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Pratt & Whitney, Pentagon Reach $1.1B Deal on F-35 Engines

Oct. 23, 2013 - 03:45AM   |  
By AARON MEHTA   |   Comments
An F-35A flies with afterburner over Edwards Air Force Base, Calif., in April. Engine maker Pratt & Whitney and the Pentagon agreed on final pricing on the sixth lot of F-35 Joint Strike Fighter engines for $1.1 billion.
An F-35A flies with afterburner over Edwards Air Force Base, Calif., in April. Engine maker Pratt & Whitney and the Pentagon agreed on final pricing on the sixth lot of F-35 Joint Strike Fighter engines for $1.1 billion. (Lockheed Martin)
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Aircraft engine maker Pratt & Whitney and the Pentagon reached an agreement for final pricing on the sixth lot of F-35 Joint Strike Fighter engines.

The deal, worth $1.1 billion, covers 38 total engines, including 18 of the conventional take off and landing (CTOL) engines for the US Air Force F-35A variant, seven engines for the Navy’s F-35C carrier variant, and six engines for the Marine F-35B jump-jet model. The Air Force will also receive two spare engines.

The low-rate initial production (LRIP) six contract also includes three CTOL propulsion systems for Italy and two for Australia, the first engines for those partner nations.

Pratt has consistently declined to share cost-per-unit, citing competitive reasons. However, a joint statement between the company and the Pentagon’s F-35 Joint Program Office (JPO) said the price on the engines used in the F-35A and F-35C models dropped roughly 2.5 percent from LRIP-5, while the F-35B engines decrease 9.6 percent compared with the last batch.

As with the LRIP-5, Pratt has assumed risk for cost overruns. However, LRIP-6 is the first batch where it’s responsible for cost overruns for spare modules. Deliveries are scheduled for the fourth quarter of this year.

“The engine price has been going down and that trend will continue,” Lt. Gen. Chris Bogdan, the F-35 Program’s executive officer, said in the joint statement. “I’ve meet 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.”

“Increasing the volume and production rate for F135 engines will be critical to realizing further cost savings for the propulsion system,” Chris Flynn, Pratt’s vice president of F135/F119 Engine Programs, said in the statement. “We remain focused on reducing costs, meeting our delivery schedule commitments, and increasing the tempo of contracting for LRIP 7 and LRIP 8.”

That volume rate may become a problem if the government-mandated cuts known as sequestration continue into the next year. On Oct. 23, top Pentagon officials told a congressional panel that if the cuts are not reversed, planned F-35 purchases will be reduced by four-to-five F-35As, along with one F-35B and F-35C apiece.

Pratt will not be able to collect on its entire $1.1 billion contract quite yet. Five percent of the company’s revenues from F-135 engine contracts are being withheld following the results of a Defense Contract Management Agency (DCMA), although the company hopes to have that issue resolved soon.

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