Takeaway: Air Force's long awaited RFP for 350 advanced pilot training aircraft and associated ground systems favors clean sheet designs.

On Dec 30, the Air Force finally released its RFP to develop and produce its Advanced Pilot Training Family of Systems.  Commonly known as T-X, the program will consist of 350 aircraft and associated ground simulators and systems to train fifth generation fighter pilots beginning in 2024.  The winner of the complex and comprehensive "best value", firm price ~$16.3B contract should be announced by October.

The most eagerly awaited part of the RFP has been Section M "Evaluation Factors" which lays out how "best value" and the winner will be determined by the Air Force source selection authority.  

  • All bids must be less than $16.3B to qualify. 
  • Bids will be evaluated on only two main factors: technical performance/risk and price.  Price is equal in importance to the sum of all of the subfactors of technical performance and risk.  Performance is essentially pass/fail.
  • There is potential for a bidder to earn up to $350M as a decrement to his total evaluated price depending on how many technical risk subfactors, e.g. systems integration, program management, training performance, etc are assessed as low risk.  
  • There is the potential of another $338M in "credit" for bidders who provide "Utility above threshold", i.e., better than minimum performance.  For example, every 0.1 G performance above the minimum of 6.5Gs is worth $13.2M in "credit"
  • The chart from the RFP reflects the complexity of the evaluation. (VATEP =Value Above Total Evaluated Price). 

We Analyze the Air Force $16B T-X RFP - Screen Shot 2017 01 03 at 9.44.04 PM

The RFP must be seen as a blow to anything other than clean sheet designs focused only on the specific T-X requirement. There is no "value" ascribed to past performance of the prime contractor.  Total operating costs are not evaluated.  Schedule is apparently not important (AF will already have 500 JSF by the time it gets its first T-X trainer) Incentives for better than minimums seem hardly worth it: a lower risk program has a maximum "credit" value of 2.1% of the total contract value. The value of better than minimum aircraft performance (and hence other mission potential) is a maximum of 2%.  The RFP will be controversial when it is understood. 

 

Competition for the award has been and will continue to be intense:  This is the last of the very large Air Force awards that will govern the US military aircraft market in the 2020's and beyond.   (LMT already has the F-35 contract, BA has the KC-46 tanker, NOC has the B-21 bomber).  (The recently released Air Force JSTARS RFP is still in play but is a much smaller program of 17 aircraft and systems valued at ~$2.3B.)

There could be as many as six aerospace industrial teams that respond to the RFP.   The primary discriminator among the bidders so far has been whether the proposed aircraft will be a clean sheet design focused specifically on the T-X requirement or a modification to an existing aircraft with the attendant advantages of known costs, lower risk and potential growth.  

We Analyze the Air Force $16B T-X RFP - Screen Shot 2017 01 03 at 9.04.42 PM

 

Our evaluation, bad to good:

  • Textron's Scorpion is a minimal performer focused on low operating costs which are not rewarded within the RFP.
  • The Sierra Nevada bid is a surprise late entry with lots of unknowns and inevitable questions about its TAI partner that will result in higher technical risk assessments. 
  • RTN's prime advantage is that the Alenia training system is being bought by Israel and Italy specifically for its F35 training requirement. However, the M-346 aircraft may have some performance challenges once USAF requirements are incorporated and then there is the challenge of moving the manufacturing operation to a green field in Mississippi.
  • LMT's T-50 entry may be the best performing aircraft in the group but it is an older and heavier design that is likely more aircraft than called for in this specific RFP.  That said, no one knows more than LMT about F35 and F22, the training targets of T-X.
  • NOC has a good looking clean sheet design but its bid will have to show significant company investment to lower risk just as it is trying to develop the B-21 bomber, a much bigger prize.
  • BA has an optimized clean sheet design and is also the 'hungriest" of the competitors as it fights to stay in the tactical aircraft market and keep St Louis alive. It also has a history of aggressive bidding.