P&W trims costs on latest F-35 engine deal

Washington DC
Source: Flightglobal.com
This story is sourced from Flightglobal.com

Pratt & Whitney will deliver a package of 38 F135 engines, spares and support items under a deal valued at a total of $1.1 billion, the company and the US government’s procurement office announced on 24 October.

The deal covering the sixth lot of low rate initial production includes a 2.5% unit price reduction for the conventional takeoff and landing and carrier variants of the engines that power the Lockheed Martin F-35, according to a joint statement by P&W and the joint programme office.

The price on the more complex and expensive short takeoff and vertical landing (STOVL) version dropped 9.6% compared to fifth lot of low rate initial production, the statement says.

Lt Gen Chris Bogdan, programme executive officer of the F-35, says P&W’s leaders are “working closely with the supply chain to continue to bring down the cost to the government”.

The award comes roughly three weeks after the joint programme office decided to withhold payments to P&W over the next four years of production. The 5% withholding covers the fifth through the eighth lots of low rate initial production.

The joint programme office imposed the withholding after the Defense Contract Management Agency determined that P&W still does not comply with four of 32 project management guidelines.

Under the earned value management system, P&W is supposed to improve how it plans work packages, estimates costs, integrates scheduling tools and documents its processes.

P&W has submitted a corrective action plan to the Defense Contracts Management Agency.

Meanwhile, P&W will continue delivering F135 engines under the new fixed price incentive fee structure adopted after the fourth lot of low rate initial production.

The terms mean that P&W must absorb all cost overruns and return 25% of any underruns to the US government.

Further cost savings, however, may only be possible if the governments involved in the programme buy more F135 engines, P&W vice-president for F135/F119 engines says in a statement.

“Increasing the volume and production rate for F135 engines will be critical to realising further cost savings for the propulsion system,” Flynn says.

P&W has delivered 115 production engines of all variants of the F135.