Hunter Green Dart program is being surged to support intelligence, surveillance and reconnaissance missions in Iraq, according to this handy Army solicitation document released today.

The build-up will require a new batch of new and retrofitted Northrop Grumman MQ-5B unmanned aerial vehicles, which is the designated host for the Green Dart platform.

So what is Green Dart? Well, we're still not sure, despite spending nearly a year of trying to find out (see links below).

It's also possible to presume that Green Dart was invented and deployed as part of the Liberty Ship program disclosed two weeks ago by US Air Force Gen Norton Schwartz. If so, it becomes a potentially major piece of the still secret effort to deploy a massive ISR force to Iraq to defeat the improvised explosive device (IED) threat.

See also:

• Code name alert: Is Liberty Ship a new Big Safari?
  
• Green Dart's back (but still classified)
• New theory: Green Dart is a counter-narc spy UAV
• Hunter Green Dart: mystery (almost) solved
• Today's mystery: What is a Hunter Green Dart?
  

• Canada to re-start strategic air refueling role ... via Airbus
• India dumps Boeing for European competitors on Tejas trainer
• China bans lunchtime (!!) drinking for air force pilots 
• Finally: A defense industry blog by someone who works in the defense industry!
  

Jacques Gansler's task force report on the defense industrial base vaguely described a "coming crisis" for the defense industrial base.

In an interview late yesterday afternoon, the former Pentagon acquisition chief explained what the task force meant by that phrase.

"If supplementals disappear and the budget shrinks and -- both of which are likely to be happening -- every $100 billion matters," he said, only half-joking on that last phrase.

"The services are going to have now to start worrying about the efficiency [issue]," he said. "For the last 7 years now, we've lived in a rich man's world. If you want something you buy it and, if you don't, you get it in the supplemental. ... Now, the services will be much more interested in not only effectiveness but also efficiency. So now you do worry about the supply side efficiency."

The Gansler task force's solution to all this is pretty clear: competition.

The US Government Accountability Office denied the Lockheed Martin protest on the contract award for the US Navy Broad Area Maritime Surveillance program.

Lockheed received word of the GAO's denial late on Friday, and has just issued this statement.

"Lockheed Martin is disappointed in the outcome of the Government Accountability Office's recommendation to support the original Broad Area Maritime Surveillance decision. We look forward to further reviewing the documents to better understand the evaluation.

Lockheed Martin protests contract awards infrequently and is committed to proposing and delivering best value solutions for our customers' mission requirements. We look forward to working with the U.S. Navy on future programs and opportunities."

Lockheed teamed with General Atomics to offer the Mariner version of the Predator B UAV, which included an Israeli sensor. The other losing bidder, the Boeing/Gulfstream G550 team, did not protest.

The USN selected the Northrop Grumman RQ-4N for the award.

See also:

• Tom Cassidy on life after BAMS for navalized Predator

• This just in: Lockheed Martin protests BAMS award

• BAMS protest watch begins

• Northrop's win streak: good luck or something else?

• The BAMS story I never wrote ... 
• Back on BAMS

I've excerpted two small passages from this week's Defense Science Board report on the defense industrial base (here and here), and now I will try to summarize.

The report is likely the most radical and comprehensive call for reform by a DOD advisory panel of the industrial base since the 1993 "last supper" prompted the frenzy of consolidation that continues even today.

The report, prepared by a DSB task force chaired by former President Bill Clinton's top weapons buyer Jacques Gansler, is also an alarming indictment of both the industry's increasingly anti-competitive practices and the Pentagon's inability or unwillingness to stop it.

Given the report's description of the problem, the Gansler task force's recommendations seem perhaps timid. The reports calls for halting mergers and acquisitions activity and re-injecting competition by embracing foreign and commercial firms offering relevant technology (erm, tankers perhaps?).

To be sure, these are not uncontroversial ideas. Embracing foreign and commercial firms means re-writing the rulebook for trading and sharing sensitive technology with overseas suppliers, not to mention tossing out the entirety of the government's arcane and sometimes frivolous cost accounting standards. Does anyone believe that kind of change is possible in the current political/social/economic environment?

But, if the Gansler task force has chosen to go that far, may I ask: Why stop there?

Why accept the current structure of five super primes -- namely, Boeing, General Dynamics, Lockheed Martin, Northrop Grumman and Raytheon? The often unhelpful market power wielded by these uber-contractors upon the taxpayer is the result of Pentagon policy.

So, if such power now causes more harm than good, the same policy instruments used to create this clout can be called upon to strip it away and de-consolidate the industry.

Seattle-based-yet-French-born aerospace analyst Michel Merluzeau spells out what he thinks are Boeing's options in the second round of the KC-X tanker competition. You can read his blog here.

Merluzeau says:

1.  Stick with KC-767 and correct the weaknesses of the initial proposal, particularly in the area of cost/maintenance.

- This option is one of the better avenues for Boeing to patch up the relationship with USAF and gives a better chance of winning KC-X.

2.  Protest the draft RFP, insist that USAF sticks to the original document

- This will likely further damage relations with USAF and provides no guarantee as to the outcome.

