UPDATE 1-Pentagon in deal with United Tech on F-35 engines
WASHINGTON, Aug 27 (Reuters) - The U.S. Defense Department has reached an agreement with Pratt & Whitney, a unit of United Technologies Corp., to buy 38 engines to power a sixth batch of F-35 Joint Strike Fighter warplanes, the Pentagon said on Tuesday.
It did not disclose the full amount of the agreement, which was first reported by Reuters on Monday, but sources familiar with the deal said it would be worth over $1 billion.
The Pentagon's F-35 program office agreed on the terms of a contract for the sixth and seventh orders of F-35s with Lockheed Martin Corp, which builds the jets, in late July.
Pratt & Whitney is the sole producer of F135 engines for the radar-evading plane. The agreement in principle will be finalized in coming weeks.
In a statement, the Pentagon said the agreement reflected a continued reduction in the cost of the F-35 engines.
It said the price of each of the 32 common configuration engines, which power both the Air Force's conventional take-off variant of the F-35 and the Navy's carrier variant, would be about 2.5 percent lower than in the previous order.
The unit prices for the 6 engines that power the Marine Corps' short take-off and vertical landing (STOVL) aircraft, were about 9.6 percent lower compared with the previous contract, according to the statement..
"Driving down cost is critical to the success of this program and we are working together - in each successive contract - to lower costs for the propulsion system," said Air Force Lieutenant General Chris Bogdan, the Pentagon official who runs the F-35 program.
The deal includes 36 engines to be installed in aircraft and two spares. It also includes the first propulsion systems for planes to be sold to Italy and Australia.
Chris Flynn, vice president of Pratt & Whitney's F135 and F119 engine programs, said the company is "laser-focused" on reducing costs, meeting delivery schedule commitments and increasing the tempo of contracting for the next two batches of fighter jet engines.
Flynn told Reuters the company hoped to conclude agreements for the seventh and eighth sets of engine orders in the first quarter of 2014.
Pratt & Whitney has delivered 107 production engines for the F-35 to date and will start delivering engines covered by the latest contract in the fourth quarter.