* F136 engine said meeting or exceeding performance goals
* Pentagon calls program 'waste of taxpayer money'
(Adds reaction from Pratt and its congressional backers)
By Andrea Shalal-Esa
WASHINGTON, March 24 General Electric Co (GE.N)
will keep funding work on a second engine for the Lockheed Martin
Corp (LMT.N) F-35 fighter engine despite a stop-work order issued
by the Pentagon, the company said on Thursday.
GE said its F136 engine was meeting or exceeding performance
expectations and was nearly complete, while the primary F-35
engine built by United Technologies Corp (UTX.N) unit Pratt &
Whitney had racked up $3.4 billion in cost overruns and was facing
The U.S. Defense Department, which has been trying to
terminate the alternate engine for five years, issued a stop-work
order to GE and its British partner Rolls Royce (RR.L) on
Thursday, calling it "a waste of taxpayer money that can be used
to fund higher Departmental priorities."
Senate Democrats earlier this month released a budget plan
that would eliminate funding for the F136 engine. Money for the
program has already been stripped out of a measure that passed the
U.S. House of Representatives last month.
The Pentagon has tried to kill the program since 2007, but
Republican and Democratic lawmakers have repeatedly added it back
into the budget, citing concerns about associated jobs and use of
one engine design to power thousands of the fighters.
GE said on Thursday that several House and Senate leaders
supported the program, and they could still resurrect the program
by introducing amendments during a floor vote, or in the
House-Senate conference to produce a final bill.
A Pentagon spokeswoman said the order would last 90 days while
the department weighed the fate of the project, a decision that
will ultimately be up to Congress.
"This does not terminate the F136 contract," she said.
GE said it was disappointed that the order came before
lawmakers completed the fiscal year 2011 budget
"We feel so strongly about this issue, as do our congressional
supporters, that we will, consistent with the stop-work directive,
self-fund the F136 program through this 90-day stop work period,"
said company spokesman Rick Kennedy. He did not say how much the
decision would cost.
GE said it had "no intention of abandoning the warfighter and
taxpayers" or walking away from the $3 billion already invested in
the second engine, which the Senate last year described as a "near
Pratt said it appreciated the government's confidence in its
F135 engine, and noted that $2.7 billion of the cost overrun
reported for the engine program reflected changes in the
"The Pratt & Whitney engine is proven and dependable and
continues to fly with 700 flights and more than 1,000 flight hours
in the past four years," said spokesman Marty Hauser.
House Armed Services Committee Chairman Howard McKeon
criticized the Pentagon's move to halt work on the program, saying
the program was funded under the current stopgap measure in place
to fund the military through April 8.
"The secretary (of defense) should follow current law and not
preempt the congressional deliberation process by yanking funding
after a single amendment vote," he said.
He said handing Pratt & Whitney a sole-source deal valued at
well above $100 billion to make all the engines for thousands of
the new F-35 fighter planes amounted to "the largest earmark in
the history of the Department of Defense."
He said the decision was especially troubling because of the
Pratt engine's development delays, noting it would cost 445
percent more than expected to finish the work.
McKeon said he would explore "all legislative options" to
maintain competition in the $382 billion arms acquisition program,
the largest ever.
Senator Joe Lieberman, who heads the Senate Homeland Security
Committee, called the Pentagon's "stop work" order an essential
step toward focusing scarce Pentagon dollars.
(Reporting by Andrea Shalal-Esa and David Alexander; Editing by
Lisa Von Ahn, Phil Berlowitz)