First, You Eliminate the Competition, Then You Refuse to Release Price Data for Competitive Reasons

I knew that the taxpayers would come to regret cancelling the alternate engine for the F-32, the F136, but I did not expect it to happen so soon:

After a long battle to edge rival General Electric out of the F-35 engine market, Pratt & Whitney succeeded in 2011. GE announced it would shelve the F136 after the Pentagon refused to fund it for four years, leaving Pratt in the coveted position of a sole-source engine supplier for the largest international fighter program ever.

Three years later, though, Pratt states that its position with its F135 engine is so potentially competitive it cannot comply with the customer's request to publicly share the target contract pricing data. At issue is Pratt's hope for more government funding by garnering a piece of a $1 billion next-generation fighter engine. Although proposed by the Pentagon, this program has yet to be funded by Congress.

“We have already made significant progress in advancing this technology and anticipate a competition will be held to develop this engine. Releasing engine pricing and cost data on the F135 would impact our ability to compete for this potential next-generation fighter engine program,” says Pratt spokesman Matthew Bates.

Senior Pentagon officials have, however, been urging Pratt to release at least some data in a transparency push for the highly scrutinized F-35. Bates cites a 40% drop in engine pricing since the first low-rate-initial-production (LRIP) lot in 2006. But the rate of cost reduction “slowed down when [Pratt] got the monopoly,” said Rear Adm. Randy Mahr, deputy program manager of the F-35. “We are trying to get that information out . . . But, I can't force somebody to go ahead and report something that by law they are not” required to report. Mahr made his comments at the Sea Air Space 2014 conference here this month. “This is a subject of legal debate but the Department of Defense feels this information should be in the public domain,” according to one defense official who requested to talk on background owing to the sensitivity of the issue.

The last known engine price for the F135 was cited by Air Force Lt. Gen. Christopher Bogdan for the third lot. The F-35A/C propulsion system cost $14 million. The F-35B, which includes a Rolls-Royce lift-fan designed for short takeoff and vertical landing, cost $38 million. He is frustrated at Pratt not bringing down F135 costs as predicted. “Pratt is not meeting its commitment,” Bogdan says. “It is as simple as that. Some of their business base has dried up on other programs and projects [and] they are spreading them right where they can, and I don't like that.”

Pratt & Whitney has declined numerous requests from Aviation Week over many months to release either its pricing data or its contractual cost targets.

I predicted that the long term budget consequences of eliminating the 2^nd engine would be negative, and that the F-35 advocates' desire to lower front end costs would be swallowed up by the price increases resulting from creating an engine monopoly.