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DOD News Briefing

Presenter: Secretary of Defense William J. Perry
November 16, 1996 12:05 PM EDT

(Also participating in this briefing today are Under Secretary of Defense for Acquisition and Technology Paul G. Kaminski, Secretary of the Air Force Sheila Widnall, Secretary of the Navy John Dalton, British Ambassador to the U.S. Sir John Kerr, and Mr. Kenneth H. Bacon, ASD [PA].)

Mr. Bacon: Good afternoon. This is a single subject news briefing on an important acquisition and force modernization issue.

Secretary Perry will announce the selection of two aerospace companies to build and fly demonstration aircraft for the Joint Strike Fighter program. Following his announcement, Under Secretary of Defense for Acquisition and Technology Paul Kaminski; Secretary of the Air Force Sheila Widnall; Secretary of the Navy John Dalton; and Sir John Kerr, the British Ambassador, will make their comments. Then there will be a brief break while we assemble a panel up here led by Art Money, Assistant Secretary of the Air Force for Acquisition, to take your questions and make further comments.

Secretary Perry, it's over to you.

Secretary Perry: The goal of our force modernization program can be described in two words -- force dominance. Force dominance means the ability to dominate any potential foe on any battlefield, now and in the future. If our military forces get in a military conflict, we want to be able to win quickly, decisively, and with minimal casualties.

A key to this force dominance is air dominance. We demonstrated that in Desert Storm. Our aircraft delivered devastating attacks on the enemy ground forces, and at the same time were able to protect our forces so they did not have to suffer any air interdiction.

We learned an important lesson about air dominance in Desert Storm. We had it. We liked it. And we're going to keep it.

The programs to keep air dominance are the F-22, the F-18E/F and the Joint Strike Fighter, which we'll be talking about today. The Joint Strike Fighter is a multi-role strike fighter aircraft. In some sense it can be thought of as replacing the F-16, although it is really more versatile than that.

Compared to current airplanes, it brings a more lethal package into the theater and brings it there faster; produces a higher sortie generation rate; and it does this with fewer supporting assets, and therefore, with less cost.

In addition, we structured the Joint Strike Fighter program from the beginning to be a flagship for acquisition reform. This will culminate the Department's efforts to forge a new approach in weapon systems acquisition so that we can reap affordability benefits.

In addition to that, it will be a truly joint program. That is, it will have many common components across all of the services as you will hear from Dr. Kaminski's briefing.

Today's contract award marks the next step towards these two goals. Today I'm pleased to announce the selection of the two contractors for the Joint Strike Fighter concept demonstration phase. These contractors are Lockheed/Martin headquartered in Bethesda, Maryland; and Boeing, headquartered in Seattle, Washington. And I will show you the two aircraft .

This is the Boeing aircraft; and the Lockheed/Martin. These two are different scales, by the way.

This next phase, the concept demonstration phase, will last more than four years. It will feature flying aircraft demonstrators, ground and flight technology demonstrators, and the continued refinement of the contractor's weapon system concept. This next phase, the concept demonstration phase, is budgeted at $2.2 billion, including propulsion efforts funded under a separate contract.

In a few minutes, I will ask Dr. Kaminski, DoD's acquisition executive, to describe the acquisition plan for the Joint Strike Fighter. Let me say, though, how pleased I am on the remarkably innovative efforts of our acquisition team. They have done something never before achieved on a major airplane program. First of all, they have conducted this program so that it will be truly joint. When you hear Dr. Kaminski's description of that, you can come to your own judgment on that.

Secondly, they have established project action teams that allowed combined consideration of desired performance features with realistic technical constraints. This is truly a revolutionary change in the way the Defense Department has managed major programs.

And they have given the program managers and the contractors the authority to use all of the reform initiatives that have been demonstrated on the acquisition reform pilot programs which we have been doing the last two years.

These three innovations combined will lead to a Joint Strike Fighter program that not only embodies the latest technology, but will allow cost savings in the acquisition, literally of tens of billions of dollars. Then an additional savings of more tens of billions of dollars in the life cycle of the airplane.

I am proud of the job which Dr. Kaminski and our whole acquisition team has done on this program, and the American people can be very thankful.

Now let me introduce Dr. Kaminski to describe this acquisition plan to you.

Dr. Kaminski: Thank you very much.

Our Joint Strike Fighter program is truly breaking new ground for our Department. It's breaking new ground first in what we buy; and it's also breaking new ground on how we are buying our future weapon systems.

What we are doing in this program is truly putting into practice all the principles of acquisition reform that we have discussed with you. I am very, very proud of the team who has worked on this effort across the services, with our key allies on the program as well, and with the contractors, working in a seamless way to define and develop a program.

