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Latest deal for 31 F-35s shows slight price decline

Lockheed Martin has finalised a nearly $3.5 billion contract to deliver 31 more F-35s at a slightly lower price than last year.

The contract award, announced late on 19 November, is a key boost for Lockheed's F-35 production programme as top Department of Defense officials are scheduled to meet on 22 November to review possible new delays and cost overruns on the development side.

The $3.5 billion award is the third contract Lockheed has received as part of the fourth lot of low-rate initial production (LRIP-4), which will be delivered in fiscal year 2013.

The DoD also awarded a $306 million contract last year for long-lead production items. And on 19 July, the US Navy placed an $819 million contract to buy special tools and test equipment required to support LRIP-4.

The combined contract value of $4.6 billion means the average cost per aircraft is over $148 million, or about 3% less than a nearly $153 million average listed contract price for 17 LRIP-3 jets. Those numbers do not include costs to develop the F-35 so far.

 Lockheed Martin F-35 JSF, Lockheed Martin
© Lockheed Martin

But the contract represents a major shift for the programme. For the first time, Lockheed agreed to sign a fixed-price deal, meaning that the contractor assumes more of the risk on cost overruns.

The LRIP-4 contract doubles the amount of production F-35s on order to 62 jets, even as Lockheed has completed only the first 10% of the flight-test programme.

The latest deal includes orders for 16 short take-off and vertical landing F-35Bs for the US Marine Corps, 10 conventional take-off and landing F-35As for the US Air Force, four carrier-based F-35Cs for the US Navy and one F-35B for the UK. The latter recently announced plans to shift its production commitment to the Joint Strike Fighter programme to the F-35C variant.

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