UPDATE 2-U.S. general suggests GE, Rolls pay for F-35 engine

* Says cost to finish development is $1.9 bln

* Says GE-Rolls funding could change minds at Pentagon

* Won’t rule out possible savings longer term
(adds Pentagon comment)

By Andrea Shalal-Esa

WASHINGTON, Oct 12 (BestGrowthStock) – The U.S. Air Force chief of
staff on Tuesday mapped out a possible compromise to end the
fight between the Obama administration and Congress over a
second engine for the F-35 fighter plane.

Gen. Norton Schwartz said if General Electric Co (GE.N: ) and
Britain’s Rolls Royce (RR.L: ) agreed to fund more of the
remaining development of their F136 engine this could diminish
opposition to funding the program.

The Pentagon has tried for years to save money by canceling
the GE-Rolls engine, which is being developed as an alternate
to an engine built by United Technologies Corp (UTX.N: ) unit
Pratt & Whitney.

Lawmakers, arguing that maintaining competition between the
engine teams will save money in the longer-term, have continued
to fund the controversial program.

Defense Secretary Robert Gates has repeatedly said he will
recommend that President Barack Obama veto any bill that funds
the second engine.

Speaking at the National Press Club on Tuesday, Schwartz
said he would not deny that maintaining competition in the
program might well result in long-term savings. But he said the
problem was that the Pentagon could not afford it now.

“If Rolls and GE are so confident that their product will
succeed and bring value to the taxpayer … it would be nice if
they put a little more against that $1.9 billion bill that
they’d like the taxpayer to undertake,” he said.

Asked if his suggestion could point toward a way to resolve
the issue, Schwartz told Reuters, “This is the secretary’s
business. My point was that if Rolls and GE (were) predisposed
to use their own investment dollars to field the engine, then
it might change people’s view.”

He said he did not know how much of that funding GE and
Rolls would have to cover.

GE spokesman Rick Kennedy said both companies had already
invested a “considerable amount” of money in the program, but
gave no details.

Pentagon spokeswoman Cheryl Irwin said Gates continued to
oppose the need for an alternate engine in the F-35 program.

She said development of the F136 GE-Rolls engine was
continuing with research and development funding appropriated
by Congress in fiscal year 2010 that had been carried over to
the new fiscal year, which began Oct. 1.

She said there were sufficient funds for the period through
Dec. 3 covered by a continuing resolution. “If the continuing
resolution is extended, the department will make a decision at
that time concerning further funding,” she said.
(Reporting by Andrea Shalal-Esa; editing by John Wallace and
Carol Bishopric)

UPDATE 2-U.S. general suggests GE, Rolls pay for F-35 engine