The Joint Strike Fighter's common family of aircraft approach is really a new way of doing business. It's nothing like the approach that we took on the old TFX program way back in the 1960s. We will be building three different designs here, not a single design. But these designs will have in common the key high cost components -- engines, avionics, and many of the high cost structural components. The idea here really is building different structures out of a common family of building blocks.

Advances in our requirements process using modeling and simulation to conduct trades, advances in our design tools and our manufacturing processes, have made it possible to significantly change the way that we now design and build our aircraft.

Rather than force fitting a common aircraft designed to different requirements, the JSF concept here is to build three highly common aircraft variants on the same production line using flexible manufacturing technology.

Our cost benefits come in this case from using this flexible manufacturing approach, and the use of common subsystems to gain economies of scale, as well as commercial, high end parts. The cost commonality across the three variants of the Joint Strike Fighter program is projected to be in the range of 70 to 90 percent. The parts commonality is lower than that, but if I look at the cost of the parts, there's emphasis on having more commonality in the higher cost parts. The cost commonality across these three designs is in the range of 70 to 90 percent. This commonality will bring with it the benefits of common depot maintenance, a commonly supported logistics tail, and increased joint service interoperability.


The cost savings benefit of the tri-service JSF program, if we compared it to separate service stand-alone efforts, is also very significant. Our estimate is that we will save nearly $18 billion in the development phase by doing it in a common way; and over the life cycle of the program, our estimate for savings is about $60 billion as a result of doing it this common way -- in development and in support, through a 20 year life of the program.

In the past, meeting a threat dictated an emphasis on performance, creating a culture in the Department in which cost and schedule were thought of as dependent variables in the acquisition process. What I mean by that is performance levels were specified, then the cost and the schedule were whatever they had to be to meet those performance objectives.

This Joint Strike Fighter program is employing this new concept you heard us describe -- cost as an independent variable -- in which we are approaching this effort to define an affordable and mission effective solution to our needs. The cost as an independent variable concept has caused this program to gel around a much more disciplined requirements development and conversion process in which every requirement must, in a sense, earn its way onto the platform. We have all the warfighters in this effort working together, thinking joint, and incorporating modeling and simulation to support these cost performance trades.

Back end sustainment costs are also receiving up front attention in this process. As a result, we have a sizable technology maturation effort underway to reduce the life cycle cost and to address the program risk. To support these investment decisions, there's a fairly well developed life cycle cost model now in existence for the program. It is the most mature life cycle cost model that I've seen at this stage of a new program. It includes estimates for operational and support elements like unit level consumable, training, expendables, depot maintenance, and mission personnel.

We are emphasizing the need to reduce the logistics footprint of this aircraft in the up front design. There really is a tremendous leveraging effort here, associated with reducing the amount of support equipment and the consumable that we must take with us when we go to war. This is especially important in the early stages of a conflict when airlift resources are scarce, and before a sealift bridge can be closed.

As I said earlier, we are really forging a new approach to how we buy our weapon systems. This program is clearly not business as usual. It is different in fundamental ways. Integrated product teams of warfighters and technologists have been applying a disciplined strategy to task, to technology process, supported by an extensive modeling and simulation effort to define, and continue to refine, requirements.

This program is trail blazing our acquisition streamlining and reform through the use of paperless processes as well. It is pursuing the use of commercial standards and best practices. In partnership with the participating contractors, we have minimized the number of contract deliverables through on-line access to the contractor's management systems and the use of common cost models and common databases which are shared. This program truly is turning the theory of acquisition reform into practice. In a sense, walking the walk as well as talking the talk of acquisition reform.

This Joint Strike Fighter is also more than a joint program. It is also an allied program. The United Kingdom is an active partner in the program, has been integrally involved in the requirements process, in the trades, and in the source selection that resulted in this decision. I expect participation by other international partners as well, and future industrial teaming arrangements to be expanded as we proceed.

The Joint Strike Fighter program, I think, is a model of the new way ahead that we are pursuing in the Department of Defense acquisition program. The selection of Boeing and Lockheed/Martin for the Joint Strike Fighter concept demonstration phase I believe is an important milestone in the Department's efforts to modernize, in an affordable way, our future tactical aviation forces.

Let me now introduce the Secretary of the Air Force and source selection authority for this program.

Secretary Widnall: Thank you, Paul.


Let me begin by thanking the Source Selection Advisory Council and the Source Selection Evaluation Board for their thorough assessment of these proposals. Their work has been invaluable to me as I worked toward fulfilling my responsibilities as source selection authority. Their counsel has been especially important given the extreme competitive environment of this program and the outstanding work done by all the competitors.

