The US government and Lockheed Martin on 21 November finalised a $4.7 billion contract for 43 F-35 Lightning II aircraft.

Included in the eighth low-rate initial production (LRIP) deal is $500 million in advanced procurement funding for later productions lots, according to the F-35 joint programme office. The deal includes 29 jets for the US military and 14 for various international customers.

Lockheed is under pressure to bring down per-unit cost of the F-35 lot over lot. It has met the mark with LRIP 8, which came in 3.5% less per aircraft than LRIP 7 in 2013 and 57% less than the US government's initial purchase, the JPO says.

"LRIP 8 contract terms continue to eliminate the government’s exposure to risk by having Lockheed Martin cover 100 percent of any cost overruns," the JPO says. " The government and Lockheed Martin will share returns derived from any underruns in target cost", at 20% for the government and 80% for Lockheed.

Per-variant costs are as follows: $94.8 million per airframe for the F-35A, $102 million per F-35B and $115.7 per F-35C, the JPO says.

An important caveat is that the prices quoted by Lockheed and the JPO do not include the F135 engines, which are bought separately from manufacturer Pratt & Whitney. The engine has been the focus of much scrutiny of late after one malfunctioned prior to an F-35A test flight, sparking a fire that ruined the jet and temporarily grounded the entire test and fielded fleets.

Pratt & Whitney has found both an interim and permanent fix for the third-stage rotor friction that caused the malfunction and has agreed to shoulder 100% of the cost to modify fielded engines and redesign future production examples. An engineering change proposal is expected in mid-to-late December, says JPO spokesman Joe DellaVedova. He did not yet know how much Pratt & Whitney would have to pay to correct for fielded engines and to redesign those in production.

The interim fix involves "pre-trenching" the third-stage stators that surround the rotor to prevent rubbing during aggressive flight manoeuvres. A permanent fix will be introduced to production engines at a later date.

Pre-trenching is done before the aircraft flies in order to allow the rotor to glide through its polymide surrounding stator without creating friction, DellaVedova says. The same affect can be achieved by flying each aircraft on a couple of carefully prescribed 1h sorties, which is being done with the 19 test aircraft.

"It is expected that the interim fix will go into fleet and production until a final configuration decision is made next year (and then qualifies later next year)," he says.

Under the LRIP 8 contract, the US government is buying 19 conventional takeoff and landing F-35As for the air force, six short-takeoff and vertical landing F-35Bs for the Marine Corps and four carrier-based F-35Cs for the navy.

It also includes the first two F-35As for Israel and Japan's first four of the same variant. Two A-model jets also will go to both Norway and Italy. The UK will receive four F-35Bs as part of the deal.

The contract also includes a concurrency clause that requires Lockheed Martin to split costs down the middle with the government for known concurrency changes arising from system development and demonstration, the JPO says.

"Newly discovered concurrency changes identified during the LRIP 8 production period will be authorized via engineering change proposals," it says.

The LRIP 8 contract contains performance-based payments, whereby the contractor will receive incremental payment as specified performance criteria are achieved along the production line until government aircraft acceptance.

Lockheed will begin delivery of the jets in 2016 and once the orders are filled, more than 200 of the jets will be in operation by eight countries. The company has delivered 115 F-35s as of 21 November.

The USA, eight Partner nations, and three Foreign Military Sales customers have announced plans to procure more than 3,200 F-35 aircraft over the life of the programme.