Companies don’t like competition, it drives down prices and costs them business. Customers, on the other hand, love competition precisely because it drives down prices and saves them money. Government, as a consumer, should like competition, or so you would think, but that’s not always the case. As the saying goes, people are much looser when it comes to spending other people’s money. No-bid contracts are commonplace in Washington, as are sweetheart deals for political allies and donors. The Obama administration has a chance to save millions of our tax dollars on a new fighter plane engine through competition. But the White House, rather than embracing fiscal responsibility, is threatening a veto.
The Joint Strike Fighter (JSF) is the next generation of fighter plane for the US military and for our allies around the world. As you can imagine, what is necessary isn’t cheap, which is why you would think the government would seek competition to help lower the price. But that’s logical thinking, which has no place in government when it comes to spending.
There are two companies that make the complex engine needed for the JSF, one is called Pratt and Whitney and the other is a joint venture between Rolls Royce and General Electric. The White House is seeking to award the contract to Pratt and Whitney, which you would think would be the end of it, but it’s not that simple.
The contract is valued at $100 billion over 30 years, no small sum. So some members of Congress thought that it might be a good idea to introduce some competition into the mix. There are two companies that can make it, why not contract with both and have them compete, which would have the added benefits of lowering the engine’s cost and improving its quality. After all, why would you spend time and money improving the efficiency of a product if it’s going to sell regardless?
This bit of logic occurred to members of Congress as ideologically diverse as Republican Leader John Boehner and liberal stalwart Dennis Kucinich, both of whom support the idea of contracting with both companies.
The Government Accountability Office (GAO), the non-partisan auditing arm of the government, studied the issue and found that if the government contracted with both manufacturers for the engine, it would save taxpayers billions, bolstering the argument of those in Congress who thought as much. This report, however, hasn’t changed the minds of the Pentagon or the administration. They still support the single winner approach. Why?
The GAO, while pointing out the long-term savings of competition, also said it would be cheaper in the very short-term to award it to one company. The White House has seized on that in an attempt to claim the fiscal responsibility mantle, but accounting tricks and short-term thinking don’t negate facts and common sense.