I'm very pleased to participate in this major milestone as the JSF program takes another big step forward. Obviously, I'm pleased that the Air Force has taken another step on its path towards making sure our theater capabilities are sustained in the decades to come.

The JSF program is essential to our efforts to ensure that the technological edge that our pilots now enjoy will continue to exist. It's the right program to meet the threats of the coming century. This program has been structured with a stringent eye toward affordability that will be essential to bring it on line.

In this program we have brought to bear all of the tools of the acquisition reform movement to create the right affordable approach to bring on this capability. That focus on affordability will be critical as we work to bring this very important program to fruition.

The Joint Strike Fighter is a central component of the Air Force's overall modernization strategy, with the F-22 and the JSF coming along to replace the F-15 and the F-16 as the centerpieces of our theater air capability. Just as those aircraft created a complementary mix that has served this nation so well, so the F- 22 and the JSF will provide the balanced force this nation will need in the decades to come.

We are embarked on a long journey. We don't expect the JSF to reach service until 2008, when the F-16 will be well into its fourth decade of service. But we are well aware that we must stay the course, because without the sustained commitment now, we will not have the capabilities we need to execute our responsibilities in the years to come.

But the real significance of this program goes far beyond its importance to the Air Force. Already, the JSF program has expanded the parameters of the world of joint acquisition, and I expect that the cooperation we have seen thus far among the Air Force, the Navy, and the Marines will continue. From still a wider perspective, I expect this program to provide our friends and allies around the world with an affordable, effective fighter aircraft well into the next century.

Well, as I noted a moment ago, this is a rather long process. And rather than lengthen it any further, let me now turn the podium over to my colleague, Secretary John Dalton.

Secretary Dalton: Secretary Perry, Dr. Kaminski, Secretary Widnall, Sir John, this is truly a very important day for our nation and our Atlantic allies. Congratulations to Boeing and Lockheed/Martin for making the cut.

On behalf of the Navy/Marine Corps team, I look forward to working with you as we build the future.

To Paul Kaminski and the DoD acquisition team, including John Douglas, the Navy Department's lead on the project -- well done.

This is an exciting time for the Defense Department. We are in the process of developing not only the most advanced fighter attack aircraft ever, but we are building the most efficient cost effective generation of military hardware in history.

It is a privilege to stand shoulder to shoulder with Secretary Widnall and Sir John as we proceed with the development of this project.

The requirements for the Navy and Marine Corps are crystal clear. In the next decade, the Navy will need a first day of the war survivable strike fighter aircraft. The Marines need a short takeoff and vertical landing aircraft to replace its Harrier and Hornet fleets.

It was obvious from day one that we would have to break the acquisition process mold on this project. Thanks to Secretary Perry's leadership and the efforts of the joint Navy/Air Force team, we have done just that.

From the get-go, the Joint Strike Fighter project has taken the lead in two key areas -- acquisition reform and inter-service cooperation. Both of these areas will prove critical to ensuring that our armed forces have what they need to fight and win the conflicts of the future. The Joint Strike Fighter goes a long way in addressing tomorrow's tactical and budget dilemmas with the right solutions today.

It's smart business all the way, and I am very proud that the Navy and Marine Corps are part of this winning team.

I'd now like to call on Ambassador John Kerr. Mr. Ambassador.

Ambassador Kerr: Three words from the United Kingdom Government -- priority, confidence, partnership.

Collaboration on JSF is a very high priority for the United Kingdom Government because it is the prime way in which we see our meeting the Royal Navy's requirements for a STOVL [Short takeoff and vertical landing] follow-on to our present Sea Harriers and the importance of the Sea Harrier to the Royal Navy has been clearly demonstrated, perhaps most clearly, in the Falklands campaign. So JSF is a very high priority for the United Kingdom.

Confidence. The United Kingdom Government has a rather high confidence in this program, principally because of the attention Dr. Perry and Dr. Kaminski have explained, the attention that this program devotes to affordability. How to achieve the technological advance that is required at an affordable cost is a problem for defense procurement machines on both sides of the Atlantic. We think it is being extremely well addressed in the JSF program, so our confidence in JSF is high.

Thirdly, partnership. The United Kingdom Government is very satisfied with the full consideration that has been given in this source selection process to the Royal Navy's requirements. The United Kingdom Government has been fully and satisfactorily involved at all stages of this selection. We are confident that an equitable and significant share of JSF work will go to U.K. industry, and we believe there's a very real determination -- I speak for the British team -- but there's a real determination in both parts of the JSF Team -- American and British we think -- to make this U.S./U.K. collaboration a significant success.

My government is, therefore, pleased with this selection process today and confident about the next stages of the JSF program. Thank you.

