Friend, enemy, or simply misguided? The Pentagon's assault on Pratt and Whitney

Is the Pentagon shooting itself in the foot, again?

Back in November of 2012, Ash Carter – then the Under Secretary of Defense for Acquisition, Technology, and Logistics – gave a public briefing on Better Buying Power, the current DoD initiative to try to improve acquisition performance,

Dr. Carter spoke to an industry concern, saying “there was some concern expressed by industry that we were trying to cut profits.  That was not our intent.  It's never been our intent to cut profits.  And what is our intent is to pay profits for better performance and higher profits for better performance.”

Arguably one of the best programs over the course of the past decade has been the Pratt and Whitney support program for the C-17 engine.   One of the reasons it has been so successful is that the military’s engine is essentially the same one Pratt and Whitney sells for the Boeing 757.  The military bought a commercial design, and that always saves a lot of money.

Don’t take my word for it.  On February 10, the Air Force named UTC’s Pratt and Whitney unit as one of its Tier 1 Superior Suppliers.

So, will somebody please explain to me why on February 20 we see a story in Bloomberg – quoting an unreleased audit – disclosed that the Pentagon Inspector General has launched subpoenas to get at cost data?

If the Pentagon isn’t interested in attacking private sector profits, why is it smearing one of the most successful programs in the portfolio? 

If the Pentagon isn’t interested in attacking private sector profits, why is it seeking cost data for what is a commercial item?

If the Pentagon isn’t interested in attacking private sector profits, why are they going after a company who is supposedly a valued and trusted supplier?

The Pentagon is getting superior performance at a competitive price, precisely what Ash Carter says he wants, and the Inspector General is still attacking.

Now, I am not familiar with all of the facts, because I don't have the "For Official Use Only" somebody apparently leaked to Bloomberg, but I do know a thing or two about this program.  It is effective, they are good people at P&W, and they are trying like hell to get the IG what it wants.

So, why is a valued and trusted supplier being abused in the media?

Ash Carter is now the Secretary of Defense.  Perhaps he should have a conversation with the Inspector General and try to explain that an adversarial relationship with a Tier 1 supplier is not an approach to be eagerly embraced.

BTW, Loren Thompson of the Lexington Institute has a great piece on this situation at Forbes.  Worth a read.

A chunk of the arsenal of democracy quietly fades away.

On December 29, 1940, President Franklin Delano Roosevelt gave what is generally recognized as one of the top 50 speeches of the 20^th Century. (text here, or audio here)  In a masterful use of the language, the President draew the nation into a new vision.

 “Guns, planes, and ships have to be built in the factories and arsenals of America. They have to be produced by workers and managers and engineers with the aid of machines, which in turn have to be built by hundreds of thousands of workers throughout the land.”

The speech continues, and the President arrives at the punch line, the phrase that we all know.

“We must be the great arsenal of democracy.”

The nation responded, and the industrial base made an astounding pivot.  Even General Motors started building bombers.  One of the epicenters of the military industrial complex that emerged was in Southern California.

In particular, Southern California, with clear skies and pleasant weather, came to be a critical node in aircraft production.  I probably will miss many, and might have a mistake or two in here, but Boeing, Consolidated, Douglas, Hughes Aircraft, Lockheed, Northrop, and Vultee all had significant airplane manufacturing taking place in SoCal by the end of World War II.

Today, most of those companies are gone.  Some faded away, but most merged into one another over the course of the past five decades.  And as they faded away so did their military aircraft manufacturing.

In Southern California, we have one aircraft manufacturing facility left, Boeing’s massive assembly plant for the C-17 Globemaster.  The facility began operations over 70 years ago for Douglas Aircraft, and ultimately became part of Boeing in their merger with McDonnell Douglas.

Boeing is winding up production of the C-17, and winding down operations in Long Beach.  Layoffs have begun, and by this summer the line will be shut down.

Military logistics will never be the same, and one of the cornerstones of the arsenal of democracy will be no more.

A sign of sanity? Navy buys ships based on a commercial design.

The Navy has accepted delivery of two ships called Mobile Landing Platforms (MLPs).  The MLP ship class leverages an existing commercial design, the Alaska class crude oil carrier built by General Dynamics'- National Steel and Shipbuilding Company (NASSCO).  Double hulled, the Alaska class was designed for BP in the aftermath of the Prudhoe Bay disaster.

The Navy variant is an amphibious assault ship - capable of being reconfigured to support other missions, like humanitarian relief - being constructed to serve as floating bases for amphibious operations.  It operates as a transfer point between large ships and small landing craft.  The ship is semi-submersible, allowing landing craft to float in and off the ship. 

The ship is huge.  Stand it on end, and it would reach about two-thirds of the way up the Empire State Building.

The interesting thing about this class is the way it was designed.  According to breakingdefense.com, “When the Navy initially put together its design requests, the ship was going to cost north of one billion per ship.  It was on the way to the junk pile of ideas. Enter the NASSCO team, which worked closely with the Navy to find a way to make this ship a reality.  After years of rethinking how to build the ship, the Navy is getting three ships which are about 80 percent of the initial concept requirements for the price of the initial projected ship cost.”

And the breakthrough thought?  Leverage an existing commercial design, leading to savings of hundreds of millions of dollars per ship.

In today’s budget environment, let’s hope this is a sign of things to come.