Integration of warranties into an aircraft engine acquisition strategy

Abstract

Within the Department of Defense there continues to be considerable confusion and debate over the effectiveness of the warranty clauses required on major weapon system production contracts. Despite the fact that they have been mandated by law since 1985, and that their costs are estimated at over two percent of total hardware costs, a uniform process to ensure their proper development and administration does not exist. Because of the politics involved, Program Managers have received considerable direction in the form of "thou shalt", but virtually no guidance as far as "how to". Fortunately, significant efforts have been made by individual programs to correct problems experienced in the past and execute warranties that make sense. Their focus, however, has been on improving warranty administration. In contrast, this thesis looks at the warranty development process and discusses the potential improvements from the early integration of the warranty development into an aircraft engine's acquisition strategy. The findings of this report support avoiding insurance warranties, changing the Navy's "no-cost" warranty policy, and including warranty reviews as part of the Milestone review1 process. There is potential for significant reductions in life cycle costs from this approach and universal applicability across all platforms and services.