Mr. Bacon: Thank you all very much. The next phase will be led by Art Money, but before we do that, I know that many of you have questions about Zaire, and in order to preserve good order and discipline, Secretary Perry has volunteered to give you an update on the situation in Zaire, and then we will all leave and Art Money will take over next.

[NOTE: Secretary Perry's segment has been excerpted and published separately.

The next portion of this briefing features Assistant Secretary of the Air Force (Acquisition) Arthur Money, Rear Adm. Craig Steidle, JSF program director, Rear Adm. Dennis McGinn, director of air warfare, U.S. Navy, Rear Adm. Tom Blackburn, defense attaché, British Embassy, Lt. Gen. George Muellner, principal deputy, assistant secretary of the Air Force (Acquisition), Lt. Gen. Terrence Dake, deputy chief of staff, Aviation, Marine Corps.]

Secretary Money: What I'd like to do now is introduce my colleagues, and for the next phase of this briefing. I will field, and the appropriate question will be answered by one or a combination of the following individuals.

The first person I'd like to introduce is Lieutenant General George Muellner. He's currently the Principal Deputy to myself, to the Assistant Secretary of the Air Force for Acquisition. Please come on up. Also in his most recent past, he was the first program manager of Joint Strike Fighter.

Second is Lieutenant General Terrence Dake, the Deputy Chief of Staff for the Marine Corps for Aviation.

I'd also like to introduce Rear Admiral Dennis McGinn, the Director of Air Warfare for the U.S. Navy.

Rear Admiral Craig Steidle, the Joint Strike Fighter Program Director.

Representing the U.K. Government today, I'm very pleased to introduce Rear Admiral Blackburn, who is the Defense Attaché and the head of the British Defense Staff here in Washington.

I'm ready now, and we're ready now, to answer any questions you may have.

Q: Why these two? What impressed the source selection authority these two?

Mr. Money: This is clearly a best value decision, but I'll ask each of my colleagues here to also comment.

Admiral Steidle: I think that was the bottom line I think Mr. Money has just provided you. It's the best value to the services. We established a selection criteria. We built those criteria with industry, shared that with them, and the process was centered on that. The end result, when you rolled it up, was best value to the government reflected in these two proposals.

Q: Can you define best value a bit more? Life cycle cost, technical...

A: Yes, I will. I'll expand upon that. What we looked at specifically is affordability. As both Dr. Perry and Dr. Kaminski mentioned, it was extremely important to us. That is one, the preferred weapon system concept that we take delivery of, the unit recurring cost of that particular weapon system concept, the development cost to get to that point of delivery, and the O&S support is specific. The cost of ownership and operating that in the fleet, in the out years.

On the other side was the concept development program itself and the phase that we're about to start. There, we were interested in the technical approach, the management of that approach, and the cost of the next phase of the program. When you roll that up, best value to the government, predicated on those factors.

Admiral McGinn: I just wanted to say that all of the members of the Source Selection Advisory Committee were consistent in their praise for the process that defined not only the joint requirements very, very well, but also determining best value for the government. So we were all very pleased with the integrity of the process and the way in which this whole down- select was carried out.

Q: Would it be possible to say a little bit about how McDonnell Douglas fell short?

Mr. Money: This is source selection information. We announced the two winners. We will be giving a debriefing to McDonnell Douglas, and for that matter to Lockheed and the Boeing team as well. But clearly, based on the overall decision Secretary Widnall made, primarily sorted it out as best value. These two teams here are the ones that made the down select.

Q: When will you be giving that debriefing?

A: We're ready and stand ready to commence with that immediately. I suspect early next week. We haven't, obviously, heard back from McDonnell Douglas or Boeing or Lockheed yet, but we're ready to do that, Craig and his team. As part of the new acquisition reform activities, we give a very thorough debriefing, both to winners as well as those that aren't picked.

Q: Some in industry were questioning a Lockheed/Martin award simply because of industrial base questions and the repercussions on McDonnell Douglas. In the event that Lockheed/Martin wins, it dominates F-22, F-16 support, JSF, everything. And McDonnell Douglas could well go out of business. Was industrial base at all a concern in making these decisions? And is there a fear that should one contractor win, you don't have an alternative that you can play one off another in order to keep the program on cost and schedule.

A: Clearly, the decision was based on best value. The award criteria did not include industrial base considerations. There is ongoing F/A-18 activity at McDonnell Douglas. There is ongoing F-22 activity at Lockheed, and Boeing is developing a series and a number of aircraft as well. Do you have anything you want to add?

Admiral Steidle: No sir, I think you handled it very well, other than I can assure you that in the source selection process incurred here, that was not taken into consideration.

