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Posted by: ka185944 at December 20, 2007 05:16 PM

Brian,

I could not agree with your point more. We have beuaracrats purchasing equipment without knowing whether it is a truly best value or not.

I am in the construction business and that is why I made the reference I did. If a person or corporation decides to build something he hires a team (architects, engineers, construction managers, and subcontractors) to build whatever it is that he is asking. If they hire a good team then any issues will be brought up by one party or another prior to any contracts being issued. When it gets muddied is when money gets involved. When you are looking at bottom dollar then it does become an issue because everyone is the focusing on liability and avenues to make money even if they have to lose money initially.

But what we need are better teams to assess whether the proposals presented by Lockheed Martin, Boeing, or Northrup Grumman are actually valid. I think somewhere along the lines we have lost that in order to save money and size in government.

DC2

Posted by: DC2 Jennings at December 9, 2007 06:23 PM

DC2,

I've worked on government contracts before, from the government angle. It's not just lowest price. It's a "best value" calculation, with a lot of other factors added in.

If I'm some eccentric billionaire, and I want to hire an architect to build me a giant inverted pyramid or something, then I'm free to make that contract on whatever terms to which we can agree. If we want to allow for later renegotiation, we can. The law does allow for renegotiation if an unforeseen material change occurs which is not the fault of either of the parties. But the government does not have the freedom to custom tailor its contracts in such a way.

Let me give you an example. Lockheed and Boeing both submit bids for a new plane. Lockheed says "we can do it for 20 billion dollars." Boeing says "we can do it for 30 billion dollars." Everything else being equal, who gets it? Lockheed, duh. And unless there's some material reason to doubt they can do it for the contract price, that's who SHOULD get it. Now who will determine what is a reasonable problem what is not? If I'm a rich billionaire, I can decide for myself -- it's my money. But a government employee can't do that, ESPECIALLY when you've got two programs that are never quite the same. A more realistic scenario is:

Lockheed: We can do this for $20 billion. Possible problems are a, b, and c.
Boeing: We can do this for $30 billion.
Possible problems are x, y, and z.

How is a government employee, who is not an aerospace engineer, supposed to predict what will happen and how much it will cost on the two not-yet-built aircraft? Answer: he can't. Lockheed doesn't know what problems will turn up (if they did, they'd fix them beforehand), and neither does Boeing. They certainly don't know how much they're going to cost, either.

Posted by: Brian at December 9, 2007 02:16 PM

MAC,

Your thought processes on government procurement is typical of beuracrats. But think of it this way: wouldn't it be better to make sure you have all of the funds you need for a project by making sure all areas are covered? If I'm a contractor bidding a defense project, my priority is to get the lowest number possible with the clearest defined scope in the original bid. From there, everything is a change in scope and thus more money.

It is the procurement guy's respsonsibility to make sure that all bases are covered in the bids and that there will be no changes in scope. That does not happen either.

If Lockheed Martin says it is going to cost $X, then they should be held accountable to that amount. Especially if there are design flaws that cause the test aircraft to be grounded, force the contractor to spend more money, and delay the project.

When an architect designs you a house and does not properly figure the stuctural loading on the roof, who is supposed to pay for the addtional trusses to be installed? If they design a building that has "never been done before", then they should make sure all costs are covered. Or bring to light any issues that might cause an additonal cost.

But the government looks at one thing only, lowest price.

Posted by: DC2 Jennings at December 7, 2007 12:52 PM

Great point about overruns 'hidave'. I would only add if the Program gets rebaselined, then the cost basis is reset and subsequent overruns are what counts in the accounting. To get rebaselined means the government/customer pretty much recognizes the original cost targets were not realistic for thetasks assigned, or the program is 'significantly' (not minor line item changes) rescoped or redirected with more work than the original contract $ would cover.

I've often thought while reading the comments here that the site could do with an article on the nature of defense contracts and the reasons why 'cost plus' contracts tend to succeed and firm fixed price contracts tend to fail -- which is why you see 'cost plus' contracts these days.

When you are doing something that has never been done before, there is always significant uncertainty as to what it will take to get it done.

Posted by: SMSgt Mac at December 6, 2007 08:57 AM

At least one or two commenters have sense. Bids are not allowed to add dollars for unforseen problems, but the F-35 in all its variants is probably the most complicated design in history. So overruns are virtually inevitable. But the taxpayer gets a break on them because the contractor doesn't collect fee on overruns. Congressional meddling with defense contract cash flow is responsible for a lot of problems in defense contracts.

Posted by: hidave at December 6, 2007 07:43 AM

Smith,

The European countries are already looking at alternatives. The project full operational date for the first aircraft is 2016. Until then this aircraft will follow the same path as the Typhoon except with a focus on ground attack versus air superiority.

Don't be surprised if other countries don't follow suit with Australia. With new F-18Fs there is no guarantee they will buy the F-35 when it does become available.

DC2

Posted by: DC2 Jennings at December 5, 2007 10:09 PM

Don't be surprised. Every major A/C program has its hurdles, and name me one that came in time, on budget and with full features. Anyone? Like the A380 or 787, the program will eventually get to production, where it still has every indication of being a very wide-serving aircraft - especially with allies who don't have access to F-22s, which right now encompasses the entire world except the USA. Be patient!

Posted by: Smith at December 5, 2007 08:48 PM

Have the F-22's got the 'B' Designation because the 'B' Versions are Y2k compliant :P

Posted by: Foreign.Boy at December 5, 2007 10:08 AM

So we are spending $233M per F-35 for 12 aircraft, while the F-22 costs $174M. Now I understand economy of scale, but come on. Like I said in a previous post, the projected overall per plane cost for the F-35s will be $154M. I don't know how much a Block 60 F-16 costs but it has to be less $100M.

The question really is: Do we want more F-22s and more F-16 Block 60s, or less F-22s and less F-35s? Let's face it, the F-35 is not going to be a front line fighter. It was never designed for that just like the F-16 was not. It is meant to compliment the F-22.

And we need to keep the F-22 production lines open. If we were to enter a war after production ceased and (heaven forbid) we lost F-22s, then we would be royally up the creek. Once production stops it does not restart. And with only 180 airframes it would not be a good scenario.

DC2

Posted by: DC2 Jennings at December 5, 2007 09:18 AM

1. "Recasting": as in "putting a certain spin on"

2. RE: "delays and rising costs are deterring F-35 orders". More accurately stated the point would have read: "The US has cut back on their initial production lot buy quantities due to Congressional funding action and driving up initial cost per unit. The program had hoped to persuade its partners to make up some of the difference by gettng them to accelerate their planned buys and to drive the unit cost back down.

But that isn't as juicy a story is it? Also it is only a minor nit, but a significant portion of the the time the A/C was down was PLANNED to be down, so the schedule loss is NOT one for one with aircraft downtime.

Recipe: Take one half-truth, add a dash of woe and blend at high speed. Yell "come and get it!"

The rubes will come a' runnin'.

Posted by: SMSgt Mac at December 5, 2007 09:14 AM

f-22s arent really an option for those of us in europe though heh.

Posted by: Ross at December 5, 2007 09:09 AM