By Marina Malenic
General Electric [GE] yesterday announced that it has augmented a fixed price offer it made to the Pentagon last year to build alternate engines for the F-35 Joint Strike Fighter, with the Defense Department again indicating no interest in such a deal.
The proposal from GE and its partner on the F136 development effort, Rolls-Royce, is to absorb cost overruns on the first 150 engines it delivers to the F-35 Joint Program Office (JPO). Company executives made a similar offer last fall to build 100 engines at a fixed price (Defense Daily, Sept. 3, 2009).
GE and Rolls said yesterday that they have presented the new offer–which they claim would save the government $1 billion over five years and up to $20 billion over the life of the program–to both the JPO and to the relevant congressional committees. They are awaiting a response to requests for a meeting with key DoD officials.
A spokeswoman for top Pentagon weapons buyer Ashton Carter said in response to the GE-Rolls announcement that the department remains firmly opposed to the continued development of a second F-35 engine and will advise White House accordingly.
“We have met in the past with GE/RR, but our position has not changed,” said Cheryl Irwin. “As [Defense Secretary Robert Gates] has said publicly many times, we will recommend a veto to the president if any legislation contains money for an extra engine.”
Gates has said that continued development of the F136 engine would siphon $2.5 billion from the F-35 effort, leading to fewer purchase orders for the aircraft itself. GE-Rolls and its supporters have argued that the five-year price would not be as high as $2.5 billion.
Lockheed Martin is developing the new stealth fighter in three variants for the Air Force, Navy and Marine Corps, as well as several foreign air forces.
The Defense Department has also emphasized that no foreign customers and all but one U.S. military service–the Air Force–would purchase only one of the two engines.
Congress has for the last four budget cycles undermined both the Bush and Obama administrations’ attempts to end the F136 program. Pratt & Whitney, a division of United Technologies [UTX], is building the primary F135 engine. Critics of the White House’s stance say that competition between Pratt and GE will inevitably drive down costs and guard against potential failure of a single manufacturer.
GE and Rolls executives said yesterday that development of their engine is more than 70 percent complete. Flight testing is scheduled to begin next year.
Dan Korte, president of Rolls’ defense division, told reporters that if an alternate engine program is abandoned and 5,000 or more F-35s are produced over 30 years, Pratt would hold a $100 billion monopoly. He added that continued funding is consistent with the Pentagon’s latest drive for competition among defense contractors.
“Instead of taxpayers shouldering the risk of production cost overruns, those risks fall squarely on the shoulders of contractors,” said Korte.
GE is seeking $485 million for fiscal year 2011 for F136 development. Company executives estimate that it will take $1.8 billion to complete the effort, contradicting the government’s $2.9 billion estimate.
Recent Government Accountability Office estimates have predicted that competition between the two engine makers could yield savings of up to 20 percent over the life of the program.