Pratt & Whitney must be feeling the heat from the GE/Rolls Royce team if their latest posting on the company blog is any indication. As the defense authorization conference talks gather steam, these wars of words will be watched closely by staff and their bosses, also known as lawmakers.
"The manufacturers of the F136 alternate engine continue to manipulate the debate over continued funding of their back-up engine for the Joint Strike Fighter. Three weeks ago, the GE/Rolls team announced they had provided the Defense Department with an unsolicited “fixed price proposal”. Last week Colin Clark pointed out in his DoD Buzz blog that GE’s proposal was little more than a pledge to keep costs under control for a program – the alternate engine – that is so immature that such a promise is all but meaningless," the corporate author claims. "And today, GE/Rolls have once again announced that they are offering the government an unsolicited firm fixed price proposal. So now they are offering two firm fixed price proposals complete with the PR extravaganza that goes with such an announcement all in one month? That seems strange. GE may argue that their first offering was a “concept” and that this offering is an actual “proposal.” Why didn’t they just offer the proposal to begin with? Whatever semantics you use in naming both of these offers, it’s important to remember that both have been unsolicited by the government because the Joint Program Office has been clear that a FFP is not what they want at this stage of the program."
[I'm not going to quibble about the author's characterization of my story. You can read it here.]
GE spokesman Rick Kennedy slammed back in an email to me: "What is GE manipulating? We never said in early September that we offered a contract proposal. We met to formalize an aggressive fixed-price approach. Following that meeting, GE/RR submitted a binding letter of intent. Then, at the behest of the Pentagon, GE/RR submitted a formal contract proposal this week, with terms and conditions details."
Kennedy went on to argue that his company's efforts were helping drive Pratt to drop its price. "P&W responded by submitting a contract proposal for early, low-rate production engines on a cost-plus basis which they claim is even more competitive. OK, game on. The engine competition was accelerated by three years," he wrote.
Pratt, obviously anticipating some of GE's ripostes, virtually stuck out their tongues saying, "they ignore an inconvenient fact – Pratt & Whitney offered the same fixed price option to the Joint Program Office several months ago, and the government decided to stay with their current acquisition strategy, which Pratt & Whitney has respected and complied with... [Later] The company released information on their Low Rate Initial Production Lot 4 contract proposal, which offers double digit percentage cost savings over the previous contract for Lot 3, reflects aggressive efforts to reduce costs and provides the Joint Program Office specific protections against cost growth and incentives for even further cost reduction."
While Pratt officials have repeatedly told me they are not responding to pressure from GE/RR, it is clear they are feeling the heat.
Meanwhile, GE's Kennedy says the company's "strategy all along has been to change the JSF engine business model to accelerate acquisition reform at the very time P&W faces significant cost overruns and an investigation by the OSD over its cost structure. In order for the GE/RR engine to receive funding, the companies have to demonstrate a level of acquisition reform to satisfy the Administration."
While I don't think many people would believe GE is doing all this fundamentally to help the American taxpayer and our government, GE clearly has done a compelling job of packaging its arguments, especially the line about competition. How many Americans -- especially on the Hill -- will say they don't support economic competition?
