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.

Aug. 27, 2013 - By AARON MEHTA – Defense News

WASHINGTON — The Pentagon has reached an agreement in principle with Pratt & Whitney on the sixth batch of jet engines for the F-35 joint strike fighter, and the company hopes to submit a proposal for its next batch within 30 days.

The contract will cover the production of 36 F135 engines, along with two spares. Official cost details are still being worked out, but it will likely be similar to the $1 billion agreement for the fifth low-rate initial production (LRIP-5) lot reached in May.

“In general, the unit prices for the 32 common configuration engines, which are used to power both the conventional takeoff and landing (CTOL) aircraft and the aircraft-carrier variant (CV) aircraft, [were] reduced in LRIP 6 by roughly 2.5 percent compared to the previous LRIP 5 contract for 35 engines,” wrote officials from the Pentagon’s F-35 Joint Program Office (JPO) in a statement. “The unit prices for the 6 short takeoff and vertical landing (STOVL) aircraft engines [were] reduced in LRIP 6 by roughly 9.6 percent compared to the previous LRIP 5 contract for 3 STOVL engines.”

“This agreement represents a fair deal for Government and Pratt & Whitney,” US Air Force Lt. Gen. Chris Bogdan, the F-35 program executive officer, said in an official statement. “Driving down cost is critical to the success of this program and we are working together – in each successive contract – to lower costs for the propulsion system.”

The agreement closes negotiations on low-rate initial production (LRIP) lot six of engines.

Lockheed Martin, the F-35’s prime contractor, announced an agreement July 30 for the production of lots six and seven of the single-engine stealth warplane, although a Lockheed spokeswoman confirmed the agreement has yet to be finalized. The two buys cover the production of 71 new jets, including the first models built for Italy, Australia and Norway.

LRIP-6 procures 18 F-35A conventional takeoff models for the US Air Force, six F-35B jump-jet variants for the US Marine Corps and seven F-35C carrier models for the US Navy, as well as three F-35As for Italy and two F-35As for Australia. Deliveries of this block would begin in mid-2014.

With the LRIP-6 engine agreement in place, Pratt is hoping to build on the momentum to complete a joint package of LRIP-7 and LRIP-8 engines early next year.

“We’re focused on getting a proposal delivered to the JPO here in the next 30 days, certainly by the end of September, and hopefully we’ll have an agreement in the first quarter of 2014,” Chris Flynn, Pratt’s vice president of F135 engine program, said. He added that after LRIP-8, he hopes to reach an agreement on engine sales annually.

According to Flynn, costs have dropped 16 percent since LRIP-3 was agreed to, and 40 percent overall since the first production engine.

“When we’re able to deliver those types of results, I believe it helps the negotiations go a lot quicker,” he said.

The improved relationship between Pratt and the F-35 Joint Program Office — rocky throughout the early part of the year — has helped the deal move along.

In January, the Marine Corps’ F-35B variant was grounded following an engine problem during a test flight. The source of that problem was later identified as an improperly crimped line in the fueldraulic system. Nine days after the jump-jet variants were cleared to resume flights, the entire JSF fleet was grounded when a crack was discovered in one of the blades in the Pratt-designed engine.

The following week, Bogdan heavily criticized Pratt and Lockheed for “trying to squeeze every nickel” out of the F-35 program.

“We continue to improve the relationship from where I sit today,” Flynn said. “We have regular meetings with General Bogdan. He’s a demanding customer, but our intent is to deliver on our commitment. I think based on the improvements in our negotiations, the relationship continues to improve.”

Deliveries of LRIP-6 engines are set to begin in the fourth quarter of this year. Overall, Pratt has delivered 107 production engines.

May. 26, 2013 - By AARON MEHTA – Defense News

WASHINGTON — Pratt & Whitney has signed a $1 billion contract for the fifth batch of F-35 Joint Strike Fighter engines and expects to sign a sixth contract shortly, according to the company’s head of military engines.

