GE, Rolls-Royce to submit fixed-price offer on F-35 Joint Strike Fighter

The industry team, which is locked in an intense battle with rival Pratt & Whitney, will submit a detailed proposal for a fixed-price contract to build a secondary engine for the jet.

ADVERTISEMENT
By offering the unsolicited proposal, the GE-Rolls-Royce team is hoping to force the Pentagon to accept competition and buy engines from both GE-Rolls-Royce and Pratt & Whitney going forward.

Pratt & Whitney already builds the primary engine for the F-35, and the GE-Rolls-Royce team was slated to build the secondary, or alternate, engine for the plane until the Obama administration decided earlier this year to oppose any funding for the second engine.

The GE-Rolls-Royce team enjoys some strong congressional support, particularly in the House, but also in the Senate.

GE spokesman Rick Kennedy said the team is going to submit a formal proposal for an engine it would deliver at a fixed price. Technically, the proposal is considered unsolicited because it is not part of any contract competition opened by the Pentagon.

Any negotiations with the Pentagon regarding a fixed-price contract would not take place for at least another year, Kennedy said. Any discussions would apply to engines delivered in the 2012-2013 timeframe, he added.

The formal proposal to the Pentagon, which will include more financial detail, follows a PowerPoint presentation GE and Rolls-Royce made on Sept. 1 to Pentagon officials, including the Joint Strike Fighter program executive officer, Marine Corps Maj. Gen. David Heinz, and the Pentagon’s director of the defense procurement policy, Shay Assad.

Kennedy said the team at that meeting presented the concept of a fixed-price contract that included some pricing information. Kennedy said the team cannot disclose any pricing information.

In media advertisements, the GE-Rolls-Royce team claims that “it is offering a fixed-priced contract,” consistent with acquisition reform legislation passed by Congress this year. The actual detailed offer will be submitted on Monday.

The GE-Rolls-Royce proposal comes at a critical time, as the future of the second engine hangs by a thread in conference negotiations between House and Senate committees. GE-Rolls-Royce hopes the move will win support for the continued development and also create competition with Pratt & Whitney to ultimately bring down the cost of producing engines for the jet.

“We are trying to show the president that we can accelerate the head-to-head competition with Pratt & Whitney by three years,” said Kennedy. Because Pratt’s engine is the primary engine, it is much further along in development and testing than the GE-Rolls-Royce one.

The two engine teams would have competed head to head for F-35 contracts starting in 2013. At that point, lawmakers and supporters of the alternate engine program argue that competition will keep the price down. Now, by submitting a fixed price, GE-Rolls-Royce hopes that Pratt & Whitney will also offer a competitive price much earlier.

Pratt & Whitney also offered to submit a fixed-price offer in July for its engine, but the F-35 program office made the decision to go ahead without a fixed price, said Erin Dick, a company spokeswoman. The company has also worked to reduce the costs of its engine and has presented its cost-reduction strategy to Pentagon officials. It has also said it remains prepared to submit a fixed-price proposal if Pentagon officials want to entertain that idea, according to Dick.

Meanwhile, Pentagon acquisition chief Ashton Carter initiated a high-level independent review of Pratt & Whitney’s cost structures. The results are due early next month.