Grumman Couldn't Bear It: The F-14 Story
Yorke, Duane
Grumman Couldn’t Bear It: The F-14 Story by Duane Yorke Since the closing days of the Eisenhower Administration the Navy has been shopping around for a plane to stand guard over its...
...but from congressional testimony, it appears that the company’s letter of warning was simply a perfunctory form of self-protection and that Grumman executives still had faith that whenever the problems reached a critical stage, the Navy would make the necessary contractual adjustments...
...Between 1969 and 1973, when its business dropped by roughly 30 per cent, from $1.1 billion to $800 million, Grumman’s work force fell from about 36,000 to 22,000...
...Preliminary designs for what became the F-14 had been on Grumman’s drawing boards since 1964...
...This advantage disappears rather quickly as cruise speed is increased and the variable sweep wing retracts...
...The Navy’s top aviators could always find a corporate home at Grumman after leaving the service...
...With more people to do the job, everyone simply did less...
...To cite one example, the original TFX specifications called for a plane that could “loiter” for four hours at a stretch...
...Scientists and engineers are not immune to fads, and the swing-wing was the great rage of the early sixties among aeronautical engineers...
...The basic plot is no different from a dozen other vignettes of weapons procurement in the sixties: a hopelessly unrealistic contract meets rising costs and technological roadblocks...
...Between October, 1968, when Grumman gave its first set of proposals to the Navy, and December of the same year, when Grumman made its final submission, the company knocked its bid price down by $474 million...
...automobile companies that build big cars when customers want little cars...
...First, it may decide that the plane is simply a job badly botched...
...The story of the F-14 and its predecessors may be depressingly familiar, but alas, it is still instructive...
...But more fundamentally, the selection of the swing-wing typified the chummy, uncritical relationship that had grown up between the Navy and Grumman: each reinforced the other’s fantasies...
...Grumman has repeatedly denied that this cut represented a traditional “buy in,” explaining the change as follows: $1 12 million in reallocation of overhead (which meant, in effect, that most of the cost was simply being billed to other government programs...
...So, throughout the recent cost controversy, the sentagon has carefully avoided declaring Grumman in default on its contract-a legal step that might shut down the assembly line and turn the F-14 into a museum piece...
...Only someone who had flunked first-grade arithmetic could have missed the implications of this...
...For the retiring generation of Grumman executives, the F-14 would provide a spectacular exit...
...Boeing was in the process of abandoning the swing-wing design for its supersonic transport, and General Dynamics had learned the sobering lesson of the TFX...
...So the TFX’s failure was not inherent in the multi-Service concept, but in the subtleties of Pentagoncontractor relationships...
...In the turbulent aerospace industry, here, it seemed, was a sturdy, if relatively small, island of stability...
...Superficially, the central moral they drew from the debris of the TFX seems sound: one plane could not be twisted to do the jobs of two separate services, the Navy and the Air Force...
...Apart from the impressive his tory of Navy-Grumman cooperation, there was also the strong bond of the TFX legacy...
...The production run is now assured only through 134 planes, at which point the company claims it will have incurred a pre-tax loss of $205 million...
...Even before Congress formally canceled the TFX contract in 1968, the Navy had given Grumman a $1.75-million contract to study an alternative design for a purely Navy jet...
...in late 1968 the rate of inflation was rising, not falling...
...To camouflage this fact, the Pentagon and defense contractors devise increasingly intricate “requirements” to justify new weaponsrequirements that often have to be altered or abandoned to economize once costs begin running out of control...
...So why did they stick with it...
...In fact, Grumman warned the Navy about the increased subcontract prices...
...Two pieces of evidence, especially, showed how much reliance Grumman had placed on the Navy...
...That yielded an estimated annual increase of threc per cent in labor costs and two per cent in material costs...
...Unfortunately, this plausible notion collides squarely with the facts that were available at the time...
...After a while it was playing the game both ways, collecting every cent it could from the TFX project but also leaking reports of the TFX’s flaws to its Navy friends at the Pentagon...
...It’s a slow, almost imperceptible process...
...The F-14 was one of the by-products of the monumental congressional investigation of the TFX...
...With the national ego firmly committed to a moon landing, aerospace companies built up enormous staffs of engineers and technicians and sent the bill to Webb...
...Will Congress be any more perceptive in the conclusions it draws from the F-14...
...Its popularity in the late fifties and early sixties stemmed from a series of experiments carried out at NASA’s Langley, Virginia, research laboratories...
...If the rate had been three per cent in the preceding years, it would likely be four or five per cent within pany’s huge overhead could be susthe lifespan of the contract...