There is also in the program, as I know you know, sir, a large technology demonstration program and there's a lot of other pieces of the industry deeply involved in that, and we expect that to continue as it's been contracted.

Admiral McGinn: I'd just like to say we have three very high quality and robust airplane manufacturing companies that were the three offerors, and there's an awful lot of work out there. For the Navy, the F-18E/F is a major program that will see us well into the 21st Century. It's flying now, and we expect to buy over 1,000 aircraft over the next 15 years. There's the AV-8B remanufacturing program, the T-45 for McDonnell Douglas, as well as all of the other programs that they are involved in in the weapons area. So I think that predictions of loss of industrial base and the demise of any of these three companies -- superb companies -- is very, very premature.

Q: Is there a role for McDonnell Douglas now that they're out? Would you like to see aspects of that design find their way into...

Mr. Money: This program is, as represented by these two companies, is extremely challenging for different reasons with each design. We encourage that all the talent available -- both here and in the U.K. -- might get realigned with the two winners. So we certainly encourage that.

As I said, the job is challenging enough, and clearly all the talent available, we'd like to see on both teams.

Q: Other than building the wings for the F-22 and the rear fuselage, Boeing hasn't had fighter experience since the 1930s. What impressed you about Boeing's design and its cost approach?

General Muellner: The Boeing expertise, I think, in this area is not only in the case of building the F-22 and the components you mentioned, but they were a very active player in the front end of that process, in the ATF source selection process, and provided a lot of key inputs into that Lockheed/Boeing team and of course won the F-22.

The Boeing team, I think, brought a very innovative design approach which, as was pointed out, really provides best value across all the services, as does the Lockheed/Martin one. We saw within the Boeing process and within the Boeing product that was delivered, a lot of confidence they could, indeed, provide all of the services with the products we need to meet our operational requirements.

Q: Can you also talk about the Lockheed design and what impressed you about that?

General Dake: I might take one part of that.

One of the things for the Marine Corps that we have long pursued is a STOVL [short takeoff and vertical landing] variant which will lead to our neck-down that we have moved with our F- 18s and our AV-8s. So as we look at the designs of these various manufacturers, the one Lockheed put forward, as you will be briefed on, seemed to have the ability to achieve that. Of course achievability in a design to go on not just to the phase that we're starting, but also to bring it to fruition so that we meet the requirements at the end of the program was important. So seeing the kind of STOVL design that we saw in Lockheed presented itself, at least, from the Marine Corps perspective.

Q: What do you say to the concerns of some critics that they see no looming danger out there that would justify the manufacture of all these aircraft, and they believe that we can get by with what we have currently.

General Muellner: In speaking for the Air Force, as was defined earlier, the primary role of this airplane is going to be in replacing the F-16 and the A-10 in the out years. As was commented on by the Secretary, at that point in time the F-16 will be approaching its fourth decade of operation. We have some real structural issues that we will be approaching at the 8,000 hour point, so those aircraft are going to have to be replaced.

The key issue was affordably replacing those, and providing an airplane that could operate in the threat environment, not of today, but in the threat environment of 2010. As we looked at what was necessary, and as Craig and his team did the modeling with our warfighters, with the developers, what you see reflected here are the products that said this is what was required to affordably meet those goals.

So in our case, and the F-16 is literally structurally aging out, and it needs to be replaced with a multi-role airplane, as was defined earlier, that can exist in flight and operate and achieve air dominance in the 2010 time frame.

Q: What threats do you expect in 2010 that don't exist today? Why not build more F-16s?

A: Because if I want the F-16 to operate in the 2010 environment with increasing proliferation of things like SA-10s, 12s, 15s, 17s, which are not only being readily marketed, but are being readily consumed around the world, I have to, to make an F- 16 survive, add a great deal of packaging and other external support environment to allow them to survive and be lethal on the battlefield. When we assess the cost of doing that, versus the cost of the approaches that are captured in these airplanes to provide survivability and lethality, this turns out to be the more cost effective way to do that.

Q: Could you restate that in layman's terms? (Laughter) ...better missiles or...

A: They're already there. They're being developed very rapidly, they're proliferating around the world very rapidly in places that we may have to engage in. And as a result of that, my choices for being able to maintain that air dominance that the Secretary talked about are either that I build an airplane that has more lethality and survivability internal and reduce the size of the packaging, or I need a lot of external packaging, support jamming, lethal SEAD, non-lethal SEAD and so on, for that airplane to be able to survive, penetrate, and then be lethal on the battlefield.

