By Marina Malenic
Responding to competitive pressure from a rival engine manufacturing team, the producer of the main engine for the Defense Department’s newest fighter jet will also offer the Pentagon a better deal.
Connecticut-based Pratt & Whitney [UTX], developer of the F135 engine for the new F-35 Joint Strike Fighter, is preparing a counter-offer to a proposal from General Electric [GE] and partner Rolls-Royce that would provide the government with a firm, fixed price for its F136 engine. The GE-Rolls team made its offer, which would replace a traditional cost-plus arrangement in which the government takes on more financial risk, to Pentagon officials last week (Defense Daily, Sept. 3).
A Pratt spokeswoman said yesterday that the company will offer its own new deal in response to its rival’s proposal.
“GE recently offered an unsolicited firm fixed price on their alternate engine,” Erin Dick told Defense Daily. “We have worked very aggressively to reduce our costs for the F135 engine and have made progress. Our upcoming…proposal reflects confidence in our cost reduction strategy and significantly lowers the risk to the government. The proposal will provide protection to the government from cost increases and safeguard against engine cost growth.
Dick added that the offer will be for the fourth low-rate initial production lot. She declined to specify the new cost structure.
On Capitol Hill, Senate defense appropriators yesterday decided not to add funding for the GE-Rolls engine to the 2010 defense appropriations bill (see related story).
The Obama administration has threatened to veto the bill if funding for the alternate engine–which the president has singled out as “wasteful” spending–is included. Critics of the second engine, including Defense Secretary Robert Gates, have raised concerns that it would become a financial burden to the program as a whole and result in fewer airplanes procured.
However, proponents of the dual-engine plan say that competition will keep both contractors from over-charging the government.
“Sounds like competition does, in fact, work,” Richard Aboulafia, an analyst at the Teal Group in Fairfax, Va., said regarding Pratt’s counter-offer. “It’s a smart but incredibly ironic move.”
Maj. Gen. David Heinz, manager of the F-35 Joint Program Office in the Pentagon, recently criticized Pratt’s performance. He cited unsatisfactory yield rates for certain machined components of its engine, as well as the company’s increased cost estimate, recently raised from $6.7 million to $8.3 million per engine (Defense Daily, July 29).
Heinz’s office declined to comment on Pratt’s pending offer.