...Of that, $1.4 billion was for initial research and development...
...Grumman ignored all this...
...The extra weight and altered aerodynamics of the wing increases the “drag,” thus offsetting most of the swing-wing’s theoretical gain...
...all its own...
...The F-14 disaster demonstrates, however, that the causes of procurement disasters transcend difficulties with cost curves, swing-wing technology, or the Grumman Aircraft Corporation...
...WGrumman’s forecasts of the impact of inflation were unrealistic to a degree that should have been foreseen at the time...
...The Navy has justified the F-14 on the grounds that it can carry new highly sophisticated missiles and radar...
...Now, five years later, their golden dreams lie shattered...
...Probably not...
...Since the beginning of World War 11, Grumman had been designing planes for the Navy...
...It implies that everything would have been all right if the contract had been awarded to someone else...
...They were wrong on two counts...
...Most of Grumman’s senior executives sat serenely on the edge of retirement, anticipating the easy years of relaxation that they felt they so richly deserved...
...Going Out with a Bang Anyone visiting the Grumman Corporation in the mid-sixties would have found a solid corporate citizen...
...By 1968 both were infatuated with the swing-wing...
...True, it would have a “variable sweep” wing, but Grumman had had five years of experience with the swing-wing as a subcontractor on the doomed TFX...
...the taxpayers’ money is wasted, the manufacturer is virtually ruined, and the customerin this case the Navy-ends up with some shiny bits of half-useful gadgetry...
...tained in the future by an ongoing Right Through the Roof Starting with these unrealistic planning estimates, Grumman proceeded to create new problems in the actual development and production of the F-14...
...and the rest from the elimination of a double-contingency fund to cover parts supplied for subcontractors.‘ Thus, Grumman argued, it never actually lowered estimates of out-ofpocket costs but simply took away some of the financial padding...
...it has been done before, and even admirals have a foggy notion of what it should cost...
...165 million in elimination of an extra layer of Grumman profit on parts supplied by subcontractors...
...The scandalridden TFX of the early 1960s blossomed into the disastrous F-1 11B and has now yielded to the F-14...
...In fact, in 1969 neither the Navy’s contracting officer nor Grumman had any real interest in confronting serious problems in the F-14 program...
...As an “associate” contractor, Grumman was responsible for about 10 per cent of the airframe costs on the TFX...
...Why America needs aircraft carriers at all has never been entirely clear, but this has not daunted the Navy, Congress, or the White House...
...Even under the original F-14 contract-which the Navy has agreed to abandon after the 134th plane-the price of the fighter is nearly twice that of the TFX...
...In its calculated gambles on the F-14, Grumman was counting on the Navy to cover its losses-and while the Navy would no doubt have loved to oblige, it had lost some of its earlier autonomy...
...Despite the recent disputes that have developed between the Pentagon and Grumman over the F-14’s price, no one should doubt the strength of the Grumman-Navy alliance...
...it’s still unclear which way Grumman will fall...
...Technically, the F-14 is an even worse plane than the TFX, the disaster it was designed to replace...
...The irony of Congress’ position cannot have escaped anyone on Capitol’ Hill...
...Anything Must Be Better Than TFX It would be unfair to spare Congress its share of the blame...
...By contrast, the Boeing Company-mainly dependent on commercial work, with little government backup-faced a .similar 30-percent drop in 1970-7 1 and ruthlessly cut its work force from 95,000 to 32,000...
...Since the 1920s the Navy and Grumman had collaborated closely on a long series of successful fighter planes...
...Criticism of past projects has produced a massive retreat from reality in the defense establishment...
...In practice, it isn’t so simple...
...A Lemon All Its Own The genesis of the F-14 project lay less in the poor performance of the TFX-though the plane was indeed a lemon-than the Navy’s indestructible obsession to have a glamorous new jet...
...Admittedly, if the Navy buys more planes, Grumman will get more-just how much depends on the outcome of complex negotiations still in progress as this article goes to press...
...From this experience, Grumman’s executives credited the Navy with a degree of influence which, in the perspective of time, now seems excessive...
...What this ignored, of course, was the fundamental shift in the economy...
...The F-14’s limit will probably be 2.8 hours...
...Troubles are bound to arise sometime, so the key to survival is to get the program moving as quickly as possible and not advertise mistakes...
...At higher speeds the swing-wing moves to an angle like that of a normal fixed-wing plane-and at that point, a good fixed wing will always be a little stronger, allowing the plane to fly a little faster and more efficiently...
...Yet, after more than a decade of tinkering with this idea, the swingwing’s advantages have proved remarkably elusive...