General Dake: Back to the original question of why now. The Marine Corps, of course, will replace our F-18s and our AV- 8s. We have long pursued and have been successful, as we looked at innovation of technology. This will represent an actual leap over a family of technology to the Joint Strike Fighter. As we've come through with helicopter renovations, with the AV-8B which represented the first STOVL aircraft to work off of amphibious ships, and now to the V-22 as we work with tilt rotor technology, the Joint Strike Fighter fits that family.

So as we look into the future and a long term goal to achieve a STOVL, the timing of this with the AV-8B, older technology, that we will stretch to the point that we can interface it now with the introduction of the Joint Strike Fighter, it's a good timing for us to do that. We achieve a lot of our long term goals. And to join with General Muellner in saying that the battlefield of the future is where we must look. That's where the Joint Strike Fighter in 2010 would be expected to operate.

Admiral McGinn: I'd like to add my endorsement to the remarks of General Muellner and General Dake, and also add that these are complementary capabilities that are being acquired in a complementary way. Complementary over time, time phased. This is a program that will produce combat capability in about 12 to 14 years. In the mean time, we have complementary programs -- the F-22 for the Air Force, the F-18E/F for the Navy, the AV-8B remanufacturing program for the Marine Corps that provide the warfighting capability between now and that time frame. Then we start to phase in, in a complementary way, the capabilities of the Joint Strike Fighter. So it is time phased. They are not directly competing with each other, and they are all affordable in each of the services' programs.

Admiral Steidle: The question that you just asked is the one that I've been asked all along the way, as I had to present the program up for both funding and for acceptance to go on to the next phase. It's the logical and the right question.

If you remember where we came from, and that was from the cancellation of AFX, the multi-role fighter, and at that time from the Bottom-Up Review in '93, domestic production of F-16s in this country. Those programs, in aggregate, were unaffordable. We had to have an affordable solution to meeting those requirements.

Dr. Kaminski set in place, and George Muellner kicked it off initially, is a process where we can actually take from defense planning guidance the specific tasks that have to be accomplished by a weapon system in the out years. You put those particular tasks with a DIA-provided threat, and the force packages that we know the services will have in that year, and in the modeling and simulation that's available today, you can run a campaign analysis. Campaigns that are provided in the defense planning guidance.

From those analyses, you get deficiencies. Those deficiencies can be corrected through characterization and functionality, and a weapon system type can be brought to bear to correct those deficiencies, either in hardware or tactics. Take those deficiencies, you do cost performance trades. Where is the knee in the curve? Where are we getting the most for our buck? That's translated into investment strategies in the program office. Also, define the weapon system. Take that weapon system and you put it back in, and you see how well it does.

At the same time, I'm forced to put legacy systems in there -- upgraded F-16s as you mentioned, F-18s, F-15s, the entire force in that package, see how well we do one against the other. Pick the most affordable, most capable solution. That's what we've done. We've done that five times.

That concept came for the Packard Commission report in the late '80s that said get the warfighter and technologist together to do the cost performance trades. Don't just increase performance, bring affordability into the realm. So that's the process we had to go through.

Q: You've been presenting us with a [first phase] aircraft, the Marine Corps wants an aircraft that can go in and do the job. It seems that this has become more and more a top end aircraft. Why are you not adding a little more capability to it and then drop the F-22? That will shorten down the logistics trail even more.

General Muellner: As was defined earlier, this airplane is not a singular airplane. It's different things for each of the services. If the Air Force were to do as you suggested, we would require improvements in signature, we would require improvements in avionics performance, we would require improvements to make it more viable and survivable in the air-to-air as its primary role. All of those things add cost, and that's the one thing that's in the very beginning, from the Air Force perspective, we did not want to do. It was essential that we produced an affordable airplane because, as you well know from the F-16 force structure, we have a significant number of F-16s, we'll have to replace a significant number of F-16s.

So in keeping with what was previously established with the F-15 and the F-16 -- a high/low mix philosophy -- we have kept the Air Force requirements on the low mix side. Our requirements, as reflected in the initial requirements document, is indeed for a "low end" airplane, if you will, as reflected by the fly-away cost that we have put into that requirements document. So from our perspective, while we're bringing a lot of new technology, it is not the high end as you have defined it.

Q: You've referred to the word "affordability" a lot here today. Given the belief of lots of people outside of this building that your current tac air plans are unaffordable, what makes you think the Joint Strike Fighter is anything more than a science project intended to keep design teams alive over the next ten years?

General Muellner: I guess my first answer to that question -- I think you have heard this answer before -- was that this program was specifically structured based upon the affordability needs that the Department brought in. As Admiral Steidle identified earlier, when the Bottom-Up Review identified the fact that indeed, our current plans at that point in time were unaffordable, were unachievable. You had some very significant programs for the services of future force structure that were eliminated because they could not, indeed, fit under the top line. So this program was structured, indeed, to fit under the top line, if you will, to be affordable for each of the services.

