Another reason the F-16 was more attractive to potential customers was that it had been in service a few years. It was considered proven, and fully backed by the awesome logistics network of the US Air Force. If a major technical problem or flaw was discovered in the aircraft, the foreign customer could be sure that the US Air Force would undertake the costly work of identifying the root cause, engineering a fix, and deploying the fix to its fleet. The foreign customer would have only to pay for the cost of the engineering change kit. The F-20, with a presumably smaller number of aircraft owned by non-American users, would have to have the cost of such changes spread among the user community. This could be costly and perhaps catastrophic if a hidden structural weakness was discovered.
On the F-5A and F-5E these problems had been covered in two ways. First, both aircraft were substantially similar to the T-38 trainer, of which the Air Force owned over a thousand and therefore fully backed logistically. Secondly, the Air Force operated a small number of F-5's as trainers for foreign pilots, aggressor aircraft to simulate MiG-21s in air combat training, and as test aircraft. In any case the aircraft were fully integrated into the Air Force logistics structures and spares could be ordered through the AFLC logistics system for Foreign Military Sales customers.
This option was to be available for the F-20, but obviously the Air Force seemed lukewarm at best in support of the aircraft. So Northrop took a bold step. It offered to guarantee foreign customers a fixed price per flight hour maintenance cost. This cost was half that of the F-16, and Northrop was guaranteeing the maintenance cost for 20 years. For this price, Northrop would conduct depot-level repair of the aircraft. Using the built-in-test features of the aircraft, failed parts would simply be replaced on the flight line, replaced with a Northrop-provided spare, and shipped back to Northrop for repair. Northrop would replenish the foreign customer's spare, repair the failed part and return it to its own spares inventory. This new spare would have all reliability improvement fixes up to that date incorporated. Slowly the component parts of the entire F-20 fleet would constantly be replaced by new spares of ever-improved reliability. Essentially this cut out intermediate level maintenance and made Northrop the world's F-20 depot.
Northrop so fervently believed in its reliability engineering process that it was sure it could make money on this arrangement. Every failed part returned would have the reason for the failure diagnosed. The cause of the failure would be fixed in units throughout the fleet if warranted. Therefore the reliability of the aircraft and its parts would constantly improve, and the actual cost of maintenance would continuously decline, and Northrop would have the potential to make money on the fixed maintenance cost, even if it might lose money at first.
Part of the risk of this approach was mitigated by excluding damage caused by misuse, mishandling, or foreign object damage to the engine. Actually, FOD was the leading cause of costly engine maintenance problems, even for the F-20 with its intakes mounted above the wing. Naturally this aspect of the guarantee appeared only in a small paragraph at the end of the marketing literature.
Yet it was an innovative and unprecedented commitment to the emerging field of reliability engineering. This whole field had been largely developed by NASA in the early 1960's, and then taken up by the US Navy with a vengeance on its F/A-18 program. The idea involved, first, rigorous application of reliability estimation during the design process. This basically involved using a huge USAF database of known failure rates for various components at the lowest level (transistors, resistors, etc for electronics). The failure rate for a new component would be guessed based on historic rates for similar parts. All of these - thousands of them for each black box - would be toted up and the 'intrinsic' failure rate for the assembled part calculated. The idea was to force selection of reliable components in the design phase in order to reach a specified reliability goal for the component.
There were several problems with this approach. First, it assumed perfect assembly. Failure rates for connections between the parts - circuit board paths and jumpers, wires, and so on - were not included. It was jokingly observed that 'connectors have no failure rate', although it was widely recognized that poorly connected avionics was a leading cause of problems. Secondly, none of this took account of software. Digital components were new when the F-20 was being developed. In fact, software failures would greatly outnumber hardware failures in service. Thirdly, even without the software, actual field failure rates were always much higher than the theoretical calculations would indicate. To compensate for this, various 'factors' were multiplied by the theoretical rate, based on experience, to predict the field rate.
It was not expected that a piece of equipment would reach this 'intrinsic' failure rate right away. Reliability engineers liked to cite what they called the 'bathtub curve'. This showed, that over the service life of a particular kind of equipment, it would have a high failure rate initially. This would decline relatively quickly and reach a relatively stable level for most of the equipment's life. At the end of its life, as components aged, the failure rate would increase again. The goal of the reliability engineer was to eliminate this initial period of high failure rates - 'infant mortality'.
To achieve F-20 goals, Northrop's reliability engineers initiated requirements for qualification testing of the equipment the like of which the industry had never seen before. The equipment was to be operated for hundreds of hours while at the same being shaken violently and being heated, frozen, and pressurized, depressurized, in an environmental chamber. The idea was to expose sample specimens of the design to a lifetime's worth of vibration energy and thermal and pressure cycles in a few months. Any failures would be logged, a fix identified, fixed, and then testing would continue. If the failures required a major engineering change, the whole process would have to start over again.
The subcontractors complained bitterly about this process. There was certainly a logical flaw to it. After all, something enduring 0.5G's of vibration over 10,000 hours of service was not equivalent to the same thing experiencing 20,000G's of impact in one second after being dropped off a skyscraper. Honeywell observed that the F-20 navigation system had to pass a much more severe environmental qualification test than the Space Shuttle Main Engine controllers they built (a component they built that was strapped directly to the engines themselves). The shaking required was so violent, that in a qualification run of the flight control system computer, a bolt holding the black box to the shaker table broke, and the box flopped violently on the table before the shaker could be stopped. On being opened up, it was found that the contents had been smashed into a pile of loose parts. The loss of this test article threatened the whole program.