3.  Switch to the 777 option

- While some believe it is already too late for 777 to enter the fray,  Boeing has done a significant amount of work on the concept.  It could still be introduced and be seen as a way to be responsive to customer requirements, what we call a "disruptive offering". KC-777 would be a formidable competitor in many areas, however it is perhaps too large and can operate from fewer airfields than KC-30.

4. Withdraw from the competition

- If Boeing truly believes that KC-30 has got the lock on KC-X, it perhaps is best not to spend anymore IDS money at this point.

5. Sue the government

- Bad, bad idea, USAF has a long memory.  Keep the lawyers away from this.

6. Hope for a split or make one happen;  read: " Cry havoc and let loose the dogs of war"

-  This is what we call "Verdun 1916″, trench warfare.  Politicians take the competition over (as if this was further possible) and enforce either a Boeing win or a split.

Personally, I wouldn't be surprised if the winner is Option 6, with an assist from Option 2. I think we can safely rule out Option 4, and Option 5 would be a big surprise.
Anybody think Option 1 or 3 have a chance?

More good reading from the Defense Science Board report out yesterday on the US defense industrial base. This section focuses on the dark side of the defense industry consolidation that began in 1993. Here's the passage:

While not widely pervasive, there is evidence that continued vertical integration poses significantly increased risks to competition, due to inherent attributes of the consolidating defense market structure. The combination of the Super Primes' broad program authority, along with their substantial subsystem capabilities, creates unintended incentives that undermine subsystem competition as well as the analysis of alternatives. Additionally, increased anecdotal evidence shows that, while subsystem and product providers are generally heathly, they vace increasing challenges. There are complaints of unfair make/buy decisions, concerns over a lack of R&D flow down -- where primes strategically keep developmetnal subsystem work "in house" rather than sharing with their subcontractors. As a result, subsystem firms increasingly do not bid in some areas due to competition from Super Primes who are also their lead customers.

• F-22s survive Guam's treacherous humidity apparently unscathed 
• Lockheed Martin heeds local pols and expands in Australia ...
• ... while simultaneously unleashing toxic chemicals on an unsuspecting Florida
• Poland becomes a new European service hub for F-16s
• Boeing uses New Zealand UAV to experiment with four-stroke, heavy fuel engines

From a new Defense Science Board report on the defense industrial base released today:

One example of the perversion of current globalization policy is the United States Air Force (USAF) tanker competition. The Boeing 767 facility must be ITAR compliant, regarding business access and US employees, so that the aircraft can be sold to the military. The Boeing 767 also required a Berry Amendment waiver, because large shares of its parts are developed offshore, including parts that are manufactured in Russia. By Contrast, the Airbus KC-30 is exempted from the Berry Amendment because the law exempts production from certain allied nations.

Interestingly, I don't think this is true. While the KC-30B is assembled in Toulouse, this rule may apply. But when the assembly line shifts to Mobile, Alabama, I think the same laws apply.

This issue came up in the same hearing last month that I quoted in my previous post today. At the risk of quoting John Young too many times in one day, here was the exchange between Young and Represenative Todd Tiahrt, a pro-767 lawmaker from Kansas.

REP. TIAHRT: You are waiving the regulations for the Europeans, by the way you just explained it to me. And in doing so you've created an unlevel playing field and an unfair advantage to one bidder over the other.

Ninety percent of the product is built in Europe, and they don't have to comply with five specific regulations -- the cost accounting standards, the Foreign Corrupt Practices Act, the International Trafficking in Arms Regulations, the Berry Amendment, and the Buy American Provisions. Those are the five regulations that have been waived by the Department of Defense -- not Congress, by you guys. Are you going to force them to comply with them just like you do the American company? Because if you don't American workers are put at a disadvantage.

MR. YOUNG: Both bidders, both companies must comply with all the regulations and laws you just cited. Both of those bidders are reaching outside of their defense company headquarters to get commercial products. Both of those commercial product providers are not subject to some elements of all of those regulations you talked about.

But all the commercial products are subject to the same regulations and then the defense companies that are bringing those commercial products into and modifying them to deliver the U.S. government a tanker are fully subject to all the regulations. And we will not be waiving regulations with regard -- (inaudible).

REP. TIAHRT: You will not apply these five regulations to 90 percent of one of the two bids. That's just what you've told me. You said the American portion -- well, fine. We'll apply the regulations equally for 10 percent of the product. But for 90 percent, we're going to make a disadvantage for American workers here by allowing no cost accounting standards, no Foreign Corrupt Practices Act, no International Trafficking in Arms regulations. Those are very expensive regulations to implement, and you're -- (audio break) -- implemented entirely on one body and you're waiving it entirely for 90 percent of another body. That is an unfair advantage.

MR. YOUNG: We're implementing it uniformly to the two bidders.

My colleague (and competitor) Amy Butler today quotes Northrop Grumman executive Paul Meyer, vice president of Northrop Grumman Air Mobility Systems, about the urgency of the KC-135 replacement. He says:

"The Air Force has made it abundantly clear they need to modernize the aging KC-135 fleet as quickly as possible."