We got the warfighters on board very, very early in the process, because they well understood that if we did not produce an affordable product, the end result was going to be decreasing force structure. As a result of that, they have been forthcoming in working the cost/performance trade to indeed achieve that goal. I think in all of the designs, and in these two in particular, they have, indeed, done that.

Q: Do you think it will be built in the numbers planned and the schedule planned?

A: At the present time, given the constraints and the modeling inputs that Admiral Steidle employs which are based upon our defense planning guidance, indeed the plan that we're taking forward is the one that we believe is necessary.

Q: Do you know when the contractors were notified of these selections, and how that was done?

Mr. Money: While Dr. Perry and Dr. Kaminski were talking here, another group of folks were calling all three contractor teams.

Q: Can you tell us fly-away costs in current years dollars anticipated for the three models, and tell us what assumptions you're making about the production rates you're going to get?

Admiral Steidle: I'll give you a long answer, first of all.

In the design guidelines we provided what came out of our analysis from our campaign analysis in the form of an initial requirements document. Usually you have an operational requirements document. This is something different. The difference is, we've been allowed by the three services plus the U.K., to form a large box within what we can operate to do cost/performance trades. It's critical to keep this program in that particular box, and this is what's unusual.

Out of that came the unit recurring fly-away cost of the weapon system they would like to have delivered. Between $28 and $38 million per copy. I can give you the specifics for each one of the variances -- $28 million for an Air Force version of the airplane; $31 to $38 for a navalized version of it; STOVL version around $35 million to $36 million.

We also looked at, and I think Dr. Kaminski alluded to this, we formed a joint common cost model. It's the first time we've ever done that. We have shared cost estimating relationships with industry, and they know exactly what assumptions we've applied to that particular model such as weights and complexity, material type, to come out with a specific answer. We did not assess the contractor's estimates. We took those inputs, put it into a jointly developed model, and came out with the results on that.

Also, the development cost of the program, if you take three individual development programs in this country today -- Air Force, Navy or Marine Corps airplane -- that sum total would be around $33 billion to run those. Our particular estimate is $15 to $17 billion for the program.

Q: Those are all in '96 dollars?

Admiral Steidle: Those are in '94 dollars, sir.

Q: The C-Span audience is going to walk away here saying this is a good price for these planes in fly-away. What do your models tell you about unit procurement costs or life cycle costs per plane, the real costs to people? What do they tell you these things are going to eventually cost? Not just fly-away.

A: The total cost for that particular airplane when you roll it up, generally at $30 million a copy, for 3,000 airplanes, you're looking at a $90 billion program. The life cycle cost to support those particular weapon systems is usually about 46 percent of the total cost of the airplane. Production cost is about 50-so percent of that. So you can almost double that for the life cycle cost of supporting those weapon systems. A significant part of the program is to identify the cost drivers from an operational support standpoint. The manpower required, the durability requirements, reliability problems, and accentuate demonstrated performance programs which will bring those costs down. We've done that.

What we have seen is, at a minimum, a 20 percent reduction in the O&S cost through reliability, durability efforts that are underway.

Q: In this effort you've got a life cycle cost model now that gives you some precision, and something to work against and work down. What's the price...

A: Absolutely. The crux of the program is, in the near term, a demonstrated performance. What is critical to this program is several things. Demonstrate commonality. It's significantly leveraging when you're trying to produce a family of aircraft. Demonstrate hover and transition for a STOVL airplane, obvious; handling qualities from a flying standpoint of a carrier suitable airplane; demonstrate those unique demonstrations that are required before you enter EMD to put this in there. Then as you get out further, you have an EMD program where we have to then demonstrate the flying capabilities of that weapon system. Also as you get into the longer frame, is the operational and support costs. Demonstrate reliability, demonstrate that you can support these with a smart maintainer at a lower level, that you can apply reliability improvements, diagnostics, getting into the area of prognostics, manufacturing techniques, unitized composite materials, things of those nature. Those are all selected across the board in the proposals that we've received. That's where you make the significant differences.

Q: How did you all rate McDonnell Douglas' technical proposal, or did the best value issue really wind up...

Mr. Money: We've got source selection material, and we'll keep that private.

Q: You talked about the other, why they won from a technical solution. What was wrong with McDonnell Douglas'? Was it adequate, or it came down to the money or was there a deficiency in the...

A: Again, the overall selection was based on best value, and we'll leave it at that.

Q: There's continued talk about keeping a second engine for firing. They're both powered by [the] Pratt engine. There's not a lot of money in the program -- not in terms of dollars amounts -- that actually do something for a second engine. Are you going to fix that or are you going to give up on the second engine supplier at some point?