...In the TFX project-which was supposed to provide a common fighter for both the Navy and the Air Force-the Navy had to tag along behind the h Force...
...Grumman ultimately discarded this and replaced it with another design proposal, No...
...That could only mean one of two things, each with damning implications: either the revised, lower bid was irresponsiblethat is, there wasn’t enough padding left to cover prudent risks...
...The study, conducted by Senator John McClellan, deeply embarrassed Robert McNamara’s Pentagon...
...For work originally estimated at $818 million, the company signed contracts totaling $1.1 billion, a 35 percent increase...
...Almost everything t h a t G ru m m an did -negotiating loosely with subcontractors, making a huge last-minute reduction in its bid price, and making unrealistically low estimates of the effect inflation would have had on the contract-seems to have been based on the assumption, admittedly reasonable in light of past experience, that whenever these steps led to trouble, the Navy would come to the rescue...
...Again, the reasoning is simple: with its wings outstretched, the swing-wing plane should be able to cruise more efficiently at low speeds than other planes, and the savings in fuel should allow it to stay in th.e air longer...
...In theory, it promised the best of two worlds: at low speeds its outstretched wings would give greater “lift,” resulting in lower fuel consumption...
...If it stops buying the plane, the cost of each of the Navy’s 134 F-14s will appear to be an astronomical $25 million, because all of the $1.4 billion in research and development costs will be spread over a much smaller production run...
...If the contractor exceeds the target, he shares the extra cost with the government...
...The company’s lapses into fantasy and fiction often seem only momentary, but, like humans, senile corporations live in the world of the past...
...Grumman boasted a reputation for honesty and competence, a reputation buttressed by 40 consecutive years of profits...
...Until then, it’s only possible to hazard a few guesses at what really went wrong...
...Technical problems and faulty contracts are merely symptoms of a larger disease...
...Rather than start from scratch, Grumman thought it could take a shortcut by going back to its earlier design...
...The first signs of trouble surfaced in early 1969, only months after the Navy and Grumman had signed the F-14 contract...
...Since both failure of the TFX and success of the F-14 were being judged by the partisan eyes of the Navy, “success” was assured, no matter what happened...
...And it is precisely this history that left many senior members of Congress-especially those embroiled in the TFX controversy-kindly disposed to the F-14: it would be the final and irrefutable proof that their decision to cancel the TFX had been correct...
...The F-14 may have had its difficulties, but for the Navy it was always better than what it replaced, the dreaded multiService plane...
...Pentagon officials now swear they will give Grumman only enough extra money to assure the company’s survival...
...Their mistake was in’ thinking that the Navy could keep bailing them out, despite the increasing impatience of both Congress and the public about mounting weapons costs...
...In short, Apollo left Grumman with a huge overhead and no place to hide it...
...There is another problem...
...this would be like building a house for your brother...
...Even though another company might have done a better management job, everything would not have been all right...
...No one knew how much it should cost to go to the moon, and James Webb, NASA’s director during the program’s critical early stages, was shrewd enough not to set any inflexible, well-publicized price limitations...
...Not only would they build the F-14, they would sell the planes like hotcakes...
...When Congress finally canceled the Navy version of the TFX, it was, as the final McClellan report noted, an action of “historic significance: no other major weapons program had ever been terminated by Congress over the objections of the civilians in charge of the Department of Defense...
...Until these experiments, the swing-wing appeared impractical because everyone assumed that the wings would have to be rotated from a central pivot position located in the front of the fuselage...
...By agreeing to reopen the contract with Grumman, the Navy has maneuvered itself into a corner from which there is no graceful escape...
...This wasteful cycle will stop only when outsiders-both Congress and the publictake the trouble to master the obscure jargon and realize that what’s going on is nothing more than an immensely wasteful public-works project...
...before making most major decisions on their plane, the Admirals had to go check with the Air Force’s research and development headquarters...
...The project’s growing momentum-be it in dollars, time, or simply bureaucratic prestige-then makes it more difficult for critics to argue for a halt...
...Companies that grow senile are usually either shocked back into the present or go bankrupt...
...Just why it did so is still a mystery, but it’s difficult to avoid the suspicion that somehow the Navy signaled Grumman that no harm would come to it if it reduced its price...
...In the case of the F-14, the ceiling was 25 per cent more than the target...
...Squeezed between unrelenting pressure to cut the overhead and the logic of Parkinson’s law, Grumman’s executives bowed to Parkinson...
...The usual procedure is this: before a potential “prime” contractor makes a bid to the Defense Department, it settles on preliminary cost estimates with its major subcontractors for the purpose of submitting a realistic bid...
