GE, Rolls extends fixed-price offer to more fighter engines

* Extend offer to F-35 engines bought through 2014

* Claim $1 billion cost savings over 5 yrs

WASHINGTON, April 27 (BestGrowthStock) – General Electric Co (GE.N: )
and Britain’s Rolls-Royce Group Plc (RR.L: ) said on Tuesday they
extended an earlier fixed-price offer for engines purchased for
the Pentagon’s F-35 fighter through 2014, in an effort to save
their multibillion dollar alternate engine from cancellation.

The two companies teamed up to develop a second engine to
power the Lockheed Martin Corp (LMT.N: ) F-35 fighter jet. The
Pentagon has proposed plans to terminate the program to build
that second engine, although Congress has rebuffed the
Pentagon’s attempts to kill the program in each of the past
four years.

Lawmakers are bracing for another fight this year,
especially since Defense Secretary Robert Gates has already
threatened to recommend a presidential veto if Congress funds
the GE-Rolls engine once again.

The primary engine for the new fighter is being built by
Pratt & Whitney, a unit of United Technologies Corp (UTX.N: ),
and the Pentagon argues that it would be too expensive to
develop both engines.

GE and Rolls said development of its F136 engine is more
than 70 percent done and flight testing will start next year.

By extending the earlier fixed-price offer to engines
purchased in 2012, 2013 and 2014, the GE-Rolls team said it
hopes to a create more competition with Pratt, saving the U.S.
government $1 billion over the next five years, and $20 billion
over the life of the F-35 program.

Dan Korte, president of Rolls’ defense division, said
funding for the GE-Rolls engine was “a vote against a
sole-source monopoly, which will raise prices and choke
competition across the sector for generations to come.”

Under the GE-Rolls offer, the companies would assume the
risk of meeting or beating price targets for early production
engines while creating pressure to drive costs lower.

They noted that production of the F-35 fighter could reach
5,000 to 6,000 aircraft over 30 years, creating a $100 billion
monopoly for Pratt if the Pentagon succeeded in killing the
alternate engine program, at a time when Congress is pushing
the U.S. government to move toward more competition.

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(Reporting by Andrea Shalal-Esa; Editing by Derek Caney)

GE, Rolls extends fixed-price offer to more fighter engines