Rolls-Royce and G.E. Cut Price to Build F-35 Engines

 Fighting to save a significant contract, General Electric and Rolls-Royce said on Tuesday that they had once again cut their prices in an offer to build alternate engines for the Pentagon’s Joint Strike Fighter.  The companies said they would build up to 150 engines at fixed prices, saving the government as much as $1 billion if a rival, Pratt & Whitney, matched the price. The defense secretary, Robert M. Gates, has said the Pentagon cannot afford to finish building the G.E. and Rolls-Royce engine. He has said he would recommend that President Obama veto any legislation that finances it. Congress has repeatedly blocked efforts to cancel the second engine over the last four years, and executives from G.E. and Rolls-Royce said on Tuesday that were trying to provide more ammunition to counter some of the Pentagon’s concerns. Congress ordered the development of the alternate engine years ago to keep from giving Pratt & Whitney, a United Technologies unit that has the main contract, a monopoly. The Joint Strike Fighter, a stealth aircraft that is also called the F-35, is the Pentagon’s largest program. The engines could account for $100 billion of the $328 billion that the Pentagon expects to spend for 2,400 of the planes, which will be used by the Air Force, the Navy and the Marines. G.E., Rolls-Royce and their supporters in Congress say that creating competition for the engine contracts could save up to $20 billion over the next 30 years and provide insurance against any problems with Pratt & Whitney’s version. David Joyce, the president and chief executive of G.E. Aviation, along with other company officials, said their offer meshed with the Obama administration’s efforts to shift more of the risks of cost overruns to contractors. But Mr. Gates and other officials have said that the cost of finishing the second engine could amount to wasteful duplication. Pentagon officials recently estimated that it would cost $2.9 billion over the next six years to finish developing the G.E. and Rolls-Royce engine and create the tooling to produce it. Officials from both companies said on Tuesday that they believed they could complete the work for $1.8 billion. The companies said they were willing to expand a fixed-price offer that they made last fall. Under the new offer, G.E. and Rolls-Royce, which is based in Britain, would provide a fixed-price for any engines the Pentagon bought in fiscal 2012, followed by a lower fixed-price in 2013 and 2014. They estimated this would provide up to $1 billion in savings over previous projections if Pratt & Whitney matched their prices. But Pentagon officials said on Tuesday that they were not swayed by the latest offer. Geoff Morrell, the Pentagon press secretary, said that Mr. Gates “does not believe the J.S.F. needs an extra engine. Period.” Pratt & Whitney also offered last fall to build its engines under fixed-price contracts, and it said in a statement on Tuesday that the latest offer from G.E. and Rolls-Royce was “simply a distraction.”



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