(Adds Pratt response paragraph 7-8, byline)
By Andrea Shalal
WASHINGTON, April 7 Pratt & Whitney, the
engine-making unit of United Technologies Corp, must
redouble efforts to lower the cost of the single F135 engine it
builds for the Lockheed Martin Corp F-35 fighter jet, a top U.S.
military official said on Monday.
Rear Admiral Randy Mahr, deputy director of the Pentagon's
$392 billion F-35 program, said Pratt had slowed its
cost-cutting after Congress in 2011 canceled an alternate engine
being developed by General Electric Co.
"We have reinvigorated the 'war on cost' that Pratt started
and then kind of slowed down on when they got the monopoly,"
Mahr told industry executives and military officials at an
annual conference hosted by the Navy League.
"In no uncertain terms, they've been informed they need to
continue to drive the cost down on that engine," Mahr told
reporters after his remarks at the conference.
The comments revealed continuing friction between the
program office that runs the Pentagon's costliest weapons
program and Pratt at a time when the F-35 program chief, Air
Force Lieutenant General Chris Bogdan has talked about improved
relations with Lockheed, the prime contractor that builds the
In 2012, Bogdan described relations between Lockheed, Pratt
and the government as the worst he had seen in two decades of
working on acquisition programs.
Pratt said it had invested $60 million in "a very
aggressive" cost-cutting program that had already lowered the
cost of the F135 engine by 40 percent.
"We are pursuing cost reductions in every aspect of the
program, including supply chain, configuration changes, process
improvements, and overhead," said Pratt spokesman Matthew Bates.
He said procurement delays affected costs.
Mahr said the government was close to reaching agreement
with Pratt on a seventh batch of engines for the new warplane
that is being developed for the U.S. military and its allies,
but declined to comment on the exact timing of a deal.
Bates said the company hoped to wrap up the negotiations by
the end of the second quarter.
The Pentagon finalized a contract worth $1.1 billion for 38
engines in a sixth batch last October, which pushed the cost of
the common configuration engine built for the Air Force and Navy
models down by 2.5 percent. It did not provide the exact cost.
Mahr said lawyers from the Pentagon's F-35 office were also
in talks with Pratt to publicly release details on the cost of
the engine, which the government buys separately from the jet.
Pratt argues it should not be required to disclose details
about the costs of the engine or spare parts, since that could
affect the company's ability to compete in a next-generation
engine procurement that the Pentagon is kick-starting with a new
$1 billion technology demonstration program.
Bates said other companies that built sole source military
engines had successfully argued against releasing pricing data
for such competition reasons in the past.
Mahr said the overall F-35 program is making steady
progress, although he said some technical issues still needed to
be to resolved, including improving the performance of a complex
computer-based logistics system called ALIS, and a recent crack
in a fan blade on a Pratt engine. The Pentagon was also pressing
the industry to lower the cost of building and operating the new
jet, and making it more reliable, he said.
(Reporting by Andrea Shalal; Editing by Jeffrey Benkoe and