On the other hand, it could not be denied that the testing was producing rugged, durable designs of unprecedented field reliability. Designing for such a test, and making changes required to pass it, ensured the components would operate through anything they might face in field service. And, in truth, the F-20 did have some severe environments due to its small size. The vibration environment in the avionics bays aft of the cockpit, where the critical flight control and inertial navigation systems were located, was severe in dives where aerodynamic buffeting shook the aircraft violently. The gun in the nose, where the delicate radar components were located, produced awesome vibrations when it was fired.
Despite all of Northrop's work on reliability engineering, in fact it was the inherent improvements due to new solid state technologies that were causing a revolution in reliability for the whole electronics industry. Wires were being replaced by conducting paths on circuit boards. Many nets of individually-soldered transistors and resistors were being replaced by large-scale integrated circuit chips Jumper wires were being replaced by multi-layer boards. Rotating gyroscopes with bearings, lubrication, and motors were replaced by laser gyroscopes with no moving parts. Each new innovation had problems at first, but then matured and became ultra-reliable. The all-electric airplane was becoming a reality.
Northrop saw it coming. The later version of the F-20 was to have electromagnetic maneuvering flaps. These would eventually be followed by replacement of all pneumatic and hydraulic actuators and devices with electrically-driven, electronically controlled equivalents.
But when it came to the nuts and bolts of implementing the fixed-price-per-flight hour, there were problems. Northrop management had calculated the price they were guaranteeing based on parametric study of maintenance cost of the F-5E and the reliability of the F-20. But then Northrop asked its subcontractors to share in the risk. They were asked to agree to provide 20-years maintenance for their component parts at the allocated portion of their portion of the total cost. The answers Northrop got back were disturbing to say the least. The total cost of subcontracting the risk of the flight-hour cost guarantee was double that of what Northrop was guaranteeing its customers. A late-night meeting was called, bringing engineering, procurement, and program management together. "There is going to be blood on the floor," promised Joe Gallagher.
There were several problems. First, Northrop management underestimated the maintenance cost by assuming it could be based on F-5 costs, without checking with the subcontractors. The fact was, while the modern avionics and engines were very reliable, repairs were very costly. In the old days a failed electronics board would be diagnosed, a new transistor soldered in for a few hundred dollars, and returned to stock. Now, very often a failed electronics board was irreparable, and had to be simply replaced at a cost of tens of thousands of dollars. Reliability had been vastly improved but overall maintenance cost had actually increased.
Second, just as the Air Force would not first believe Northrop's guaranteed reliability and maintenance costs, neither would the subcontractors. They had been asked to invest their own money in developing components for an aircraft that still hadn't been sold. They further had to delay the day of any profit further by being asked to sell their initial production below cost in order to keep the aircraft selling price competitive. Now Northrop was asking them to invest even further, losing money for perhaps years until the reliability of their equipment improved to the point where they would make money on the fixed maintenance cost.
This was in an industry where aircraft and components were often sold below cost, with the money being made later on spares and maintenance. The management of some companies either didn't believe in Northrop's reliability theory, or just weren't going to take any more risk in order to stay in the program. As usual, risk-adverse General Electric was the major problem, with the radar being the elephant in the room as far as maintenance costs were concerned.
Northrop's manager of avionics subcontracts did an actuarial analysis of the issue, similar to comparing the cost of buying insurance versus self-insuring. Some subcontractors were padding their estimates to guarantee they would have no risk and make a healthy profit on the deal. In those cases, Northrop could decline their offers, and pay them for maintenance and fund engineering changes in the conventional manner. But then Northrop would reap the extra profit when and if reliability went up and maintenance costs went down as predicted. Other companies, with management more in tune with the electronics revolution, signed up to the plan.
In truth, no one could know the reality. Very likely Northrop had seriously underestimated its maintenance cost in making its guarantee. But Northrop was desperate to make a sale. If there were no sales, it wouldn't matter if it even guaranteed free maintenance for 20 years. If there was a sale, it might be stuck with a money-losing proposition on the first major contract, but this could be adjusted later on. In any case, the secret truth was that most of the world's air forces outside of NATO barely flew their aircraft - a hundred hours a year or less. Sometimes they were not even flown enough to keep their lubricating systems in shape. So while Northrop's guaranteed price per flight hour might have been ruinous with the US Air Force, which typically flew a fighter several hundred hours a year, it might be tolerable for a customer that flew under a hundred.
Discussions were held with Federal Express as part of this new logistics concept. If there had been an F-20 logistics program, Fedex would have warehoused F-20 spares for free, in exchange for the exclusive contract to move them around the world, from the end-users to Memphis, then to the subcontractors for repair, and back to the warehouse. With proper accounting treatment, Northrop would be able to run the whole F-20 logistics program without any investment in warehousing, test equipment, or facilities - a virtual depot. The only cost would be shipping the components around.
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© Mark Wade, 1997 - 2006 except where otherwise noted.
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