Pentagon Says It Is Ending 14-Year F-35 GE Second Engine Program

The U.S. Defense Department told General Electric Co. (GE) and Rolls-Royce Group Plc (RR/) it was ending their 14-year-old project on a second engine for the F-35 Joint Strike Fighter.

The “notice of termination” was issued because Congress hasn’t included funding in the fiscal 2011 budget signed into law April 15 by President Barack Obama, the Pentagon said today in a statement.

GE spokesman Rick Kennedy said the engine team was “deeply disappointed” by the notice and “will work closely with our congressional supporters during the fiscal 2012 budget process” to restore funding.

“There is significant congressional willingness to revisit the funding debate,” Kennedy said. Congress hasn’t yet taken action on that budget. House Armed Services Committee Chairman Howard McKeon, a California Republican, has said he wants to continue funding. Defense Secretary Robert Gates, the primary engine opponent, says he plans to leave office this year although he hasn’t set a specific date.

GE also provides engines for the Navy’s F/A-18E/F fighter. The service is buying more of those planes as a hedge against additional F-35 delays. GE also competes for F-16 and F-15 engine work.

GE last year had $2.9 billion in defense contracts, out of total revenue of $150.2 billion, according to Bloomberg Government derived data. Jet engines represented as much as $2.2 billion of the total, according to the data.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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