...During that period Grumman negotiated dozens of separate deals with its subcontractorsbut at prices that were $300 million higher than the estimates Grumman had used in computing its own contract price to the Navy...
...The swing-wing is a classical technological booby-trap-beguilingly attractive in theory, but devastatingly destructive in practice...
...The TFX investigation was impressively exhaustive, but its disheartening lesson is that Congress-even when it unearths the right facts-often settles on the wrong conclusions...
...the proposal for the F-14 was an updated version of design No...
...Grumman Couldn’t Bear It: The F-14 Story by Duane Yorke Since the closing days of the Eisenhower Administration the Navy has been shopping around for a plane to stand guard over its aircraft carriers...
...This error is particularly intriguing in light of the company’s subsequent arguments that inflation was the main culprit in the overruns...
...Had anyone cared to look, he could easily have discovered other evidence in 1969 indicating the flimsy financial underpinning of the F-14 program...
...Grumman’s engineers felt they had diagnosed and cured all the TFX’s flaws...
...Technically, the F-14 seemed routine...
...When the Navy-aiged by congressional investigators-finally succeeded in scuttling the TFX (also known as the F-1 1 l), Grumman was virtually the preordained choice to build a successor...
...Often, in the final negotiation after an award, the prime con tractor-now with life-ordeath control over a huge flow of funds-is able to knock that price down...
...The reasons for the failure are not hard to understand...
...By 1968 this attractive theory had been battered by practical experience...
...that discovery breathed new life into the swing-wing theory...
...Grumman’s executives lost touch with reality in two areas-technology and politics...
...There was, to be sure, an element of inertia...
...All this means that inflation may have compounded Grumman’s problems, but it did not cause them...
...The various competitive chicks and balances within the industry have failed...
...In its F-14 contract proposal, Grumman estimated that it would have a total “business base” of 50 million man-hours in the seventies...
...Financially, the F-14 is enough to create a wave of nostalgia for the “inexpensive” days of Robert McNamara...
...The danger, then, is that in contemplating the F-14, Congress will miss the central point, which is: big weapons programs have reached a point of diminishing ‘returns and have become “makework” projects...
...So, with a total production budget of less than $4 billion and half of that outside Grumman’s control, the $300-million overrun was no tiny mistake...
...From beginning to end the company placed blind faith in the Navy...
...The swing-wing was available...
...To Grumman’s executives the assumption seemed natural...
...On the other hand, building the new fighter plane has proven to be a protean nightmare, especially since it now costs 300 times more than its World War I1 counterpart...
...Illustrations abound: power companies that plan new generator projects as if environmentalists didn’t exist...
...Before, there was very little incentive or motivation to economize or control costs...
...And the TFX had exceeded its own original cost estimates by 100 ifer cent...
...An illustration from the Apollo program may explain what happened...
...Aviation’s Hoola Hoop The main technological blunder was the selection of the swing-wing...
...After this goes on for a while, company executives begin to see it as “normal,” making it impossible for them to envision, much less execute, big reductions in the company’s engineering and design staffs...
...about half of the remainder (for the production of the aircraft) represented so-called ‘ ‘G F E” (Government Furnished Equipment), for which the governmen t assumed direct financial responsibility...
...Second, building an airplane, even a military plane, is not like going to the moon...
...With their experience on the TFX, Grumman’s executives weren’t oblivious to the drawbacks of the swingwing...
...The story is like that of the third-string college quarterback who gets his big chance late in the third quarter, with the team behind 20 to 0. Envisioning three touchdown passes and a dramatic 21 to 20 victory, the quarterback dreams of a pro contract...
...Most large bureaucratic undertakings, especially defense projects, eventually become races against disaster...
...or the first bid contained an unconscionably large profit margin-which Grumman expected the Navy to wink at...
...With this new protective “sweetheart” arrangement, there is none...
...The full story of how this happened may never be known unless Congress orders the Government Accounting Office to conduct a full-scale investigation...
...Amid the soul-searching and the scramble for cover after the debaDuane Yorke is a former Grurnman engirirer and Wall Street analyst cle, the Pentagon and Congress blame -and revise-contract procurement methods, accept (for a time) the strictures of technology, and may even briefly ostracize a particularly inept or greedy manufacturer...
...Corporations, like people, lose touch with reality...
...303, which Grumman made in the early sixties in preparation for the TFX competition...
...The Navy did this with as much grace and good humor as Chiang Kai-shek recognizing the mainland government...
...Except for a $1 -billion price tag-they cost $55 million during World War 11-the aircraft carriers have presented relatively few production problems...
