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June 12, 2019

US DoD and Lockheed sign agreement to lower F-35A aircraft cost

The US Department of Defence (DoD) has signed a ‘handshake’ agreement with F-35 combat aircraft manufacturer Lockheed Martin for the 12th lot of aircraft, securing a significant discount on each jet.

The US Department of Defence (DoD) has signed a ‘handshake’ agreement with F-35 combat aircraft manufacturer Lockheed Martin for the 12th lot of aircraft, securing a significant discount on each jet.

The agreement pertains to the F-35 Lot 12 production contract and includes options for subsequent batches, lots 13 and 14.

The deal will allow the DoD to achieve cost savings of around 8.8% per F-35 aircraft when compared to the price agreed in the previous production lot.

Defense Acquisition and Sustainment Under Secretary Ellen Lord stated that as a result of the agreement, Lockheed Martin will deliver an F-35A for an estimated cost below $80m in Lot 13.

Lord said: “This is a historic milestone for the F-35 Enterprise, and marks the largest procurement in the history of the department.

“The $34bn 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 US Military services, our partner nations, and our foreign military sales customers.”

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The parties intend to reach a formal deal on the tentative agreement by August.

Lockheed Martin vice-president and F-35 programme general manager Greg Ulmer said: “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.

“As a result of the agreement, Lockheed Martin will deliver an F-35A for an estimated cost below $80m in Lot 13.”

“The handshake agreement, once finalised, will represent the largest F-35 production contract and the lowest aircraft prices in programme history.”

According to Reuters, the cost of each fighter jet would reduce from $89.2m agreed in August last year.

The news agency reported that the 13th and 14th batches would include approximately 160 F-35 units.

The unit recurring flyaway cost of less than $80m for each F-35 jet represents an integrated acquisition price for the aircraft.

Lockheed Martin manufactures the fifth-generation fighter jets in three variants, F-35A for the US Air Force, F-35B for the US Marine Corps and F-35C for the US Navy.

In addition to the US, international allies, including Australia, Japan, the UK, the Netherlands, Denmark, Canada, Italy, are partners in the global programme.

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