Top F-35 makers downgraded in review

By Andrea Shalal-Esa and Jim Wolf

WASHINGTON (Reuters) - Top suppliers to the Pentagon's F-35 Joint Strike Fighter program received lower grades in their most recent performance review, the general running the program said on Wednesday.

Lockheed Martin Corp (LMT.N: Quote, Profile, Research, Stock Buzz), the prime contractor, and both engine makers -- Pratt & Whitney, a unit of United Technologies Corp (UTX.N: Quote, Profile, Research, Stock Buzz), and General Electric Co (GE.N: Quote, Profile, Research, Stock Buzz) -- received lower ratings for the latest six-month period than in the previous period, Maj. Gen. Charles Davis told the Reuters Aerospace and Defense Summit.

Davis said companies were graded on performance factors such as cost and schedule, but gave no details on what caused the latest ratings to drop.

The F-35 is a family of warplanes for the U.S. Air Force, Marine Corps, Navy as well as for export. Current Pentagon plans call for production of 2,458 aircraft in three versions over a 28-year delivery period.

An additional 738 aircraft are expected to be ordered by eight co-development partners: Britain, Australia, Italy, Canada, Denmark, Turkey, the Netherlands and Norway.

The ratings affect tens of millions of dollars in award fees on contracts and reflect performances during a six-month period, not the contractors' cumulative track record.

Pratt & Whitney's award fees could be docked in the next review period if an engine blade problem identified in August caused significant delays and cost increases, Davis said.

The problem was discovered in the third stage of one Pratt F135 test engine when an engine blade snapped off, he said.

United Technologies President and Chief Operating Officer Louis Chenevert told the Reuters Summit on Wednesday that the blade failure was due to high cycle fatigue, or break-down due to vibrations in the engine, and Pratt & Whitney had already fixed the problem.

"I stand here today with assurances from the Pratt team that the problem is well understood, and there is a fix in place," he said. "We have new blades in production."

Davis said it was not yet clear if the test engines Pratt has already built for the program needed to be repaired.

Davis said the company had already conducted 25 hours of tests on a second engine, submitting it to the same level of vibrations involved in the first one that failed, but those blades did not snap off.

"It could affect their award fee if it results in a significant cost growth to Pratt's budget," he said.

Davis said Lockheed, the Pentagon's No. 1 contractor by sales, received its highest-ever rating in the previous six-month review period.

Lockheed had no comment on the ratings issue, saying all questions about award fees were handled by the program office.  Continued...