The Blueprint for Affordability agreement seeks to implement cost reduction initiatives to bring down the F-35 production costs to the equivalent of the existing fourth generation fighter aircraft.
F-35 program executive officer lieutenant general Chris Bogdan said the cost cutting measures will benefit the government and the taxpayers.
"By 2019, we expect that the F-35 with its unprecedented fifth generation capability will be nearly equal in cost to any other fighter on the market, but with far more advanced capability," Bogdan said.
Under development in three variants, the F-35 is a multi-role fighter aircraft designed to conduct ground attack, reconnaissance and air defence missions.
The three companies will invest $170m between 2014 and 2016 in affordability measures to reduce the cost of each F-35 fighter from $100m to under $80m.
The companies would recoup their investment and profit only after the cost is reduced.
The US Government has an option to make additional invest between 2016 and 2018 if the initial cost reduction initiatives are successful. It can realise its savings through reduced F-35 unit recurring flyaway (URF) cost.
The reduced URF is expected to benefit countries purchasing F-35s as well.
Lockheed Martin F-35 Program executive vice president and general manager Lorraine Martin said: "Our industry team knows what is at stake given the current budgetary and global security demands to reach these cost milestones."
The agreement builds on the government’s Better Buying Power 2.0 initiative that encourages defence contractors to determine new methods for lowering the price of their goods and services.
Image: An F-35C Joint Strike Fighter in flight over the Chesapeake Bay, US. Photo: courtesy of Andy Wolfe.