The U.S. Department of Defense and Pratt & Whitney signed a contract today for the sixth lot of F135 propulsion systems to power the F-35 Lightning II. Today's $508 million modification to the fully funded contract (N00019-12-C-0090) brings the total LRIP 6 contract value to $1.1 billion.
The low rate initial production (LRIP) contract covers 38 total engines, including program management, engineering support, production non-recurring effort, sustainment and spare parts. This agreement represents a significant milestone for the F-35 Program, and reflects the execution of cost reduction initiatives shared by the government and Pratt & Whitney.
The 38 total engines in the LRIP 6 contract include 36 install engines and 2 conventional takeoff and landing (CTOL) spare engines. The U.S. Air Force will receive 18 CTOL engines, the U.S. Navy will receive seven carrier variant (CV) engines, and the U.S. Marine Corps will receive 6 short takeoff and vertical landing (STOVL) engines. The LRIP 6 contract also includes the first CTOL propulsion systems for Italy (3) and Australia (2).
The prices for the 32 common configuration engines which are used to power both the CTOL and the CV aircraft reduced in LRIP 6 by roughly 2.5 percent compared to the previous LRIP 5 contract for 35 engines. The unit prices for the six STOVL propulsion systems reduced in LRIP 6 by roughly 9.6 percent compared to the previous LRIP 5 contract for three STOVL engines.
"The engine price has been going down and that trend will continue," Lt. Gen. Chris Bogdan, F-35 Program Executive Officer said. "I've met with Pratt & Whitney's senior leaders and they are working closely with the supply chain to continue to bring down the cost to the government."
The LRIP 6 contract maintains the same fixed price incentives terms Pratt & Whitney agreed to in LRIP 5 for propulsion systems; the company will continue to absorb 100 percent of all cost overruns. For LRIP 6, spare modules are now covered by these fixed price incentive terms. The government and Pratt & Whitney will share returns on a 25/75 split derived from any underruns in target cost.
"Increasing the volume and production rate for F135 engines will be critical to realizing further cost savings for the propulsion system. We remain focused on reducing costs, meeting our delivery schedule commitments, and increasing the tempo of contracting for LRIP 7 and LRIP 8," said Chris Flynn, vice president, Pratt & Whitney F135/F119 Engine Programs. "As the fleet is expanding, Pratt & Whitney is equally committed to driving down long-term sustainment costs. Our efforts will be critical to ensuring the overall success of the F-35 program and getting the Services ready for Initial Operational Capability."
Source: Pratt & Whitney, A United Technologies Company (NYSE:UTX)
Date: Oct 24, 2013