Robert Gates Completes Cancellation Of Targeted Weapons Programs

By Colin Clark
Editor, AOL Defense

Robert Gates today crowned his tenure as Defense Secretary by formally cancelling the last major weapons system he had targeted for termination: the second engine of the Joint Strike Fighter program.

“The Department of Defense today notified the General Electric/Rolls Royce Fighter Engine Team (FET) and the Congress that the F136 Joint Strike Fighter (JSF) engine contract has been terminated,” began the short, five-paragraph Pentagon press release announcing the news.

But the General Electric/Rolls Royce team that has already spent $3 billion developing the engine said it remains “committed” to the project, according to GE spokesman Rick Kennedy. Both companies are working with their congressional supporters “during the 2012 budget process in pursuit of incorporating the engine into the [aircraft] program, and preserving competition,” he said in an email to AOL Defense. Engines programs are run and funded separately from aircraft initiatives.

The F136's termination "represents an important victory for our men and women in uniform and the American taxpayer," said Marty Houser, the spokesman for GE's arch nemesis in the engine wars, United Technologies. It is the parent company of rival engine-maker Pratt & Whitney.

"United Technologies appreciates the [Department of Defense's] and the U.S. House and Senate’s confidence in the F135 engine by eliminating funding for a wasteful extra engine," Hauser said. For the last five years, UT has argued that money spent on the F136 sucked money from their engine, the F135.

Still, GE and Rolls Royce hope their congressional friends will fold money for the second engine into the larger aircraft program. And GE knows that, should that happen, they would have to pour “some substantial share” of their cash into the kitty, Kennedy confirmed. “We are going on the assumption that there will be some expectation for self-funding in the future,” he said.

The Pentagon previously supported the second engine program for the F136 because, in the past, it found weapons systems competition spurred innovation and drove down prices.

But Loren Thompson of the Lexington Institute said he doesn’t think GE's program has much of a chance.

“GE has never made a convincing case for how buying two engines could cost less than buying one," the defense analyst said in an email. "Since the government is the sole customer, it would have to pay for two design teams, two production lines, two supply networks and so on -- and then split its annual buys into two uneconomical lots to keep both teams viable.”

This is “an industrial subsidy to one of America's wealthiest companies,” Thompson wrote.

(Readers will remember this is the same GE that managed, through masterful command of the tax code, to avoid paying a single dime in taxes to the US Treasury last year.)

“Gates has now managed to prevail on every major program kill he decided to pursue, from the Air Force's F-22 fighter to the Army's Future Combat System to the Navy's next-generation destroyer," Thompson added. "No other defense secretary has managed to get his way so consistently, so the logical conclusion is that once Gates goes, the Pentagon will see less effective management.”

At a time of flat or declining defense budgets, less savvy management bodes ill for the Pentagon, the taxpayers, and the defense industry writ large. Cutting wasteful programs saves money, maintain political support for weapon systems, and results in better weapons, in the long term.

While GE is fighting to secure new funding for the second engine program, Kennedy said it would “take all necessary steps to ensure that the F136 assets and intellectual property are protected.” That is not insignificant since there is more than $200 million in F136 hardware scattered across 17 facilities. That includes, the spokesman said, nine engines in various stages of assembly.

GE and Rolls Royce have already shrunk their FET program to a core technical group of about 100 people. The team's job? “To protect, enhance, and advance the vital F136 propulsion technologies for JSF and future combat aircraft,” Kennedy wrote in his email.

The GE spokesman clearly foreshadowed some of the arguments supporters in the House and Senate will utter when they try to revitalize the program. He noted that the engine ”has been under development since 1996 and is 80% complete with six development engines tested.” And, he said, the program “has been on or ahead of schedule.”

Whether the two companies can raise the program from the near-dead –- as happened twice to the V-22 Osprey aircraft –- cannot yet be determined. But the chairman of the House Armed Services Committee, Buck McKeon (R-Ca.), is a fervent supporter of the second engine. The program has powerful supporters in the Senate, as well. Their task will be extremely tough in the face of the current fiscal climate, especially with the Tea Party watching in the House.

Launching in Spring 2011, AOL Defense will provide news, insight and tools about the defense sector. Follow Colin on Twitter at @colinclarkaol. Follow AOL Defense at @aoldefense.