In the headlong rush to consolidate its defence industry in the search for efficiency, the USA may just have blinked. Having set itself on a steadfast course towards a winner-takes-all competition for one of the largest combat aircraft programmes in history - the Joint Strike Fighter (JSF) - the US Department of Defense (DoD) has launched a 90-day review of potential alternative acquisition strategies.

The review has been prompted by the realities facing the consolidated and restructured US defence industry. Wall Street, which welcomed the wave of mergers and acquisitions which reshaped the sector almost beyond recognition, has turned against the resulting giants as one by one they have failed to meet their earnings expectations.

Stock prices have plummeted, making it difficult for companies to attract investment. Conceivably, losing the 3,000-aircraft JSF programme could put the loser out of the fighter business. Certainly, it would make it difficult for the loser to keep investing in the talent and technology necessary to be an effective competitor in the next fighter competition - whenever that might happen.

While the DoD insists that continued consolidation and restructuring is an "absolute necessity" if the defence industry is to become more efficient, and its products more affordable, it now acknowledges that the Pentagon is in danger of losing its greatest weapon in containing costs and ensuring innovation - competition.

Without competition the USA will be unable to modernise its armed forces, the DoD argues, because competition reduces costs and increases innovation. Without a competitive defence industry, it says, the Pentagon will lose out on both the affordability and performance of its future weapon systems.

The JSF is at the forefront of the drive for affordable high performance, and a winner-takes-all competition has been seen as the best way to ensure that the two bidders, Boeing and Lockheed Martin, minimise costs while maximising innovation. But what will happen to the loser? What will happen if a single contract award will leave only one contractor remaining in a critical sector like fighter manufacture?

The DoD now says that it must consider ways to maintain the potential for future competition, and that it must consider industrial base issues when shaping acquisition strategies. What does that mean for JSF?

Outlining the DoD's concerns at a conference in Washington DC last week, Pentagon acquisition chief Jacques Gansler cited the example of the DD21 destroyer programme, where the winning design will be produced competitively by two shipyards. If applied to JSF, this would mean picking a winning design, then requiring both Boeing and Lockheed Martin to produce that aircraft competitively.

The price of preserving the health of two US fighter manufacturers could be increased costs, but the penalty could be reduced if the US Government heeds another of the DoD's calls: that export controls be modernised so industry can access the markets and technology of other nations.

Key to the JSF's affordability is its international flavour. Not only is this paving the way for export sales of the winning design well beyond the basic 3,000-aircraft requirement, it is allowing the teams to tap the expertise of industry outside the USA, to reduce cost and increase performance. Examples include the lift system, crucial for the short take-off and vertical landing variant. As well as the UK, which is a full partner, there are eight other countries signed up to the ongoing concept demonstrator phase with the JSF programme office targeting just about every operator of the Lockheed Martin F-16, Boeing F/A-18 Hornet and British Aerospace/Boeing AV-8B Harrier II for participation in later stages of the programme.

If the USA denies potential partners access to JSF technology, and therefore drives potential customers into the hands of foreign manufacturers, then it is possible that no JSF acquisition strategy, however industry-friendly, will allow two US fighter manufacturers to survive for long in the new century.

Source: Flight International