By Marina Malenic and Emelie Rutherford
General Electric [GE] and Rolls-Royce are seeking to win over critics of the plan to purchase an alternate engine for the Pentagon’s newest fighter jet, making a new business case to Pentagon officials based on a fixed-price contract offer for its F136 engine.
President Obama and critics on Capitol Hill have argued that the Pentagon neither wants nor needs a second engine for the Lockheed Martin [LMT] F-35 Joint Strike Fighter. Pratt & Whitney, a division of United Technologies [UTX], is on contract to build the F135 primary engine.
“GE and Rolls-Royce enjoy significant support in the House and Senate, as we have for 14 years,” Jean Lydon-Rodgers, president of the GE Rolls-Royce Fighter Engine Team, told Defense Daily yesterday. “But we must further align ourselves with the acquisition reformers.”
Lydon-Rodgers said that GE and Rolls have offered to take on additional financial risk in the potential deal for the F136 by offering the Pentagon a fixed-price contract, as opposed to a traditional cost-plus arrangement. She said GE and Rolls executives Tuesday laid out the proposal for Shay Assad, director for Pentagon procurement, and Marine Brig. Gen. David Heinz, the Pentagon’s F-35 program manager.
There are approximately 100 engines in the low-rate engine production phase of the F136 engine program designated as “direct buy” in order to start up the production line– these are engines in lots 5 and 6. By lot 7, according to the new proposal, GE-Rolls and Pratt would begin a head-to-head annual competition.
Referring to a House Armed Services Committee report on its fiscal year 2010 defense authorization bill, Lydon-Rodgers noted that Pratt is $1.9 billion over budget in its development program and that the cost of its production engines has accelerated “dramatically.”
“We plan to ensure that won’t happen with the GE-RR engine program,” she added.
Heinz recently criticized Pratt’s performance, pointing to 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).
“Our unique fixed price proposal accelerates head-to-head competition on a 30-plus year program,” Lydon-Rodgers said. “This is entirely consistent with the Weapons Acquisition Reform Act of 2009. We have been in discussions with the DoD on this proposal for several months.”
She noted that the Reform Act calls for head-to-head competition in major Pentagon acquisition programs, as well as for fixed price contracts whenever possible.
The fixed-price arrangement, if reached, could bolster the argument for the second engine on Capitol Hill.
One congressional observer said a fixed-price deal could give second-engine opponents an easy to back away from their opposition without declaring defeat.
Aides said they were aware of recent talks between F-35 program officials and General Electric about the fixed-price concept.
Lawmakers and aides supportive of the alternate engine program point to technical-related delays and price increases with Pratt & Whitney’s engine, the need they see for more testing of that primary engine, and the benefits of competition in engine development.
Funding for the alternate engine is not in the Pentagon’s FY ’10 budget request, but is included in the House-passed defense authorization and appropriations bills. The Senate Appropriations Committee will unveil its version of the appropriations legislation this month, and its chairman, Sen. Daniel Inouye (D-Hawaii), told reporters last month he supports the alternate-engine effort.
The Senate voted to remove the second-engine monies from the Pentagon authorization bill it passed in July, rendering the program a sticking point for House-Senate negotiators working on the final authorization measure. Senate Armed Services Committee (SASC) Chairman Carl Levin (D-Mich.) has talked of wanting to see the engine funding in the policy bill, while SASC Ranking Member John McCain (R-Ariz.) has stood with Obama and Gates in opposition to it.
Lydon-Rodgers said she expects Pratt to respond to the fixed-price proposal with a more competitive pricing offer of its own for its initial production engines.
“The government saved billions by allowing GE and Pratt to fight it out on the F-16,” she said. “The same opportunity should be afforded the JSF, a much larger program.”