Lockheed Martin Lowers The Price Of F-35 In A New Production Contract With Pentagon

September 28: The U.S. Department of Defense and Lockheed Martin have finalized an $11.5 billion contract for the production and delivery of 141 F-35 aircraft at the lowest per aircraft price in program history. The source at Lockheed Martin has confirmed the latest development.

"This agreement marks a significant step forward for the F-35 program as we continue to increase production, reduce costs and deliver transformational capabilities to our men and women in uniform," said Greg Ulmer, F-35 Vice President and General Manager. "As production ramps up, and we implement additional cost savings initiatives, we are on track to reduce the cost of the F-35A to $80 million by 2020, which is equal to or less than legacy aircraft, while providing a major leap in capability."

For the eleventh consecutive year, the cost of an F-35A was lowered.  The F-35A unit price including aircraft, engine and fee, is $89.2 million. This represents a 5.4 percent reduction from the $94.3 million it cost for an F-35A in Low-Rate Initial Production Lot 10 (LRIP 10). 

In LRIP 11, the F-35B unit cost was lowered to $115.5 million.  This represents a 5.7 percent reduction from the $122.4 million it cost for the short-takeoff and landing variant in LRIP 10. The F-35C unit cost was lowered to $107.7 million. This represents an 11.1 percent reduction from the $121.2 million it cost for the carrier variant in LRIP 10. The LRIP 11 agreement funds 91 aircraft for the U.S. Services, 28 for F-35 International Partners and 22 for F-35 Foreign Military Sales customers. Deliveries will begin in 2019.

"Driving down cost is critical to the success of this program," said Vice Admiral Mat Winter, F-35 Program Executive Officer. "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."

With stealth technology, supersonic speed, powerful sensors, large weapons capacity and global deployment, the F-35 is the most advanced the fifth-generation multi-role fighter aircraft. The F-35's ability, according to the Lockheed is to collect, analyze and share data as a powerful force multiplier that enhances all airborne, surface and ground-based assets in the battle space.

The F-35 program has expanded to 12 nations-9 partners and 3 foreign military sales customers- across the world taking off with the U.S. and expanding to U.K., Canada, Australia, Italy, Turkey, Norway, Israel, Japan and South Korea, The Netherlands and Denmark.  The United States has the maximum 2,456 F- 35 aircraft and deployed over to Europe, the Pacific, and, most recently, to the Middle East. 

According to Lockheed official, F-35 weapons system reliability continues to improve through a combination of hardware and software improvements, the latest contract is a demonstration of the program's progress and maturity, as industry and the government now set their sights on future acquisition approaches for the next three production lots to further reduce costs.

The development may have the resultant effect for India as Indian Air Force is lookout for 110 fighter jets through a global tender which includes the Lockheed Martin F -16 Block 70 among other contenders. Recently, Vivek Lall, Vice President, Strategy and Business Development, Lockheed Martin talking with BW Businessworld said: “Block 70 mission systems are completely new and leverage technologies from the F-35.”

Reducing the overall cost may have the desired effect in the process as Lockheed might send a strong signal to sweeten the deal for the 110 fighter aircraft with India.