|JSF: The Largest Acquisition Program in DoD's History |
JSF: The Largest Acquisition Program in DoD's History
DoD News Briefing: Edward C. "Pete" Aldridge, USD ATL, Friday, October 26, 2001 - 4:30 p.m. EDT. Live interview with Ron Insana, CNBC. Source: News Transcript from the United States Department of Defense. Contract announcement for the Joint Strike Fighter Program. Also participating were Lord Willy Bach, under secretary of Defence and minister for Defence, United Kingdom; Gordon England, secretary of the Navy; James Roche, secretary of the Air Force; Marine Corps Maj. Gen. Michael Hough, Joint Strike Fighter Program Manager; and Richard McGraw, principal deputy assistant secretary of Defense for Public Affairs. See related news release and contract announcement.
McGraw: Well, good afternoon, ladies and gentlemen. Have a room full of new faces, so for those of you whom I haven't met, my name is Dick McGraw. I'm the deputy assistant secretary of Defense for Public Affairs.
We have an announcement to make today on the Defense Acquisition Board, and to make that announcement is the under secretary of Defense for Acquisitions, Technology and Logistics.
Sir, you're up.
Aldridge: I'm up? (Laughter.)
Well, good afternoon. We're here today to announce two important decisions on the largest acquisition program in the history of the Department of Defense, the Joint Strike Fighter. The value of the program, depending on the degree of international cooperation and participation, will be -- could be in excess of $200 billion.
I have with me today three key customers of the Joint Strike Fighter: the secretary of the Navy, Gordon England; the secretary of the Air Force, Jim Roche; and from the United Kingdom, the minister of Defense Procurement, Lord Willy Bach, and the national armaments director and the chief of Defense Procurement, Sir Robert Walmsley.
Also with me today is the Joint Strike Fighter program manager, Major General Mike Hough, who's over at the side, and the deputy program manager, Brigadier General Jack Hudson.
The Joint Strike Fighter is a family of highly common, lethal, survivable, supportable, and affordable next-generation multi-role strike fighter aircraft. There are three variants: one for conventional takeoff and landing, applied to the Air Force mission; a carrier-deck-compatible variant for the Navy; and a short takeoff and vertical landing -- STOVL -- variant for the Marine Corps and the United Kingdom.
This family of aircraft will replace the aging fleet of Air Force A-10s and F-16s, the early model Navy F/A-18s, and the Marine Corps AV-8Bs.
The United Kingdom is a major partner in the development, and there is additional strong international interest in the program.
Two contractor teams, one led by Lockheed Martin and the other led by Boeing, have just completed a concept development phase that demonstrated the design validity and the flight performance of the three aircraft variants. Both contractor teams met or exceeded the performance objective established for the aircraft and have met the established criteria and technical maturity for entering the next phase of the program, systems development and demonstration.
Advanced aircraft design knowledge, improved engine performance, lighter-weight materials, and computer-aided design capability have permitted both contractors to build and fly a highly common airframe that meets the multiple needs of the military and potential international partners.
The Joint Strike Fighter will be the world's premier strike platform beginning in 2008, and lasting through 2040. It will provide an air-to-air capability second only to the F-22 Air Superiority Fighter. The Joint Strike Fighter would allow for migration by U.S. forces to an almost all-stealth fighter force by 2025. For the Navy and Marine Corps, the Joint Strike Fighter represents their first deployment of an all-aspect stealth platform.
There will be a package of information available describing the JSF -- available to you, describing its capabilities and variants we tend to develop, and I will not go over that detail this afternoon.
This week, on Wednesday, October 24, 2001, the Defense Acquisition Board met to review the status of the Joint Strike Fighter and to determine whether the aircraft is ready to enter this next phase. We reviewed the technical performance relative to the exit criteria for the SDD phase; the funding profiles projected over the next 10 years; and the unit-cost estimates. We also reviewed an independent technology maturity report by the director of Defense Research and Engineering. Based on the information received, we have concluded that the Joint Strike Fighter is ready to enter the next phase of development. This is not a decision to enter into production or a decision on how many aircraft to produce, but it is a commitment to continue the development leading to those decisions in the future.
The DAB has made the decision to enter into SDD, and that decision has been reviewed and concurred in by the secretary and deputy secretary of Defense. I have signed the documentation that implements this decision.
With the decision to proceed now made, it is now appropriate to announce the winner of the Joint Strike Fighter competition, and the prime contractor team for the remaining phases of the program. The source-selection process is very rigorous, comprehensive, balanced, and strict, leading to a decision on the best offer by the source- selection authority, in this case the secretary of the Air Force.
I would now like to turn the podium over to the Secretary of the Air Force, Jim Roche, to announce the winner of the competition.
Roche: Thank you very much, Pete.
The process involved -- in the end, it was about 250 people, Source Selection Advisory Council. In addition, my colleague, Gordon England, the secretary of the Navy, and I had a chance to discuss the selection process with each of the subcommittees of this. We also had a chance to read everything. We separately met with the companies so that we heard from the companies, and both proposals were very good; both demo programs were very good.
But on the basis of strengths, weaknesses and degrees of risk of the program, it is our conclusion, joined in by our colleagues from the United Kingdom, that the Lockheed Martin team is the winner of the Joint Strike Fighter program on a best-value basis.
On that basis, I'll turn it over to my colleague, Gordon England.
England: Jim, thanks very much.
I just want to thank Secretary Roche, one, for his leadership at this phase of the program. I also want to thank General Mike Hough, who did a terrific job the last couple of years on this program. This is a program very, very important to the Navy; very, very important to our Marines. It has my personal full support, and I concur fully in this decision. Jim and I worked as a team in this decision.
I also want to thank the contractor teams, the management, the engineers on both the teams who because they worked very, very hard. I know a lot of dedication, a lot of energy, a lot of talent went into the program. I want to thank them for their efforts, and I do look forward going -- as we go forward on this program into the future.
Thank you all very much.
Q: Mr. Secretary?
Aldridge: Just a second. We'll have one more --
I'd like to turn it over to our U.K. partners, and Lord Willy Bach has a few words to say.
Thank you, Willy.
Bach: Thank you very much, Pete.
Today, ladies and gentlemen, United Kingdom and United States forces stand shoulder to shoulder at the forefront of the worldwide coalition battle against terrorism. I am, therefore, delighted to be here to demonstrate our partnership.
The United Kingdom government, as a full partner in the collaborative Joint Strike Fighter program, is very happy to endorse the decision to move the JSF program forward into the next phase and to pursue the Lockheed Martin contractual path.
May I briefly congratulate Pete Aldridge, Secretary Roche and Secretary England and the Joint Project Office, under the leadership of Major General Mike Hough, for the exemplary manner in which the program and this competition has been run to date. The United Kingdom is proud to be a partner in such a program.
Aldridge: Thank you, Willy.
Well, my congratulations to Lockheed Martin and their teammates for providing an exceptional product for our military and our nation. And while the Boeing team was not selected, they did a terrific job during the concept-development phase, and my congratulations to them during that process.
Now we'll respond to any questions you may have.
Q: I'd like to ask you whether you're encouraging Lockheed Martin to share the work with Boeing, either as co-prime or in any other way.
Aldridge: The source selection did not have that in the process. Once the team has now been selected to proceed on, if Lockheed Martin wishes to use the unique talents of Boeing, they have -- they are free to do so.
We're not forcing them to do it, but we're not -- if they would like to do that, that's up to them.
Q: Would you encourage them though to do so, from the standpoint of maintaining the industrial base and ensuring that Boeing remains as a tactical aircraft maker?
Aldridge: We would not discourage it, let's put it that way. They have a team. They put a team together to win this competition. They have a great team. How they proceed at this point obtaining other talent is really up to them.
Q: Secretary Aldridge?
Q: Mr. Aldridge, can you expound a little bit on the value of the program and the phase you're going into today or next week? There's been a lot of stories that today you were going to announce the $225 billion production contract, the largest ever. Clarify this for the public please.
Aldridge: Okay. The phase that we're entering in is called System Development and Demonstration phase. It is the phase of the program that will prove out the validity and design and capability of the aircraft prior to entering production. It is not a decision to enter production at this point in time, it is a decision to enter the next phase. The contract that's been awarded to Lockheed Martin I think is about $19 billion for this, and there's another contract to Pratt and Whitney, which will be the engine producer at this phase in the program, of about 4 billion, 4.8, I believe is the number.
So it is not a production decision. It is a decision to enter in the development phase, SDD we call it.
Q: What is the --
Aldridge: Let me go to -- yes.
Q: What were the strengths of the Lockheed Martin design? Was this a close call, or was this a no-brainer?
Aldridge: That's for Jim Roche.
Roche: It was very clear as we went through the process that while both were very, very strong, and they both had very good teammates, that the Lockheed Martin proposal, the Lockheed Martin team, which had Northrop and British Aerospace on it, emerged continuously as the clear winner based on strengths that they had, few weaknesses and the risks involved in the proposals of both sides.
With respect to the details of that, we'll be debriefing each of the companies over the next week, and we'd rather speak to them about these first before we speak to anybody else.
Q: Mr. Aldridge.
Q: Mr. Aldridge.
Aldridge: Yes, sir.
Q: You said that you were -- I think you said you weren't going to encourage a split of the contract, but some members of Congress, particularly from Missouri, are planning, I think to offer legislation that would at least mandate the Pentagon to study that. Would you resist that?
Aldridge: I have been asked that question on several occasions about the strategy of the winner-take-all. We looked at that question very, very seriously. We understand the problems of this -- of the winner-take-all strategy in terms of long-range competition.
We looked at that quite thoroughly. Secretary Roche, Secretary England and I spent some time talking about this issue. We concluded that the winner-take-all strategy was the right approach. There are continuing production of fighter aircraft in the defense budget through the year 2012. The F-22 will continue in production with both Lockheed as a prime and Boeing as a subcontractor, building part of the airplane. And there's the continued production of the F-18 E and F. So, there's continued aircraft productions through the next eleven years, and after that point, there's still design work going on on unmanned aircraft and unmanned combat aircraft.
So, it was our view that this winner-take-all strategy was not going to interfere with a long-term competitive role for the fighter aircraft.
Q: What about -- are you -- are you --
Aldridge: I'm opposed to the legislation, and we have written a letter to Congress making that statement that we are opposed to forcing the contractors into the merged plan. Our decision today is basically to continue with the winner-take-all strategy and the down select has been done.
Q: In that letter that you refer to, you made the point that you would be interested in maintaining competition much with engines you have you have, but also on the avionics side. Have you made any decision with regard to that issue?
Aldridge: No, let me -- Jim Roche could address that.
Roche: In case of the primes, we felt there's plenty of work. For instance the UCAV program, which is very much like tactical fighter. Boeing just had its first autonomous taxi with UCAV here very recently. In terms of the fire control radar, we want to take a good look at what it might mean for both the two houses that are left in the United States who produce these, and we will be working with Lockheed on that. So, we've left that open, just as we have the engines. The engines will be for two, so we are at the subsystem level. We will work with the prime to worry about some of the major subsystems.
Q: Yes, but how would you set that up contractually for the next phase?
Roche: No, we'll work with the winner, once we had a winner to worry about that issue.
Q: Mr. Secretary, even though this is just one phase of the whole program, it's pretty likely though that whoever has this phase is going to get the whole deal. Is that right?
Aldridge: That's the plan. But we have to address this in phases because there's a -- we have to worry about making sure that we're going to deliver the proper designed aircraft at the proper cost, and it is a commitment to head down the path to build this airplane. This is a first step in that process.
Yes, right here.
Q: If I understand right, the Russians still maintain
two jet fighter centers. We may, most analysts think, be down to one by decade's end. Could you say a little more about why you think -- the thinking that went into the idea, the conclusion that it's worth saving a little money now, having one production line instead of two, at those possible lack of competition and national security risks later?
Aldridge: Well, the production lines for the tactical fighters will continue to the year 2012, for the F-18 E and F and the F-22. It is likely those lines will continue even after that because of the possibility of foreign military sales. In addition, if we are going to continue to look at unmanned combat air vehicles and other unmanned air vehicles, the design teams would be very, very appropriate to work those problems as well.
We also, in the 19 -- FY '02 budget, we put $30 million to look into a new long-range strike platform that could have capabilities far out into the future. And when you get to the period of 2025 or 2040, it's not clear that manned aircraft competition will exist at all. So if we look out in the future, we have to think about what might be possible technology.
Q: Can you say a bit more about on this end right now
what made it so important to keep it at a single winner? That's the advantage of it?
Aldridge: The two teams formed under the assumption that they were out to win the contract. They worked very, very hard. They put a tremendous amount of investment into their team activities and they went out to win the contract. And one of them did. It seemed to be somewhat unfair to tell the winner, "You now must absorb the loser after you formed your team." And so the idea that we see a long-range production run for tactical fighters and the fact the teams did their job the way they were -- planned to do it, it would seem unfair to make a decision to do anything other than we did.
Q: Could I ask Lord Bach what the position of the U.K.
is on choosing between the CV [compatible variant for carrier landing] version and the STOVL version? And secondly, what will be the value of the U.K. contribution to the SDD phase?
Bach: Yes. A pleasure to answer you. The two STOVL designs that were put up are very different ones. And after today's decision, we're in a position to examine the preferred design and all its implications. And in due course, we will make our -- will make our decision.
Your second question, I think, related to what we were putting in to the system development demonstration, the SDD stage, the one we're about to reach. It's 2 billion pounds. And --
Roche: It's dollars. Dollars. (Laughter.)
Bach: Forgive me. (Laughter.)
Roche: Thank you. We thank you very much. (Laughter.)
Bach: May I start that again? (Laughter.) Two billion dollars. And as far as spending of the United Kingdom itself is concerned, $840 million.
Q: Mr. Aldridge?
Aldridge: Yes, right here.
Q: What's going to be the nomenclature for these airplanes? What's the designation?
Aldridge: Very good question. It's going to be called
-- the Lockheed version was the X-35 --
MR.: Mike knows. Mike knows the answer.
Mike, the answer is?
Aldridge: F-35. Thank you, I knew -- X-35 was the Lockheed --
Q: How did you decide on that? Where does that come from, the F-35?
Hough: It's a list of the different variants, different companies, different --
Aldridge: The Boeing version was X-32.
Q: Can you give us an idea of what you consider the unit costs to be at this point, what you anticipate them being for each version?
Aldridge: The unit cost -- it varies with each variant. The STOVL version is more expensive than the carrier version. And the number I remember -- and, Jim, you might be able to help me -- I remember a number, but I'm not sure it's right.
Roche: We've been digesting lots and lots of paper.
Aldridge: And what fiscal year is also --
Roche: If the planes happened to be available today, we were buying them today, and we were to buy the CTOL [conventional take off and landing], the Air Force version, which, of course, was the most interest to me, then the number would be -- a fly-away cost -- in other words, if we go buy the airplane, would be roughly $40 million a copy.
Q: What's the unit acquisition cost, though?
Roche: It depends on what you're throwing into that.
Q: Well, everything. What's the taxpayer going to pay for your version?
Roche: Well, right now we're only going to pay for the SDD part of the program.
Q: How much is the carrier and the STOVL version?
Q: Yeah, the other version?
Roche: It would run between -- let's see, 40 would be cheapest. It would be less than 50.
Q: Fifty million dollars?
Aldridge: Let me go this way, right here.
Q: The Department of Defense now owns the X-32 and all of the associated technologies that Boeing provided to the Program Office. Can you address the utility that you see remaining in that technology in that demonstrator aircraft, and how that might factor in to what Lockheed does in the SDD phase?
Aldridge: To tell you honestly, we haven't addressed that, because up until now, we couldn't determine which one was going to be excess and which one was not. So I'm sure there'll be some design --
Q: Such as direct lift -- does that have any utility anymore, now that you've chosen the lift fan concept, or not?
Aldridge: I think that's subject to review now by the Program Office as they now can proceed with a specific design that they now know, and a specific design that's not going to be part of the program, they can look at the configurations and look at the technologies that exist and determine what they're going to do.
Yeah, right here in the middle.
Q: What exactly does the $19 billion commit Lockheed to do? How many airplanes, starting when, and for who first?
Aldridge: For who first? Let's see.
Mike, can you help me on that one?
Hough: Yes, sir. Lockheed, will, in the course of this phase, build 14 fliers and seven ground-test vehicles, plus develop all the software ready for production delivery to the war-fighter, starting in 2008, and that's six airplanes to the Air Force, four airplanes to the Navy, throughout 2012, when this phase ends.
That's a total of 465 airplanes in this phase.
Aldridge: Yes, right here.
Q: Does OSD [Office of the Secretary of Defense] -- is there any planning or discussion about accelerating or decelerating any variants of JSF?
Aldridge: We haven't talked about that yet, because we have just started this -- getting the decisions to proceed with this phase of the program. We would like to get this airplane sooner, but we also want to make sure we're delivering the right airplane with the right reliability and the right performance.
Q: What is sooner?
Aldridge: Well, we all like to have this -- we'd love to have this airplane today, as you would expect. But the first delivery will be 2008. That's the plan we're on right now. If we could find some way to accelerate that during the period, we'd love to do so. But we're going to make sure we do it right with the development phase --
Q: That's acceleration. Normally --
Aldridge: Even that was acceleration, because we are -- this airplane is unique because it's -- it does have a spiral development characteristic to it. We're not going for the 100 percent airplane on the very first deployment. It will have blocks that will improve its capability over time, with software and performance improvements.
Yeah, right here.
Q: Follow up on that. During the transformation briefing a couple months back, there was talk about accelerating the Navy variants. And somehow that seems to connect to rumors that maybe the STOVL variant may kind of fall off on the wayside. And to ask our British friends as well, being that that variant --
Roche: Well, it's -- we are -- we have now have a decision to proceed, and exactly what the program's going to look like and which airplane's going to come first and in what variant I think is subject to review at this particular point in time and further downstream. We can now -- we now have the flexibility to do it. We know the configuration that we will have. We know what risks there will be in the development program. And we can now decide exactly how to lay out a lot more details of the program that we could not do until this decision was made.
Q: Mr. Secretary.
Aldridge: Yeah, you right here.
Q: You -- I believe the three main criteria for choosing the winner were management, cost and the design. Could you say --
Aldridge: Many more factors than that.
Q: Well, but weren't those the three broadest categories?
Aldridge: Well, I'll let the source-selection authority -- (laughter.)
Roche: The subcategories are basically the airplane design, and then there was a whole logistics section, and then there was management. There was also past performance. Under the airplane design, there are many subcategories. And in all of those, there were strengths, weaknesses, evaluated, and then risks associate with either A or B proceeding. And we, as I say, will be debriefing the companies on that this next week.
Q: Well, I was just wondering if the Lockheed proposal was the winner in each category, or --
Roche: I would rather that the companies be debriefed. It was a best value. So that means we take a look at strengths, weaknesses, strong weaknesses, strong strengths, middle/little risks, large risks, and we bring it together.
But as we did so, it became a very, very clear point that the Lockheed team had the better -- best value.
Q: There's been a lot of commentary about the ungainly appearance f the Boeing design. Could you comment on that?
Roche: Coming from a company that built the batwing B-2 bomber -- no, there was -- that was just never an issue. We looked at performance. There was no aesthetics, there was no beauty contest.
Q: Sir, did the White House in any way weigh in on this or express a preference or offer guidance in the decision?
Aldridge: Not to my knowledge.
Roche: I can say it. Not in any way, shape, or fashion
-- (laughing) -- and in fact the White House just recently was informed of the specific decision, although they knew that Pete had made a decision to proceed.
McGraw: We have time for a couple more questions, please.
Q: Mr. Roche, was it actually the difference between the X-32 and the preferred weapons systems -- (inaudible) -- the delta wing versus -- the Boeing redesign, was that a factor in your -- against -- weighing against Boeing?
Roche: We took the proposal. There was information that was learned from the demonstrators, but it was the proposal that was evaluated. The demonstrator provided confidence in various aspects, but it was the proposal. So it was the redesign that was evaluated, but it was across many, many, many things. And Boeing's team performed quite nicely in the demonstrators. But Lockheed just had strengths in certain areas that outweighed fewer weaknesses, and when we looked at risk, the Lockheed Martin team was the better value. (Cross talk.) You want to share that with the companies first.
Q: Dr. Roche, can you characterize it as a squeaker, or did Lockheed win by a mile?
Roche: I would not characterize as it as a squeaker at all, nor would I say by a mile. It became clear, as we went through this process, that the case built more and more strongly that the Lockheed Martin team was a clear winner from the point of view of best value for the government.
Q: Lockheed Martin had touted a test in which it was able -- its plane was able to take off, reach supersonic speed, return, and then do a vertical landing. They said that was the key test; that's what really did it for them. Would you say the same thing --
Roche: No, ma'am.
Q: And do you think that was very important?
Roche: No, ma'am. And Gordon, I think, can comment as well. We follow the criteria as set up a long time ago, and any particular extra test made no difference.
Gordon, any --
Q: In the overall affordability question, today is going to jump-start the debate --
Aldridge: Start over again.
Q: The overall affordability question on TAC (Tactical] Air --
Q: -- today will jump-start again the debate. You've had three lines going, a finite amount of dollars, and a $225 billion program out there sometime. Give us a sense of the funding priority problems and dilemmas now you're going to have to hash out in the next two years --
Aldridge: That was one of the questions that we looked at very carefully. Is this airplane affordable in the Defense budget? The average tacair budget for the Department of Defense for the last 20 years has been about 18 percent of the DoD budget. hat's on the average. It has climbed as high as 25 percent of the DoD budget back in the mid-80s, during the Reagan buildup period. During this next FYDP [Future Years Defense Plan], even with the Joint Strike Fighter, we will not get to the average level of TAC Air budget until the FY '07. And even after the FY '07, the peak of the spending for TAC Air will not reach but 22 percent of the DoD budget, less than what we did in the mid-80s.
McGraw: I'm sorry, Secretary. We're out of time. Thank you.