OSD, GE Keep Talking F136 Price

Talks between the Pentagon and the makers of the F136 about a fixed price deal have not broken off, signaling either high-level interest about the idea or a clever way to keep the competitive heat on Pratt & Whitney. Or a bit of both.

“I was at the Pentagon yesterday (Wednesday). They are continuing to review the fixed price approach. I still feel very positive about their reaction,” Jean Lydon-Rodgers, president of the GE Rolls-Royce fighter engine team, told me on the last day of the Air Force Association’s annual conference.

Lydon-Rodgers said she believes Pratt’s recent push to lower the F135’s price that their competitor is feeling the competitive heat. Pratt & Whitney sources have said they plan to Maj. Gen. David Heinz, JSF program executive officer, a “hard goal” of a 30 percent reduction in cost for the F135 engine by the time it reaches the midpoint of production, at engine 250. In addition, in the short term they want to cut reduce costs for LRIP 4 — some 36 engines — by 10 percent from LRIP 3.

One of the F136’s biggest supporters on the Hill, Rep. Neil Abercrombie, put out a letter on Monday — the beginning of the AFA conference — urging his colleagues to support the F136 because it forces Pratt to compete.

Here’s the essence of the letter:

“One of our colleagues recently wrote, asking us to support this $110 BILLION non-competitive deal and sign a letter to Chairman Ike Skelton. She didn’t mention her district’s economic interest in this sole source contract. She never talked to me, the subcommittee chair responsible for this program. I would have explained that the Armed Services Committee has no opposition to her constituent’s engine,” Abercrombie wrote. “But the committee does strongly believe that competition, particularly in this program, provides the best outcome for the Nation. If competition doesn’t apply to a $110 billion program, where does it apply?”

In this debate — this wonderful, brawling, gloves-off battle for the bucks — it is that argument about competition that the administration and Pratt are going to find so difficult to naysay. The engine wars may or may not be relevant. But there are almost no red-blooded Americans who would dare deny that competition is a good thing.

Defense Secretary Gates says there is no business case for the F136. The administration argues it’s a waste of money and some defense observers call it pork. But that emotional argument about competition will almost certainly sweep those intelligent and well-meant points into the old dustbin of history.

Just ask Sen. Daniel Inouye when he sits down to hammer out the final version of the defense spending bill in conference.