Pentagon, Lockheed Martin reach handshake agreement on F-35 production contract on more-favorable terms

Pentagon’s No.1 weapons supplier Lockheed Martin Corp has announced a handshake agreement with the U.S. Department of Defense for the next F-35 Production contract – at the lowest per aircraft prices in program history.

In an announcement said that the Pentagon and Lockheed Martin have reached a handshake agreement for the F-35 Lot 12 production contract, with options for Lots 13 and 14. Further information and quotes from senior leadership are below.

The agreement includes 157 jets in lot 12, and comes with an estimated 8.8 percent Unit Recurring Flyaway cost savings from the previous lot. While the Pentagon did not provide costs per aircraft in its news release, that would amount to about $81 million per F-35A conventional takeoff and landing model compared to $89.2 million for an F-35A in lot 11.

Also, a statement from the Under Secretary of Defense for Acquisition and Sustainment Ellen Lord said that: “The U.S. Department of Defense and Lockheed Martin have made great progress and now have a handshake agreement on the Lot 12 production contract, with options for Lots 13 and 14. This is a historic milestone for the F-35 Enterprise, and marks the largest procurement in the history of the Department. The $34B agreement for F-35 Low Rate Initial Production Lots 12-14 will see the delivery of 478 F-35 aircraft, 157 for Lot 12, in support of our U.S. Military services, our Partner Nations, and our Foreign Military Sales customers.

The price of the F-35B short takeoff and landing variant and F-35C carrier variant also dropped in lot 12, said Greg Ulmer, Lockheed Martin Vice President and General Manager, F-35 Program.

“With smart acquisition strategies, strong government-industry partnership and a relentless focus on cost reduction, the F-35 enterprise has successfully reduced procurement costs of the 5th Generation F-35 to equal or less than 4th Generation legacy aircraft. The handshake agreement, once finalized, will represent the largest F-35 production contract and the lowest aircraft prices in program history. The unit price for all three F-35 variants was reduced and the agreement will include an F-35A unit cost below $80 million in Lot 13, exceeding the Pentagon and Lockheed Martin’s long-standing cost reduction commitment earlier than planned. We look forward to working with the Joint Program Office to finalize the agreement and will share more details as the process continues.”