The low-rate initial production (LRIP) contract with the US military includes 35 jet engines — 32 for installation and three spares — as well as sustainment, support and spare parts. The engines will power 22 of the F-35As for the US Air Force, three of the jump-jet F-35Bs for the Marine Corps and seven F-35C carrier variants for the Navy. Through the first four LRIPs, Pratt has delivered 98 engines to the F-35 program.

“We were able to close the LRIP-5 contract for about a 6 percent price reduction relative to LRIP-4, so we continue to get good cost reductions,” Bennett Croswell, president of Pratt’s military engines division, told Defense News last week.

As part of the contract, Pratt has taken on 100 percent risk on cost overruns, a move Croswell described as proof “we have confidence in our ability to hit the cost targets.” He also said that taking on risk may facilitate the signing of LRIP-6, which he hoped would be done “soon.”

During the interview, Croswell highlighted Pratt’s “War on Costs,” a 2009 plan to bring the price of the high-tech F-135 engine down to that of the older F-119 design, despite significant upgrades to thrust and weight.

Since the delivery of the first production representative engine, costs on the F-135 have dropped by 40 percent, Croswell said. Those cost savings are also seen in the contract for LRIP-5, which saw a 6 percent drop in cost from LRIP-4.

Despite two well-publicized engine problems this year, Croswell said he believes the relationship between Pratt and the Pentagon’s F-35 Joint Program Office (JPO) is strong.

“I think we have a great relationship with [Air Force Lt. Gen. Christopher Bogdan, the head of the JPO], and as long as we continue to deliver, I suspect we will continue to have that relationship.”

In January, the Marine Corps’ F-35B variant was grounded following an engine problem during a test flight. The source of that problem was later identified as an improperly crimped line in the fueldraulic system. Nine days after the jump-jet variants were cleared to resume flights, the entire JSF fleet was grounded when a crack was discovered in one of the blades in the Pratt-designed engine. The following week, Bogdan heavily criticized both Pratt and Lockheed for “trying to squeeze every nickel” out of the program.

“I think the JPO customer is satisfied with how we handled the situation. Gen. Bogdan makes great points. He thinks that contractors should accept more risk on the program. I agree with him,” Croswell said, pointing to Pratt’s internal investment of $60 million of its own money as an example of how the company has taken on some of that risk.

Engine Sales

Despite the movement on F-135 sales, Croswell said the company knows there are challenges on the horizon.

A series of decisions to push F-35 purchases to the right has halved expected F-135 sales since 2009. Combined with the end of production on the F-119 and slowed sales on the F-117 and F-100 engines, the company is facing a production gap Croswell referred to as a “bathtub.”

He expects a total of 75 engine sales in 2015. While that number should increase in later years as F-35 sales grow, it leaves the company in a tricky situation of planning for the future while in a low period.

To help bridge that gap, Croswell said Pratt is looking for ways to use existing engine designs for new platforms.

“A lot of the newer platforms that are being considered for the future, they’re not going to buy a thousand of them,” he said. “So across the board, we need to find ways to deliver good propulsion capability without large development costs. So we are looking at any off-the-shelf engine we have. We’ll look at our whole suite of engine capability and see what meets the future requirements.”

As an example, he pointed to the Navy’s X-47B unmanned aircraft, which runs on an F-100 jet engine, an older model designed for the Air Force’s F-15 and F-16 fighters.

Apr. 25, 2013 - by AARON MEHTA – Defense News

WASHINGTON — The head of the F-35 Joint Program Office told Congress that the program is continuing to improve, in part because of turnover at primary contractor Lockheed Martin.

Lt. Gen. Christopher Bogdan was testifying in front of the Senate Armed Services Committee Airland subcommittee when he was asked by Sen. John McCain, R-Ariz., to elaborate on previous statements the general had made about the relationship between his office and contractors Lockheed and Pratt & Whitney.

“My intention was to put [the contractors] on notice,” Bogdan told McCain. “I needed to make sure that they were committed in the long term to reducing costs in this program, and at the time when I made that comment I was not so sure. Doing business with both companies has been difficult and is getting better. I was seeing behaviors in which I thought over the next 30 or 40 years were not sustainable for us or either one of those industry partners.

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