...With Grumman, the opposite happened...
...While the McClellan committee was pondering the TFX, the Navy and the Air Force were proving that one plane could meet both their needs by buying hundreds of McDonnell Douglas F - ~ s ,w hich are now the backbone of both their fighter fleets...
...Second, and rather less likely, Congress might conclude that it had been sold a bill of goods by the Navy and Grumman...
...To produce its inflation estimates, the company took aerospace labor and material costs over the preceding decade, derived an average, and then projected the average throughout the life of the proposed contract...
...Remember, first, that all major military contracts contain two basic types of price goals-the “target” price and the “ceiling” price, which is the maximum allowed under the contract...
...The company’s publicists rarely tire of touting this accomplishment, but in fact, Apollo was a breeding ground for inefficiency...
...such a pivot would be too big and bulky and would throw off the plane’s balance...
...They were still smarting from their subordinate role in the TFX affair and fervently wanted to prove that they could succeed where the Air Force and General Dynamics had failed...
...But, if the Navy decides to go ahead and order an additional 179 planes, the program’s total costs will probably balloon to at least $1 billion more than the original contract price of $5.3 billion...
...But the NASA experiments showed that each wing could be made to pivot on smaller joints located in the wings themselves...
...The theoretical advantage of lower fuel-per-mile consumption than fixed-wing planes at both low and high speeds looked tempting...
...Given the aircraft carriers, the need for the fighter plane seems equally axiomatic...
...Reality intervenes, of course, as he’s intercepted twice, and the final score is 34 to 0. The F-14 is to Grumman what interceptions are to quarterbacks...
...in fact, the base is turning out to be about half of that...
...Similar equipment could have been installed in existing aircraft at a fraction of the cost...
...Grumman was one of the major contractors for Apollo, responsible for designing and building the lunar module (LEM...
...There is no contingency plan to replace the F-14, and it has become virtual treason to discuss shortcomings...
...The customer was the Navy...
...It looked easy...
...That’s true, but meaningless...
...As long as our attention remains fixed on them, the Pentagon can keep justifying new projects, arguing that next time technology will work and costs will be kept under control...
...These estimates involve a “should not exceed” figure-that is, the subcontractor says that for suchandsuch a job, the cost “should not exceed” a certain price...
...310, whieh was eventually accepted for the TFX...
...Grumman executives played this game as well as anyone else, confidently expecting that the comstream of government contracts...
...In a total project budget of $5.3 billion, $300 million may not seem like much, but in this case, the $5.3-billion total was misleading...
...The Navy Will Provide Grumman’s political and financial blunders were even more serious than its technological error...
...This logic, not naivete’, best explains Grumman’s behavior...
...at liigh speeds the wings would fold snugly into the fuselage, reducing the plane’s drag...
...The gap between the target and the ceiling is supposed to allow for unforeseen problems...
...Simultaneously, the F-4 was being purchased -and fitted for a variety of defense roles-by Israel, Iran, Britain, West Germany, Japan, Spain, Turkey, and Greece...
...First, the work simply didn’t materialize...
...Since Langley, Virginia, was also the home base of the Air Force’s Tactical Air Command, the Air Force quickly adopted the swing-wing gospel and based its TFX specifications on the assumption that without a swingwing the new plane would be passing up a major technological blessing...
...They wanted but one more corporate triumph to embellish their twilight years, something to secure their niche in aerospace history and give Grumman the basis for another generation of profits.The F-14 was to be their final triumph...
...Just as the Navy had seethed in its subordinate role to the Air Force, so Grumman had yearned to get out from under General Dynamics...
...When it submitted its bid, Grumman, of course, should have had a good idea of what its subcontracts would cost...
...But that would have satisfied neither the Navy’s craving for a new jet nor Grumman’s need for a contract...
...What made the Grumman-Navy alliance less fruitful than the early days was a new element in the equation: corporate senility...
...The Navy envisioned a program of more than 700 planes, at a total cost exceeding $8 billion...
...The swing-wing school of aeronautical engineering argues that, all other things being equal, a plane with a swing-wing can stay in the,air longer...
...The joint at mid-wing inevitably adds to the weight of the wing-not just because it is an extra part, but also because additional structural reinforcement in other areas of the wing is necessary to compensate for the joint...
...The first proved fatal for the F-14, the second for Grumman’s finances...
...all of Grumman’s and the Navy’s troubles stem from the fact that the company had shot right through the ceiling and entered the area where all extra costs must be borne by the contractor...
Vol. 5 • July 1973 • No. 5
