The offer intends to create and accelerate competition between the JSF program's two engine suppliers (the second being Pratt & Whitney with the F135 engine), and to shift the risk of cost overruns from the government to defence contractors.
The offer could change the government's acquisition model for procuring approximately 150 F136 engines in the early years of the fighter program, allowing the government to know immediately its costs over this period.
Also, the approach is intended to drive lower pricing between the two competing engine suppliers.
With more than 70 per cent of its development complete, the GE/Rolls-Royce F136 engine program is poised for flight testing next year.
"We are announcing a fixed-price offer for F136 engines purchased in 2012, followed by further price reductions for engines procured in each 2013 and 2014," David Joyce, president and CEO of GE Aviation, said.
"We can create a competitive environment that will save the government $1 billion over the next five years, and $20 billion over the life of the JSF program."
"Funding the F136 engine means buying what's best for the US armed forces and the US taxpayer," Dan Korte, President - Defence, Rolls-Royce, said.
"It means a vote for choice and a vote against a sole-source monopoly, which will raise prices and choke competition across the sector for generations to come.
"Competition works, and we are already seeing that in action."
The company has argued that without competing engines for the fighter, a $100 billion monopoly will be handed to a single supplier.
The JSF engine program will ultimately reach $100 billion.
Recently, the Government Accountability Office anticipated a 20 per cent benefit from a JSF engine competition, using the F-16 engine competition as a comparison.