Murphy's Law: Priced Out Of The Market


January 30, 2012: In the last two decades the U.S. military has found it increasingly difficult to design and build equipment and weapons specifically for military use. There are too few manufacturers of such gear and the commercial sector is increasingly coming up with cheaper and more capable (or at least as capable) alternatives.

Commercial Off-The-Shelf, or COTS, gear has always been present but the uncontrollable expense of developing some types of military gear has forced the military to go commercial rather than go without. A major example of this is the development of military helicopters. Most of these have been commercial designs or commercial type designs that were sold to the military as military models. Then the manufacturer turned around and sold the same helicopter, with a different paint job and accessories, as a civilian chopper. One of the most famous examples was the UH-1 "Huey." When the U.S. Army was shopping around for a transport helicopter using more efficient gas turbine (jet) engines in the 1950s, Bell Helicopter took a design they were working on and presented it to the army, who ordered three prototypes. This civilian design, in military markings, was satisfactory. Military orders eventually amounted to over 16,000 (most of them after the Vietnam War). The civilian version, the Bell 204, sold nearly as well and continued to evolve and is still in production. The U.S. Army adopted a new design, the UH-60 in the 1980s, and that became the popular civilian S-70.  

Attempts to build new military helicopters have not been successful. The U.S. Army cancelled its Comanche light scout helicopter and ended up using a militarized civilian chopper instead. Other new military helicopter designs have also suffered from the same problems as Comanche (too expensive and too unreliable). The U.S. V-22 tilt-rotor aircraft can operate either as a helicopter or a fixed wing transport. But it proved very expensive to build and maintain. Orders have been continually cut. The European NH90, a more modern UH-60 type design, ran into similar problems: too expensive and unreliable. While older helicopters can be rebuilt for quite a long time, they eventually wear out. Military planners, like it or not, are faced with eventually (in 20 years or so) replacing many current helicopters with militarized civilian models or, via some miracle, new military designs that they can afford.

This is largely because of a post-Cold War trend; an increased reluctance to build a lot of a weapon that became extremely expensive. Thus the B-2 bomber, Seawolf submarine, F-22 fighter, Crusader artillery system, Comanche helicopter, and DDG-1000 destroyer all got production cut sharply, or were cancelled, when their budgets went too far out of control. Currently, most major American military procurement projects are over budget and late. Some 40 percent of the cost overruns are the result of suppliers submitting unrealistically low bids for new weapons and then coming back for more and more money as "unforeseen problems" appear and costs kept escalating and delivery delayed. This has come to be called "lowballing." Currently, procurement of weapons and major equipment make up about a third of the defense budget. While this is expected to decline over the next decade, as defense budgets shrink, the problem also extends to upgrades and refurbishment of existing equipment.

The military goes along with the lowball angle because it makes it easier to get Congress to approve the projects. Once a new project is in the military budget a few years it is very difficult to get it cancelled. Since Congress has a short memory the military does not take much heat for this never ending "lowball" planning process.

Actually, it's poor planning in general that causes most of the high costs. It's bad planning by the military, when coming up with the initial design, and bad planning on the part of the few manufacturers that have a monopoly on building certain types of weapons systems. Monopolies do not encourage efficiency. There are many examples of all these bad habits at work. Don't expect any of this to change anytime soon. It's the way things have worked for a long time. Many generals and admirals, members of Congress, and even a few manufacturer executives, have called for reform. But it just doesn't happen, at least not to a large extent.

This means that a lot of very old, very useful, and very durable systems are staying in service for a very long time. The B-52 heavy bombers, the Minuteman ICBM, the UH-1, CH-47, and AH-1 helicopters have all been in service for half a century and still have a decade or more of service left. So, in the meantime, civilian equipment is increasingly accepted for military uses. This ranges from clothing to radios, weapons, sights, and ship design techniques. If you can't beat them, copy them.

But there are many older systems that have no obvious civilian equivalents. The most obvious case is the Minuteman ICBM. While there are no obvious civilian alternatives for ICBMs and heavy bombers, there are commercial alternatives. For ICBMs there are rockets used to launch satellites. For heavy bombers, there are large airliners. While these kinds of conversions are abhorrent to many of the users, and the developers of purpose-built military equipment, when time and money are tight you improvise to survive.






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