Emphasis on Low Price Disrupts US Air Force’s T-X Trainer Competition

Northrop CEO Evades Questions on T-X Participation (excerpt)

(Source: Defense News; posted Jan 26, 2017)

By Valerie Insinna

WASHINGTON --- Northrop Grumman has designed, built and flown a new plane for the T-X trainer competition, but that doesn’t mean it will ultimately bid on the program, its CEO said Thursday.

During a quarterly earnings call, Northrop CEO Wes Bush said the company was reviewing the newly-released request for proposals and had not yet reached a committed decision on whether it would remain in the competition.

“Let me be clear, we have not reached a conclusion on that,” he said, adding that the company was “really looking at each of these opportunities through the cold hard lens of what does the RFP really tell you, and what would the business case look like?”

Northrop, the incumbent manufacturer of the T-38 jet currently used to train Air Force fighter pilots, has already invested millions of dollars into its offering for the T-X competition. Although the company has been secretive about its entrant — a compact design with a large vertical tail, built with BAE Systems, L-3 and Northrop subsidiary Scaled Composites — its prototype has been sighted by aviation enthusiasts while conducting ground and flight tests in California.

One market analyst questioned whether the T-X competition had become a “low-cost shootout,” making Northrop reticent to put forward a potentially more expensive clean-sheet design.

Bush declined to comment specifically on the T-X contract, but acknowledged that the company is not always inclined to battle it out when cost is the deciding factor for an award. (end of excerpt)

Click here for the full story, on the Defense News website.

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Trainer Price Wars: Raytheon Wanted Millions Less Per Plane Than Leonardo (excerpt)

(Source: Defense News; posted Jan 26, 2017)

By Tom Kington

ROME and WASHINGTON --- The collapse of the deal between Raytheon and Italy’s Leonardo to offer the T-100 jet trainer in the US T-X competition followed Leonardo’s inability to cut the price of the aircraft by nearly a third, Italian sources have told Defense News.

“Raytheon wanted to drop the price of the plane by 30 percent below Leonardo’s idea,” said the source, who was knowledgeable of the talks between the two firms. “Leonardo worked towards that but could not achieve it."

The partnership was nearly called off in October in a dispute allegedly over control of the program. All appeared to be back on track later the same month when Raytheon announced it would build a final assembly and check out line in Mississippi.

All appeared back on track later the same month when Raytheon announced it would build a final assembly and check out line in Mississippi. While structural assembly would take place in Italy, at least 70 percent of the T-100 training system — including ground-based systems —would be built in the United States, a Raytheon spokesman said at the time.

“The October row was over control, and that never really went away, but the debate over price also became more important, particularly as the [competitiveness] of Boeing’s offer in the T-X program became more evident,” said a second Italian source. Boeing has teamed with Saab to offer a clean sheet design.

The second source added that Raytheon wanted to reduce the price by 25-30 percent.

The first source sympathized with Leonardo over the price wrangle, stating, “Raytheon saw price as key to competing, but perhaps didn’t fully understand the cost of the plane, not being an aircraft manufacturer.” (end of excerpt)

Click here for the full story, on the Defense News website.

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