Cyclone stopped paying the bills about then and the bearing test machine was never built.
So, what did OSU say? 1) Bearings were the "critical path", meaning they were preventing the engine from meeting its run time requirements. 2) Cyclone data showed no bearing combinations they ever tried were able to give acceptable life. 3) OSU engineers determined that the next necessary steps were to build a bearing test machine and develop new bearing designs. 4) They only got as far as planning bearing experiments and one of their steps was "–Make improvements or design changes if no bearing survives 250 hrs".
They knew of no water lubricated bearings that would survive for 250 hours (and we know from the FSDS contract that Cyclone can't make water lubricated bearings survive for 10 hours, unless, of course, its a different fatal design flaw in the Cyclone engine causing its rapid failures).
So, yes, OSU engineers concluded there were no known water lubricated bearings that would work.
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