Pentagon faulted for decision to cancel fighter's alternate engine

The Pentagon based its controversial decision to cancel a backup engine for the F-35 Joint Strike Fighter on incomplete cost and savings projections, congressional investigators concluded Monday.

In a nine-page letter to Senate Armed Services Chairman John Warner, R-Va., a Government Accountability Office official confirmed lawmakers' fears that terminating development of a second engine would eliminate competition and ultimately drive up the cost of the $250 billion international aircraft development and production program.

The decision, which the Pentagon announced in its fiscal 2007 budget request, was driven by the need to fund other, higher priority programs, the report said.

"In supporting the decision to cancel, officials focused only on the potential, up-front savings in engine procurement costs," wrote Michael Sullivan, director of GAO's acquisition and sourcing management. "They did not, however, consider the full, long-term savings that might accrue from competition for providing support for maintenance and operations over the life cycle of the engine."

GAO also challenged comments by Defense Department officials that they have made steady progress on the primary engine. Investigators found only a "small portion" of the primary engine testing has been completed.

Warner and House Armed Services Tactical Air and Land Forces Subcommittee Chairman Curt Weldon, R-Pa., initiated the GAO investigation in late March, after both lawmakers publicly questioned cancellation of the alternate engine. Congress first required a second engine in 1995 to keep all engine costs down and provide a backup in case the primary engine developed technical problems.

The Pentagon's decision would remove General Electric Co. and the British firm Rolls Royce from the engine program, leaving the Connecticut-based Pratt & Whitney unit of United Technologies Corp. as the sole engine provider.

Both the House and Senate versions of the fiscal 2007 defense authorization bill would overturn the decision.

"The department's proposal to cut the alternate engine hit us like lightning earlier this year," Warner said in a statement. "Clearly, this new report buttresses the case for keeping the alternate engine."

Defense Department officials, however, assert that canceling the second engine would save $1.8 billion over the next five years.

"If we do face engine problems in the future, we believe that fixing any problems with the original engine will cost less than developing and producing a second engine (which might develop its own problems)," Mark Schaeffer, acting director of defense systems in the Pentagon's acquisition office, wrote in a May 5 response to GAO, which shared its findings in advance of their release.

He said the study "mischaracterizes" the department's rationale for canceling the program, and does not weigh the upfront development costs of the second engine, estimated at $2.4 billion.