Pentagon, Lockheed Martin Agree to New F-35 Contract

September 28, 2018 12:01 PM
Workers can be seen on the moving line and forward fuselage assembly areas for the F-35 Joint Strike Fighter at Lockheed Martin Corp’s factory located in Fort Worth, Texas. Lockheed Martin photo.

The cost of the F-35 Lightning II Joint Strike Fighter is dropping by millions of dollars per plane under a new production contract agreed to by Lockheed Martin and the Pentagon, which was announced today. 

The $11.5-billion contract covers a batch of 141 fighters known as Low Rate Initial Production (LRIP) Lot 11. The bulk of the aircraft covered by this contract – 91 fighters – will be delivered to the Navy, Marine Corps and Air Force. The remaining 35 aircraft are for delivery to international partners, according to a Lockheed Martin statement.

“Driving down cost is critical to the success of this program,” Vice Adm. Mat Winter, the F-35 Program Executive Officer, said in a statement. “We are delivering on our commitment to get the best price for taxpayers and warfighters. This agreement for the next lot of F-35s represents a fair deal for the U.S. Government, our international partnership and industry. We remain focused on aggressively reducing F-35 cost and delivering best value.”

Under the LRIP-11 contract, Lockheed Martin was able to reduce the cost of each F-35 variant as follows:

  • The F-35A, the variant flown by the U.S. Air Force and most international partners, will cost $89.2 million per aircraft under LRIP-11, representing a 5.4-percent price drop from the $94.3-million cost per aircraft under the contract for the previous F-35 production lot.
  • The F-35B, the vertical takeoff and landing variant flown by the U.S. Marine Corps, will cost $115.5 million per aircraft under LRIP-11, representing a 5.7-percent price drop from the $122.4-million cost per aircraft under the contract for the previous F-35 production lot.
  • The F-35C, the arrested landing variant for aircraft carrier flight operations used primarily by the U.S. Navy, represents the most significant price drop. LRIP-11 F-35C variants will cost $107.7 million each, an 11.1-percent price reduction from the $121.2 million it cost to build each F-35C under the contract for the previous production lot.

Negotiators from Pentagon and Lockheed Martin have been hashing out details of the LRIP-11 contract for more than a year, with a focus on reducing costs. When speaking with reporters in March, Winter conceded he had hoped to finalize a deal by the end of 2017. At the time, he expected to announce the LRIP-11 contract in May 2018.

However, the lag in signing the LRIP-11 contract was not expected to delay the production of the aircraft. Component-parts are purchased a year before work on the first LRIP-11 aircraft starts. Winter said in March prep work for the LRIP-11 aircraft had already started.

The contract announced Friday appears to have accomplished much of what both sides had hoped. Winter had previously stated the LRIP-11 contract would increase production to 130 aircraft. With 141 aircraft under this contract, the entire production rate moves closer to what Lockheed Martin officials have long stated is their goal – to build 150 F-35 per year.

Ben Werner

Ben Werner

Ben Werner is a staff writer for USNI News. He has worked as a freelance writer in Busan, South Korea, and as a staff writer covering education and publicly traded companies for The Virginian-Pilot in Norfolk, Va., The State newspaper in Columbia, S.C., Savannah Morning News in Savannah, Ga., and Baltimore Business Journal. He earned a bachelor’s degree from the University of Maryland and a master’s degree from New York University.

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