So am I!
Lockheed Martin and the Department of Defense have reached an agreement — but not signed a contract — on the fourth lot of low rate initial production for up to 32 jets (including one option reserved for the currently deadlocked Dutch government).
What does it mean to reach an agreement without signing a contract? Who knows! Maybe they agreed on the font size for the letterhead on the cover sheet.
Lockheed, meanwhile, says the value of the contract could be more than $5 billion. But that doesn’t mean the cost of each jet is at least $156 million, which is the mean. That number also includes production costs not associated with the flyaway price of the aircraft, such as extra tooling.
Why would the new contract include extra production costs even though the Department of Defense already gave Lockheed a $819 million contract two months ago to buy special tools and testing equipment for LRIP-4? Again, we don’t know the answer.
Here’s what we do know: LRIP-4 negotiators will have to work hard to keep the average price per aircraft on a downward trajectory.
In May 2008, Lockheed received a $2.2 billion contract to build 12 F-35s in LRIP-2, which averaged $183 million per jet excluding the engine and long-lead acquisition costs.
Fourteen months later, Lockheed received a $2.1 billion contract to build 17 F-35s in LRIP-3, or $123 million per jet with the same exclusions as above.
Now we’re waiting to see the value of the LRIP-4 order for 31 or 32 aircraft. If it’s anything like the $5 billion figure cited above, this blogger will need to see a lot more details to understand why the aircraft is getting cheaper.
Still wondering how much an F-35 costs?
So am I!