The end of the fiscal year is spurring the Air Force to conclude two significant and long awaited head-to-head contract competitions that have the potential to move corporate revenue needles for some time to come. Continued contract award delays cost money and jeopardize future resource requests.
T-X. The Air Force will award the first contract of this long-awaited $16B advanced jet training program by the end of the month. The program includes 350 high performance jet trainers worth ~ $6.2B and an additional $10B for trainers/simulators, ground-based curricula and required maintenance to train pilots for the Air Force's single seat F-35s and F-22s.
- LMT is partnered with Korean Aerospace (KAI) to use an improved version of the T-50 of which over 200 are in use as light fighters and trainers around the world. To be built in Greenville, SC with GE engines. LMT's advantages include a robust, proven airframe with little manufacturing and performance risk and the fact that LMT is the builder of the F35 and the F22 which is the target of the entire T-X program. Disadvantage is that the aircraft is likely to be heavier and somewhat over-engineered for the trainer task although this cost risk can be mitigated by an aggressive bid. Odds: 2:1.
- BA is partnered with Swedish Saab on a clean sheet design with GE engines that has two flying prototypes. To be built in St Louis. The advantage of the clean sheet is that it is designed exactly to the requirements thus eliminating excess weight = $. The disadvantage is that there is a lack of data/experience = higher risk to development cost and schedule and more unknowns in the evaluation of operating cost and performance. Odds: 3:1.
- DRS, a Finmeccanica company, is partnered with Leonardo to offer its M-346-based training system currently being used and procured by Israel and Italy specifically for future F-35 pilots. To be built in Tuskegee, AL. Ominously, Leonardo was previously rejected by GD and RTN to serve as prime partners due to cost disagreements. The Italian M-346 aircraft with its HNY engines is seen as only barely meeting T-X's high performance requirements. Odds: 10:1.
- NOC had partnered with LLL, Rolls Royce and Scaled Composites on a clean sheet design but decided late in the process not to bid. NOC similarly aborted its participation in the Navy's MQ-25 unmanned refueler competition (won by BA). Both instances reflect intense pressure on NOC to focus it resources on its massive Air Force B-21 bomber win.
Air Force H-1 Replacement. This is a $4.2B program to procure 84 aircraft to replace 62 ancient UH-1s used to service STRATCOM's ICBM and Continuity of Government transport missions. The aircraft is required to carry nine passengers with a 225 mile range. Sikorsky's ubiquitous H-60 has to be seen as the front runner for any H-1 replacement program given that is what it was originally designed to do, there are literally thousands already in DoD with proven high reliability and readiness rates and the Air Force already has H-60s in its Special Forces and combat rescue inventories. TXT's Bell, builder of the original H-1 and of the Marines' current H-1 replacement programs, UH-1Y and AH-1Z, apparently saw it that way and declined to bid.
- Sikorsky (LMT) is proposing a new build aircraft, HH-60U, optimized for the STRATCOM mission. There are two flies in LMT's ointment, however. First, Lockheed made the highly unusual move of protesting to GAO about the Air Force during the competition phase. GAO denied Sikorsky's claim that the Air Force was demanding excessive intellectual property as part of its proposal evaluation process. The AF has told Congress that the protest caused it to reprogram $84M to keep it on track for award this fall. It normally isn't good to sue your customer before he signs the contract. The second problem is Sierra Nevada's disruptive approach (see below) which requires Sikorsky to essentially compete against itself.
- Privately held Sierra Nevada (SNC) agrees that the H-60 is the best aircraft but proposes to upgrade older model surplus UH-60Ls and outfit them to meet the STRATCOM requirement. SNC believes that their concept has a significant cost advantage over a new build from Sikorsky. The challenge for SNC's disruptive proposal will be getting IP from LMT if the remanufacturing process requires it and convincing the Air Force that they are not buying tired iron.
- BA is partnered with Leonardo to provide a militarized variant of the commercial AW-139 produced in Philadelphia. BA claims large O&S cost savings compared to the H-60 over time as a result of its commercial roots. The disadvantage of the proposal to the Air Force would appear to be the introduction of a new type/model/series for a relatively small buy.
