Engine-funding battle could hurt Rolls-Royce

General Electric Co. has mounted an all-out effort to get its supporters in Congress to defy Defense Secretary Robert Gates when the House of Representatives votes on the $567 billion defense bill for fiscal 2011.

GE wants Congress to keep funding its backup engine for the F-35 Joint Strike Fighter. Gates says a second engine is a wasteful expense. Pratt & Whitney supplies the primary engine for the Lockheed Martin Corp. jet and opposes the GE program.

The decision could have a major impact on the Indianapolis operations of London-based Rolls-Royce Group Plc, a parter of Connecticut-based GE. Rolls-Royce is the area's second-largest manufacturer, behind Eli Lilly and Co., with about 4,300 local employees.

Gates wants to cut spending he considers excessive or wasteful, and has said he’ll ask President Barack Obama to veto the defense budget if it funds a second engine. The House’s defense panel added $485 million to continue the program.

The Senate Armed Services Committee sided with Gates on Wednesday night. As it did last year, the panel declined to fund the engine, committee Chairman Carl Levin, a Michigan Democrat, told reporters, without elaboration.

“The matter is going to be resolved” in a joint House- Senate negotiating conference if a final House bill “has money in it,” Levin said. The full House was due to consider an amendment to strip the money from its measure, perhaps later tonight.

House and Senate versions of the authorization legislation must be reconciled and the measure must be signed by President Barack Obama before becoming law. This legislation sets defense policy, and money it authorizes can’t be spent if it isn’t in a separate appropriations measure.

In dueling letters Wednesday, Gates and GE CEO Jeffrey Immelt each sought support from House members. Gates also sent Ashton Carter, the Pentagon’s top weapons buyer, to buttonhole individual lawmakers.

“Given the many pressing needs facing our military and the fiscal challenges facing our country, we cannot afford a business-as-usual approach to the defense budget,” Gates wrote to Representative John Larson, a Connecticut Democrat who supports Pratt & Whitney. Programs like GE’s alternate engine for the F-35 jet “are unaffordable luxuries,” he said.

Immelt, in a letter to all 435 members of the House, said letting Pratt & Whitney, a unit of United Technologies Corp., become the sole supplier would create a “$100 billion engine monopoly.” Competition, by contrast, would lower prices and let both suppliers maintain their workforce, he wrote.

Pratt & Whitney supporters are counting on Larson, who will propose an amendment to eliminate funding for the GE engine. Pratt’s final assembly plant is in East Hartford, Larson’s home town. Cosponsoring the amendment is fellow Democrat Chellie Pingree of Maine, whose district includes a Pratt & Whitney plant. Twelve other states are represented by other cosponsors.

“When you have the Pentagon, the Air Force and Navy saying they don’t want the engine, why go forward with a program that is essentially wasteful?” Larson said in a May 24 interview.

Gates may not be able to count on House Speaker Nancy Pelosi to drum up opposition to funding the GE engine because the issue is splitting Democrats along regional lines, said Winslow Wheeler, a former Senate defense appropriations staffer and author of a book on congressional defense politics.

For the Speaker “to not ‘whip support’ for the amendment, tells members ‘forget Gates,’” Wheeler said. “I would expect the votes to fall with the second engine — spending for everybody.”

The battle pits supporters of GE and its partner Rolls-Royce Group, who are clustered in Ohio, Indiana, Massachusetts and Virginia, against supporters of Pratt & Whitney in Maine, Connecticut, and Florida, states where Pratt has facilities.

GE counts among its allies the Heritage Foundation research institute in Washington and three major unions: United Auto Workers, International Union of Electrical Workers and Communication Workers of America. All have posted statements supporting the engine on their websites and are pressing lawmakers to back the program.

Adding weight to GE’s cause, Ohio’s Governor Ted Strickland wrote Gates Wednesday, saying cutting the engine funds would likely cost 1,000 jobs at GE’s plant in Evendale.

The pro-Pratt & Whitney coalition includes Amvets, a military veterans group and citizen watchdog organizations including Council For Citizens Against Government Waste, National Taxpayers Union and Taxpayers For Common Sense.

Larson’s amendment “should definitely rise to the top of the large pile attached to the bill,” said Laura Peterson, national security analyst for the Taxpayers For Common Sense.

“When you’ve got the president, secretary of defense, Pentagon acquisition chief and military service leaders all saying we don’t need this expensive engine, then lawmakers should be given a chance to stop it,” Peterson said.

Still, “it will likely be a close vote,” Peterson said “Industry is hitting the Hill hard.”

Pratt agrees with Gates’s argument that a second engine isn’t needed and that any additional investment in the GE engine might jeopardize the program by forcing the U.S. to cut the number of jets it plans to buy.

“It makes no sense to invest $2.9 billion to get a second engine,” David Hess, president of Pratt & Whitney told reporters. The additional cost is the Pentagon estimate to continue developing the GE engine. GE disputes this estimate, saying the additional cost is $1.8 billion.

The F-35 jet fighter, the Pentagon’s most expensive program at an estimated cost of about $328 billion, is designed to replace all other fighter aircraft, including the F-16, A-10, AV-8 Harrier and older F-18.

GE, the world’s biggest jet engine maker ahead of Rolls-Royce and Pratt, is fighting to supply the backup engine because it projects a worldwide market for the engines worth as much as $100 billion. The U.S. plans to buy about 2,473 jets and eight international partners may buy 700 more.

Many other U.S. jet fighters operate with a single engine supplier, including Boeing Co.’s F/A-18 whose powerplant is made by GE, Warren Boley, president of Pratt’s military engines unit told reporters. Lockheed’s F-16 jet is the only aircraft in the U.S. inventory powered either by a GE or Pratt & Whitney engine, he said.

For a program as large as the F-35, the Pentagon did not conduct a separate competition to pick the engine suppliers, GE’s Immelt wrote in his letter. When the Pentagon chose Lockheed to build the F-35, the plane maker picked Pratt’s engine after evaluating competing designs, Boley said.

Asked if Lockheed had evaluated engine designs and picked the Pratt model, Tom Burbage, Lockheed’s executive vice president for the F-35 program said, “It’s a stretch to say there was a competition for the F-35 engine.”

Lockheed was asked by the Pentagon to use a variant of Pratt’s F-119 engine that powers F-22 airplane because there were no engines that could meet the F-35’s power requirements during the prototype phase of the jet in the early 1990s, Burbage told reporters in Arlington, Va.