Air Force Contract for New Training Jet in Jeopardy

The U.S. Air Force plans to announce the winner of a contract to build a new training jet, dubbed the T-X, by the end of this year. However, funding for the new jet will not be available unless the continuing resolution (CR) that expires in December is replaced by a real federal budget approved by Congress and signed by the president.

The three bidders on the contract are teams comprised of the following:

• Boeing Co. (NYSE: BA) and Saab
• Lockheed Martin Corp. (NYSE: LMT) and Korea Aerospace Industries
• Italy’s U.S. subsidiary Leonardo DRS

The estimated value of the contract is around $16 billion.

If the CR is extended and not replaced, the law prohibits initiating new programs. To deal with that possibility, the Air Force is looking at awarding the contract on a delayed start basis. That is, the winner would be announced but the contract will not be awarded.

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Lt. General Arnold Bunch, the service’s head of acquisition, told Defense News:

We will look at options to see if we can award with a delayed start. There are ways, we have done it before, when you award a contract and you delay the start of the contract for a few months. But we need some budget certainty before we go do that. If we go to sequestration funding levels, we’re going to have to look at everything that we’re doing. I hate to say the acquisition answer depends, really, on what the situation is when we get to that point.

If the CR is extended, that could have ripple effects on the T-X program as a whole, Bunch continued:

Are the contractor prices still good? Have we extended out? There are a bunch of different things that we have to look at and weigh out. But our goal, because it is a critical capability to replace the T-38s, we want to go as fast as we can.

Boeing and Saab have submitted a clean-sheet design for the T-X, while the Lockheed-KAI team has submitted a variation of KAI’s T-50 training jet. Leonardo DRS has submitted a modified version of its parent company’s M-346 that it calls the T-100.

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