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  • FARNBOROUGH: Lockheed drops F-35 price in Lot 11 ‘handshake agreement’

FARNBOROUGH: Lockheed drops F-35 price in Lot 11 ‘handshake agreement’

Lockheed Martin says it has made a “handshake agreement” with the F-35 Joint Program Office for the 11th lot of low-rate initial production.

The company declined to state the unit cost for LRIP 11 until the deal was finalised, though it says the agreement puts the F-35A Lightning II on track to cost $80 million per unit by Lot 14 in 2020.

“We continue to work together to definitise the contract for a total of 141 F-35s for the US services, International Partner Nations, and Foreign Military Sale customers,” said the company. “The total award value and per variant unit prices for the contract will be released when the contract is finalised.”

The Joint Program Office also declined to comment on the per unit price until the contract is finalised, but says the agreement would bring down the cost of the aircraft.

“The JPO and Lockheed Martin have made significant progress and are in the final stages of negotiation on the Lot 11 production contract,” the Joint Program Office says.

Reuters cited sources that said the cost per unit of the F-35A in Lot 11 would fall about 6% to about $89 million.

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Lockheed Martin says it believes its agreement on this latest group of aircraft would allow it to negotiate Lots 12, 13 and 14 as a block buy, which could allow for negotiating bulk discounts on materials, components and subsystems from its suppliers, and has ordered suppliers to ramp up production in anticipation of a larger commitment.

It is not clear what slowed the closing of the Lot 11 contract, as Lockheed Martin and the JPO have declined to comment on the delays. President Donald Trump’s intervention in Lot 9 and Lot 10 contract negotiations delayed the closing of those agreements.

In absence of a final contract, the Department of Defense awarded Lockheed an interim and partial contract for $5.58 billion in July 2018 to continue building LRIP 11 aircraft as negotiations continued. Lockheed received a $9 billion contract to build 90 F-35s for LRIP 10.

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