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Pentagon, Lockheed in $34 billion F-35 deal

In what is billed as the largest procurement contract in the history of the Department of Defense (DoD), Lockheed Martin and the Pentagon reached a $34 billion “handshake agreement” for hundreds of F-35 Lightning II stealth fighters.

The agreement covers the purchase of 478 F-35 aircraft over low-rate initial production lots 12, 13 and 14. The Joint Program Office and Lockheed Martin are negotiating on the final details of the contract, which would cover aircraft delivered to the USA, as well as development partners in the Joint Strike Fighter programme and Foreign Military Sales customers.

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Lockheed Martin's F-35 Lightning II assembly line in Fort Worth, Texas

Lockheed Martin

“When the statutory certification is completed, we will be able to formally announce the final Unit Recurring Flyaway (URF) prices for each variant in each lot,” Ellen Lord, under secretary of defense for acquisition and sustainment, says on 10 June. “Until that time, I am proud to state that this agreement has achieved an estimated 8.8% savings from lot 11 to lot 12 F-35As, and an approximate average of 15% URF reduction across all variants from lot 11 to lot 14. This framework estimates the delivery of an F-35A for less than $80 million in lot 13, one year earlier than planned.”

The DoD plans for lot 12 to have 157 aircraft, an 11% increase from the prior lot, which is in production throughout 2019. The agreement for 478 aircraft over lots 12, 13 and 14 would nearly equal the total number of F-35s contracted in all prior lots: 501 aircraft.

Lockheed Martin is ramping up production to meet what it expects to be growing demand for its signature stealth fighter. The company sees worldwide sales of the fighter possibly reaching 4,600 units over the course of its lifecycle.

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