Admiral Steidle: We do have a competitive engine program. You've seen it reflected in the language that came back from the congressional committees this year. We actually have been plussed up coming out of the last budget hearings. It's very, very important that when we get to the introduction of the airplane in the fleet that we have two competitive engines that can go into that airplane. Each one of these contractors, the three teams, know that particular feeling, know that we have required them to look at a competitive engine. That competitive engine program is underway. We have a contract with General Electric out of my office. The first phase of the program has been completed. We've identified an F-120 engine as the competitive engine program. We have funded a program between now and when we need to start an EMD program on that engine, that is 2004, to get it into an airplane in 2008 to compete with the 119 versions.

Q: Will you have competition for one time, or will you do the F-16 type of thing -- blocks...?

A: It's too far out there. I couldn't make a call on that one right now. Somebody else will be in charge.

Q: I'd like to ask a question of the British military attaché. Given the consolidation in the U.S. defense industry and we have two companies providing out of three on this program, what are the challenges facing the European defense companies, and where do you see their consolidation going? And is it really too late for them to have meaningful programs to offer?

Admiral Blackburn: I'm not really competent to answer that specific question for you. I'm the Defense Attaché. There are others who could. I really came as a representative of the user, and that's really rather, I'm afraid, for me, off of my scope.

Q: What do you still see, in everything you've seen in these two proposals, as the biggest technological challenge and hurdle that needs to be overcome? And a second related question, are you still willing to entertain Russian participation in either of the teams?

General Muellner: Addressing the first question, and I'll let Craig talk to the second. I think as we reviewed all of the proposals, the propulsion element clearly is a risk area. The propulsion that we see reflected in all three of the designs, but in the two that you see here also, have considerable growth to the 119 engine. While clearly the Lockheed/Martin and the Boeing company have showed good risk mitigation plans for addressing that, clearly that's an area we're going to focus on. That's another reason why, in the long term, as Admiral Steidle just pointed out, the competitive engine is something that we want to have on board as a means of not only getting best value long term for the taxpayer, but also of ensuring that we keep the fleet flying, if you will, as we go through what are very stressing engine designs.

Q: ...A greater challenge than the LO or the composites -- The propulsion?

A: I think if you look at the variants of airplanes, clearly when you look at a STOVL design, the propulsion is the stressing element. So it's not true across all of the variants, but across the family, I think it is, indeed, going to be more challenging than it has been in either of the two elements you talked about.

Admiral Steidle: As I was reflecting upon some things I said before in answer to your question, I think, the cost of those particular weapon systems, the Marine Corps version is $30 to $35 million, is our unit recurring fly-away title. If I go over that one, as I stated, $35-$36, I'm in trouble.

The most complicated and technical challenge is the full integration, as General Muellner said, of the flight control and propulsion systems. When you bring those propulsion system development pieces together, which are run by computers nowadays, with the flight control systems that are also brought by computers, and then merge that together, that is a difficult, challenging task, and that is, in my view, the most difficult one that we have to keep our eye on in the future.

Mr. Money has volunteered to answer that second question.

Mr. Money: As far as Russian participation, that's clearly up to the contractors. There is some technology programs where there is some technology in the Russian area that is being looked at, but clearly that will be a teaming decision made by the contractors.

Q: Has there been any pressure by the Russians to participate...

A: I have no knowledge.

Q: Does Admiral Steidle know?

Admiral Steidle: Only on one thing, sir, if I could. From an international perspective, Dr. Kaminski asked General Muellner and I several years ago to put down a framework for anticipated future international participation in the program, and we did that. We have on ramps and exit ramps and entrance and exit criteria. It's very, very detailed and formalized. I think you will see in the next couple of weeks some interest in the program -- Norway, the Netherlands, and Denmark will be signing an MOA in the very near future, as will Canada, to join the program, do some trade studies analysis, requirements verification pieces.

We also have the capability, beyond collaborative partnerships and associated partnerships, fee for services where I as a program director, Dr. Kaminski allows me to contract directly. I did have several contracts. One of these particular contractors had had one to look at technology areas. That is not a trade of information, it's just going out and acquiring particular history, trade analyses of maybe some technological areas that we're interested in.

Q: Did you have any more discussions...

A: No, I don't. I don't have any more anticipated beyond today, either.

Q: One final question about the tac air review. In the end, you're confident, then, that Congress is going to fund the program, support it, build the constituents you need to get the numbers of the planes when you want to get them?

Mr. Money: We have a well laid out time phase, well balanced plan to procure F/A-18s with the Navy, V-22s with the Marine Corps, F-22s with the Air Force as well as this program.

Thank you very much.

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