Analytics of Third-Party Claim Recovery for Military Aircraft Engine Warranties

by John E. Peters, Benjamin Zycher

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This briefing reports findings on whether warranty recovery firms could be employed effectively to assist the armed forces with their warranty claims for aircraft engines. The General Accounting Office periodically has criticized the Services for poor oversight of warranty claims, and the relevant trade literature suggests that the commercial airlines discover and file only about 30 percent of the warranty claims to which they are entitled contractually. Such airlines as United Airlines procure the services of warranty claims firms annually. A number of circumstances often are alleged that would limit the effectiveness of a third-party aircraft engine warranty claims process in the military context. These concerns seem misplaced. The use of contractors for this purpose in principle is feasible, but the military use of engine warranties is decreasing, and even a substantial increase in claims engendered by a third-party program would yield only as mall return in terms of dollars or equivalent goods and services. Accordingly, a program is unlikely to yield benefits worth the administrative efforts required.

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