Lockheed Martin expects Lot 5 award on F-35 by year-end

Washington DC
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Lockheed Martin expects to receive by 1 January a long-delayed and contentious contract award worth up to $4 billion on the F-35 programme.

Negotiations on the Lot 5 tranche of F-35s have dragged on since early 2011, but have recently made progress, says Marillyn Hewson, an executive vice president in line to replace Lockheed chief executive Bob Stevens.

"We do feel confident we're going to get to closure on Lot 5 by the end of this year," Hewson says.

The company also hopes to close an at least undefinitised deal for a Lot 6 contract by the end of the year, she says.

The F-35 joint programme office did not immediately respond requests for comment.

Negotiations appeared to get bogged down last year after US government auditors found that the company overran the first four in a series of cost reimbursable contracts by more than $1 billion.

The US military promised lawmakers that it would negotiate tougher deals with Lockheed and reduce the risk of overruns to the taxpayer by converting the contracts to fixed-fee arrangements years early.

As the talks dragged on, the paralysis drew complaints from both sides. Lockheed chief executive Bob Stevens warned investors last November the company was exposed to $1.2 billion in unpaid bills, but that was one month before the company received the undefinitised contract.

In September, Maj Gen Christopher Bogdan cited the protracted negotiations on Lot 5 as an example of a poor working relationship between Lockheed and the government programme office.