Lockheed Martin, Pentagon reach deal for “lowest-priced” F-35s in program history

The U.S. Department of Defense and Lockheed Martin  (Bethesda, MD) have struck a deal on the lowest-priced F-35 Lightning II aircraft to date marking the first time the price for an F-35A is below $100 million. The contract is for 90 stealth fighter aircraft and represents more than a 60% price reduction for the F-35A variant since the first LRIP-1 contract. The F-35B and F-35C variants price were also substantially reduced. In total, the Lot 10 contract represents a $728 million reduction when compared to Lot 9.

"The LRIP-10 contract is a good and fair deal for the taxpayers, the U.S. Government, allies, and industry," says Lt. Gen. Chris Bogdan, F-35 Program Executive Officer. “We continue to work with industry to drive costs out of the program.”

The F-35A variant comprises approximately 85 percent of the program of record. The F-35A unit price in LRIP-10, including aircraft, engine and fee, is roughly seven percent lower than the previous LRIP-9 contract. Over the past two procurement lots (LRIP-9 and 10), the price of the F-35A has dropped 12 percent.

“With initiatives like Blueprint for Affordability and the natural learning curve, we are substantially bringing the cost of each aircraft down and at the same time the F-35 program will continue to add thousands of additional jobs to the U.S. economy as we increase production year over year,” says Jeff Babione, Lockheed Martin F-35 vice president and general manager.

This announcement was made after President Trump sent out a Tweet criticizing the cost of the F-35. Lockheed Martin’s CEO Marillyn Hewson gave Trump a “personal commitment” to cut the cost of the F-35.  

Currently, the F-35 program supports more than 1,300 suppliers in 45 states, directly and indirectly employing more than 146,000 people. There are also hundreds of suppliers around the world supporting the F-35 program creating thousands of international jobs. By the 2020s, at full rate production, direct and indirect job growth is projected to be more than 260,000 with a majority of those in the U.S.

In addition to procuring the air vehicles, this contract funds manufacturing-support equipment and ancillary mission equipment. Deliveries of 90 aircraft begin in early 2018. To date, more than 200 operational F-35s are operated by eight different nations including Australia, Italy, Israel, Japan, Netherlands, Norway, United Kingdom and U.S. In total, the F-35 program today plans to produce more than 3,000 aircraft with approximately 600 of those aircraft presently planned to be procured by our international allies.

Lockheed Martin statement:

“We’re pleased to have reached an agreement with the U.S. Department of Defense for the next 90 F-35 aircraft. The agreement represents $728 million in savings and a nearly 8 percent reduction in price over our last contract for the air vehicle delivered by Lockheed Martin and our industry partners. The increase in the number of aircraft in this agreement enables us to reduce costs by taking advantage of economies of scale and production efficiencies.

President Trump’s personal involvement in the F-35 program accelerated the negotiations and sharpened our focus on driving down the price. The agreement was reached in a matter of weeks and represents significant savings over previous contracts. This is a good deal for the American taxpayer, our country, our company and our suppliers.

The agreement ensures our men and women in uniform are equipped with the best technology available at the best value for the American taxpayer. It will also create 1,800 new jobs at our Fort Worth, Texas, factory and support thousands more jobs in our U.S. supply chain.”