Pratt, Pentagon Open F-35 Engine Price War

April 8, 2014 Source: Defense-Aerospace.com

PARIS --- Having canceled the GE/Rolls-Royce F136 alternate engine program for short-term savings, the Pentagon finds itself powerless to force Pratt & Whitney to reduce the cost of its own F135 engine, now the single-source powerplant for the entire F-35 program.

While many in Congress tried to block cancellation of the F136 program for several years, arguing that competition had very effectively reduced fighter engine acquisition costs in the past, the program was eventually killed in December 2011 when GE and Rolls-Royce finally decided to stop funding the project in the hope the Pentagon would restore funding. At the time, the Pentagon opted to cut F136 funding as part of a program-wide campaign to reduce the F-35’s ballooning costs.

Pratt & Whitney’s single-source, monopoly position is so strong that the F-35 Joint Program Office cannot even force the company to reveal the true cost of the engines, Rear Adm. Randy Mahr, deputy program manager of the F-35. “I can’t force somebody to go ahead and report something that by law they are not” required to report, he told Aviation Week at the Sea Air Space 2014 conference in Washington, DC on April 7 (see below).

The most recent F135 production contract, announced Oct. 23, 2013, covers 38 engines for Low Rate Initial Production (LRIP) Lot 7 and is worth $1.1 billion, or an average cost of $28.9 million per engine. More precise cost figures are not available.

At the time, Lt. Gen. Chris Bogdan, F-35 Program Executive Officer, said that "The engine price has been going down and that trend will continue." He added that "I've met with Pratt & Whitney's senior leaders and they are working closely with the supply chain to continue to bring down the cost to the government."

Six months later, Bogdan’s comments appear very optimistic. The following two stories show that Pratt & Whitney is dragging its heels in reducing engine costs, and that the company, which now holds an unassailable monopoly position on F-35 engine production, is virtually immune to Pentagon pressure.