$17 Billion Cut... But Trillions More Spent Elsewhere

The Obama Administration, in the process of spending trillions of dollars for all manner of programs and projects, is trumpeted the 17 Billion dollars it is trying to cut from the Federal Budget. Rather than try to digest them all en masse, we'll look at each of them one at a time and allow you to make up YOUR mind as to the rationale and wisdom for the decisions included below. Herewith; another of the programs on the chopping block that has an aviation or aerospace connotation.

From the 'Terminations, Reductions, and Savings' document published this week by the OMB, as part of the FY 2010 US Budget:

Proposal: The Administration has decided not to fund the Joint Strike Fighter (JSF) Alternative Engine Program (AEP), because it is no longer needed as a hedge against the failure of the main Joint Strike Fighter engine program. The Department of Defense (DOD) proposed cancelling the JSF AEP in the President's 2007 Budget because development of the main engine was progressing well and analysis indicated that savings from competition would not be offset by high upfront costs. DOD did not request funding for the program in the 2008 and 2009 Budgets. However, the Congress has rejected the proposed cancellations and has added funding each year since 2007 to sustain the AEP development.

Justification: Because DOD wanted to reduce technical risk in the development of the JSF engine, the Department has had two contractors developing separate JSF engines. However, in 2007, DOD proposed to cancel the contract for the second (alternate) engine because the main engine program was progressing well, making a second engine program unnecessary. Moreover, financial benefits, such as savings from competition, have been assessed to be small, if they exist at all, because of the high cost of developing, producing and maintaining a second engine. The reasons for canceling the AEP in 2007 remain valid today.

Studies by both the Government Accountability Office and Congressional Budget Office have questioned the affordability of the current defense program, particularly the high cost of modernizing tactical aviation.1,2 Canceling the AEP will result in estimated near-term savings of over a billion dollars.

FMI: www.whitehouse.gov/omb/budget/fy2010/assets/trs.pdf