Pratt & Whitney says drive to lower F-35 costs "burned in our brain"

The head of Pratt & Whitney's military engine business said on Wednesday that driving down the cost of the F-35 fighter jet was "burned in our brain," but cuts sparked by U.S. budget woes could slow the effort.

Bennett Croswell, president of Pratt & Whitney Military Engines, said he met with the Air Force general who heads the Pentagon's F-35 program in Australia after he accused Pratt and F-35 prime contractor Lockheed Martin Corp of trying to "squeeze every nickel" out of the U.S. government.

Lieutenant General Christopher Bogdan told a conference on Tuesday that he had spoken with executives at Lockheed and Pratt & Whitney several times in the past few days and had received assurances that they had "heard my message.

Croswell said Pratt, the United Technologies Corp unit that makes the F135 engine that powers the F-35, began a "war on cost" in 2009 that was already yielding results. He noted that Pratt had invested heavily to cut the cost of the engine by 40 percent since the first one was delivered.

"Since we launched that 'war on cost' in 2009, that message was burned in our brain from the very beginning," Croswell told reporters. "I concur with the general; he's right. We've got to continue to drive the cost down of this system."

The Pentagon plans to buy 2,443 of the new radar-evading fighter jets in coming decades, with the total cost of developing and procuring the planes forecast at $396 billion.

Pratt submitted a proposal to the Pentagon's F-35 program last June for a sixth batch of engines, and looked forward to beginning negotiations on that contract, Croswell said.

Current plans for the sixth batch of 39 engines include 23 conventional engines for the U.S. Air Force and international customers, seven carrier variant engines for the U.S. Navy, six engines for the Marine Corps' short takeoff, vertical landing planes, and three spare engines, according to a Pratt spokesman.


Croswell said the company would have to get updated pricing data from its suppliers, who account for 80 percent of the work on the engine, if the automatic U.S. budget cuts that took effect on March 1 result in a reduction in the number of F-35 jets to be built in fiscal 2013.

Air Force and Navy officials have said the program might lose four to nine jets, depending on how the cuts are implemented. Bogdan has said that his top priority is funding the F-35 development program, which is only about a third complete.

"We have made a proposal for a certain number of engines, and if that number of engines gets adjusted, then we'll have to re-propose," Croswell said.

Congress is still negotiating with the White House about possible alternatives to soften the impact of the mandatory budget reductions, about half of which would come from the U.S. defense budget. It remains unclear if the cuts will be averted.

Croswell said he expected negotiations about the sixth F-35 engine contract to proceed more quickly than the last time since Pratt had already signed a $65 million agreement with the Pentagon on maintenance of those planes.

The company also agreed to shoulder 100 percent of any cost overruns on the fifth batch of engines, which meant there was less new ground to cover in the next contract, he said.

Pratt reached agreement with the Pentagon last month on the fifth batch of jet engines to power 29 jets and three spares, a deal that lowered the cost of the engines by 5.5 percent.

Croswell said the company expected to lower costs further in the sixth batch, although he declined to say by how much. If the number to be purchased declined, he cautioned, the savings could well be less than currently proposed. "Potentially it could reduce the reduction," he said.

(Reporting by Andrea Shalal-Esa; Editing by Dan Grebler and Paul Tait)