I've always accepted the air force's KC-135 replacement urgency at face value. After all, some of these tankers date back to the early 1960s. How much life could they possibly have left?

But John Young, the Pentagon's undersecretary of defense for acquisition, technology and logistics, surprised me in his testimony last month. Here's what he said:

"The truth is, KC-135s currently have, on average, 17,000 hours and they have a structural life of 36,000 to 39,000 hours. Those airplanes have plenty of life. We could continue with those airplanes structurally. Those airplanes were designed in a time where we developed more robust structures. Today's airplanes have less robust structures. I think it remains to be seen whether [newer] planes can serve for 25, 40 or 50 years."

Pentagon's Unmanned Spokesdrone Completes First Press Conference Mission
(Tip: Ares)

In what could become an entertaining series for The DEW Line over the next few months, John McCain's well-chronicled antipathy towards a certain major defense contractor will be -- hopefully -- illuminated.

Our first specimen comes from the keyboard of Gordon Adams, American University professor and noted national security expert, who has analyzed the defense budgeting issues facing whomever is sworn in as the next president in January.

Adams' copy contains some unfortunate typos (erm, the "C-14 Globemaster"?), but his point is clear.

"Both Obama and McCain have said that they will undertake a review of the services' hardware plans to ensure that the country is buying equipment that meets its strategy. Even before such a review, McCain's federal budget plan already suggests that the Future Combat System and the air force's airborne laser and C-14 Globemaster cargo aircraft 'should be ended.' (That all three are Boeing programs, and the senator was a severe critic of Boeing's actions around the new air force tanker program may be more than a coincidence.) Thus far, Obama hasn't identified program changes, but he has promised a procurement review."

The Air National Guard wants to buy your Boeing Business Jet. Two of them actually.

The 201st Airlift Squadron, of Andrews Air Force Base, Md., is soliciting for two of used 737-700IGWs converted into VIP transports. List price for a new BBJ is about $50 million each. Not sure what the blue book is.

The ANG will offer "domestic and worldwide team and VIP transportation" with the new BBJs thanks to funds provided in "Congressional legislation as enacted in Public Law 110-181".

  

Lockheed Martin started it.

The defense contractor teamed with AgustaWestland to offer the US101 for the $11 billion CSAR-X contract award went negative on Thursday, dishing to reporters about the key "weaknesses" facing both of their competitors.

The Sikorsky HH-92 proposal is "high-risk", according to Lockheed, because they've decided late in the bidding process to switch to a 5-blade rotor. That decision means Sikorsky must extend the tail boom and enlarge the fuel sponsons, which also increases risk, Lockheed says.

I asked Sikorsky for a response.

"As the GAO reported in its decision upholding Sikorsky's first protest, the US Air Force rated our aircraft performance risk as 'low' while our competitor received a 'high' risk rating. Accordingly, these misinformed statements by our competitor smack of desperation," Sikorsky said.

Lockheed found similar fault with the Boeing HH-47 proposal. Boeing will cut into a major load-bearing structure by widening the cabin door to 48-inches, Lockheed says. This is the kind of design change that introduces a variety of unknown-unknowns into the development phase, even for an aircraft based on a 47-year-old airframe, according to Lockheed.

Boeing rebuts:

"The airframe modification to incorporate the larger cabin door does not fundamentally require a change in the airframe structural arrangement or the use of advanced materials. The airframe loads, load distribution and the material allowables are all known, making the risk low."


See also:

• One year ago today: Boeing wins CSAR-X contract
• CSAR-X: The movie, by Boeing
• CSAR-X intrigues continue

• Canada hearts Joint Strike Fighter ...
  
• ... but Australia keeps an open mind
• Meanwhile, Boeing fires Australian division chief
• Wife of alleged B-2 spy speaks
• Shell Oil taps UAVs to spot whales
  

The Lockheed Martin industry team, including major subcontractors BAE Systems and Northrop Grumman, has avoided official cost overruns for the F-35 program since a $5 billion meltdown in 2004.

But Heidi Wood, a aerospace and defense industry analyst for Morgan Stanley, warns that a fundamental accounting change proposed by Lockheed during recent contract negotiations could start putting a huge dent in the program's finances.

The change involves how the big companies in the F-35 industry team charge the government for acceptable overhead costs. Right now, all three companies each submit their own bills for services rendered to the F-35 joint programme office for payment. Each company tacks on an overhead fee for each bill.

According to Wood, Lockheed's proposal would change this process. Rather than submit their bills directly to the JPO, BAE and Northrop would submit their bills to Lockheed, the prime contractor. Lockheed would then submit an aggregated, single bill to the JPO.

The problem is, BAE and Northrop would continue to add the overhead fee for their portion of the work. Then, under Lockheed's proposal, Lockheed would add a fee on top of that for the aggregated amount, significantly increasing the size of its own overhead fee.

Wood also points out that we're not talking about chump change here. She's been told by a senior JPO official that the current structure has saved the program $850 million so far. By changing the structure before the start of full rate production in 2012, the overall cost increase could be enormous.

When asked to comment, Lockheed didn't deny any of Wood's statements, but expects

"fee structures to be comparable regardless of whatever the structure of the contract".