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Pentagon Awards $6 Billion Contract Modification To Keep F-35 Production Rolling

Two Marine Corps F-35B Lightning II, assigned to Marine Fighter Attack Squadron (VMFA) 121, 3rd Marine Aircraft Wing, transit the Pacific Ocean on Jan. 9, 2017. US Marine Corps Photo

The Pentagon modified its current F-35 Lightning II Joint Strike Fighter contract with Lockheed Martin to include an additional $6 billion intended to keep the production line going as details of a future contract are negotiated.

The F-35 Joint Program Office (JPO) announced the deal late Wednesday. The new funding will pay for the manufacture of 255 F-35 fighters, to be divvied between the U.S. military and for sale to foreign militaries.

At the end of September, the Pentagon and Lockheed Martin signed an $11.5-billion contract to build Lot 11 of the F-35. This latest contract modification is for fighters being built as part of lots 12, 13 and 14.

The U.S. will receive 106 of the 255 F-35 fighters, with the Air Force receiving 64 F-35A models, the Marine Corp receiving 26 vertical lift short take-off F-35B variants and the Navy receiving 16 arrested landing, catapult launch F-35C variants, according to the JPO.

This contract modification, the JPO states, will, “enable us to deliver on our goal of an $80 million F-35A by 2020.”

The following is the full JPO contract announcement.

F-35 Joint Program Office Media Statement on LRIP 12 UCA

On 14 November the F-35 Joint Program Office (JPO) awarded a modification to the previously-awarded Low-Rate Initial Production Lot 12 (LRIP 12) advance acquisition contract. This award directs the continuation of production activity for all aircraft in the F-35 program’s LRIP 12 contract, as well as aircraft for several international customers in LRIPs 12, 13 and 14 (Fiscal Years 2018, 2019, 2020). This contracting funding strategy provides stability and a steady production rate over a defined period of time, which enables industry to plan and make investments that reduce overall cost and achieve greater manufacturing efficiencies.

Today’s contract action obligates $6 billion in funding from the U.S. Services, International Partners and our Foreign Military Sales customers for 255 F-35 aircraft. F-35 aircraft allocation includes; 106 F-35s for the U.S. Services, 89 F-35s for International Partners, 60 F-35s for our Foreign Military Sales customers. LRIP 12, 13 and 14 aircraft deliveries will begin in 2020, 2021 and 2022, respectively.

This award brings the Department of Defense into compliance with Congressional direction by placing all 20 FY18 (Lot 12) and 16 FY19 (Lot 13) congressional plus up aircraft on contract. It also establishes a $22.7 billion not-to-exceed contract threshold for LRIP 12 aircraft. This Undefinitized Contract Action (UCA) enables F-35 production to continue efficiently while the government and industry teams reach contract agreement. We are committed to reducing costs, and confident the final negotiated LRIP 12 aircraft unit prices will be less than LRIP 11, and enable us to deliver on our goal of an $80 million F-35A by 2020. In parallel, a separate Lot 12 propulsion UCA between the JPO and Pratt & Whitney is currently being negotiated.

Lockheed Martin Statement on F-35 UCA

This Undefinitized Contract Action will provide critical funds to ensure F-35 production and cost reduction efforts remain on schedule as we partner with the F-35 Joint Program Office to finalize the formal contract agreement. The acquisition approach for Lots 12-14 will deliver significant cost savings and is critical to achieving our joint goal of an $80 million F-35A for aircraft ordered in 2020. This is a smart approach for the taxpayer, the warfighter and for industry. We appreciate the government’s proactive action and partnership to maintain supply chain stability, reduce costs and ensure deliveries remain on track to meet growing demand around the globe.

Official DoD Contract Announcement

Lockheed Martin Corp., Lockheed Martin Aeronautics Co., Fort Worth, Texas, is being awarded a $22,712,874,822 not-to-exceed undefinitized contract modification to a previously awarded fixed-price-incentive-firm-target, firm-fixed-price advanced acquisition contract (N00019-17-C-0001) for 255 aircraft. This modification provides for the production and delivery of 106 F-35 aircraft for the U.S. services (64 F-35As Air Force; 26 F-35Bs Marine Corps; 16 F-35Cs Navy); 89 F-35s for non-Department of Defense (DoD) participants (71 F-35As, 18 F-35 Bs); and 60 F-35s for Foreign Military Sales customers (60 F-35As). The U.S. aircraft quantities are for the Lot 12 program of record plus fiscal 2018/fiscal 2019 aircraft quantity congressional adds. Work will be performed in Fort Worth, Texas (57 percent); El Segundo, California (14 percent); Warton, United Kingdom (9 percent); Cameri, Italy (4 percent); Orlando, Florida (4 percent); Nashua, New Hampshire (3 percent); Baltimore, Maryland (3 percent); San Diego, California (2 percent); Nagoya, Japan (2 percent); and various locations outside the continental U.S. (2 percent), and is expected to be completed in March 2023. Fiscal 2018 and 2019 aircraft procurement funds (Air Force, Marine Corps and Navy) in the amount of $3,505,522,468 (59 percent); non-DoD participant funds in the amount of $1,578,531,164 (26 percent); and Foreign Military Sales funds in the amount of $916,667,000 (15 percent) for a total of $6,000,720,632 will be obligated at time of award, none of which will expire at the end of the current fiscal year. The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity.