We Now Know Why Sierra Nevada Corp Canned Its Navy Jet Trainer Bid
The Sierra Nevada Corporation (SNC) says its decision not to submit a bid to replace the U.S. Navy’s T-45 Goshawk jet trainer was driven by the service’s insistence on a fixed-price contracting structure. The company has also called attention to the potential export opportunities that could emerge for whoever ultimately wins the Undergraduate Jet Training System (UJTS) competition.
For more than a year, SNC had touted plans to compete for UJTS with its Freedom Jet, which was set to be the only clean-sheet design in the running. However, the company confirmed on Tuesday that it had not done so. This has left the Beechcraft M-346N, based on the established M-346 Master jet trainer, submitted by a team made up of U.S. firm Textron and Italy’s Leonardo, as the only known entrant.
A rendering of the Beechcraft M-346N. Textron
Through UJTS, the Navy hopes to acquire 216 new jet trainers to replace its aging fleet of approximately 200 T-45s. The first versions of the Goshawk began entering Navy service in the early 1990s, and the fleet has received significant upgrades since then. The aircraft are aging, and operating and sustaining them have become increasingly challenging. A spate of reported hypoxia-like physiological episodes among pilots led to the development of a new oxygen system in the early 2020s. There have been several Goshawk crashes in recent years due to a variety of factors. The Navy lost another T-45 just in May, with the two individuals onboard thankfully surviving.
A US Navy T-45 Goshawk jet trainer. USN
SNC had previously said that the Navy’s contracting structure was the central factor behind its decision not to submit a proposal for UJTS, but did not elaborate initially. TWZ reached out for more information and subsequently received a much more detailed response.
Fixed-price risks
“SNC’s decision was driven by the acquisition structure, not the aircraft, the team, or the mission. The current solicitation requires industry to commit to firm-fixed-price production before the aircraft design has fully matured,” SNC told us. “This creates a level of risk we could not responsibly accept and a risk that we believe the Navy will inherit as future cost increases and schedule delays. After careful review, we concluded that we could not commit to pricing a future configuration that has not yet completed the normal design maturation process.”
A rendering of a pair of SNC Freedom jet trainers. SNC
“Our concerns centered on three related issues: firm-fixed-price production before design maturity, limited visibility into the program’s long-term funding profile, and the requirement to lock in production pricing before key design decisions are finalized,” the company continued in its lengthy statement. “Taken together, those elements place a significant amount of program risk on industry while important aspects of the program are still evolving.”
As the name indicates, firm-fixed-price contracting involves the customer and the vendor agreeing to a hard cost figure up front. Cost growth due to delays and other factors is then generally shouldered by the vendor, though the parties can also renegotiate the terms down the line.
The pros and cons of firm-fixed-price have been a particularly hot topic of debate between the U.S. military and its suppliers for years now. It has been argued that fixed-cost deals are good for U.S. taxpayers, by promoting accountability and preventing an endless stream of funding going into programs that are not delivering results. At the same time, questions have been raised about incentives, or the lack thereof, and the compounding impacts of ballooning costs on program schedules due to factors potentially beyond a company’s control.
Boeing has become something of a poster child for the pitfalls of fixed-price contracting that can emerge on both sides of the equation. In recent years, the company has seen billions of dollars in losses on high-profile fixed-price deals, particularly with the U.S. Air Force. This includes the KC-46 Pegasus aerial refueling tanker and T-7A Red Hawk jet trainer programs. The company has lost more than $3 billion just in the course of work on two new VC-25B Air Force One jets. This is in no small part due to <a href="https://www.twz.com/a
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