On Oct. 28, the Pentagon reached a final agreement with Lockheed Martin for procurement of the F-35 Lightning II.
The announcement was made as a contract modification, and the initial release of funds is more than $7 billion. The contract is expected to be worth about $34 billion – and lowers the cost per aircraft to around $80 million.
The agreement concludes years of negotiations between DOD and the company, and also guarantees production stability.
Lockheed Martin’s CFO, Ken Possenriede said Oct. 22 during the company’s earnings call that falling production costs will open up additional international sales opportunities. He went on to say that Lockheed should hit the $80 million target price about the middle of the multi-year contract.
In a statement, Lt. Col. Michael Andrews, spokesman for Pentagon acqusitions chief Ellen Lord, said, ““The U.S. Department of Defense and Lockheed Martin have made tremendous progress and now have an agreement regarding the production and delivery of F-35 Lots 12-14.
“This agreement represents our continued commitment to reduce F-35 cost aggressively, incentivize industry to meet required performance, and deliver advanced capabilities to our warfighters at the best value to our taxpayers,” he continued.
Specifically, the modification procures 48 F-35A aircraft for the Air Force, 20 F-35B aircraft for the Marine Corps, nine F-35C aircraft for the Navy, 12 F-35A aircraft for the government of Norway, 15 F-35A aircraft for the government of Australia, and eight F-35A and two F-35B aircraft for the government of Italy.
The above U.S. aircraft quantities are inclusive of fiscal 2019 (Lot 13) plus up aircraft.
In addition, this modification adds scope for the Air System Diminishing Manufacturing Sources integration, software data loads, critical safety items, red gear, non-recurring engineering, recurring engineering and the Joint Strike Fighter Airborne Data Emulator.
Work will be performed in:
Fort Worth, Texas 57 %
El Segundo, Calif., 14 %
Warton, United Kingdom 9 %
Cameri, Italy 4 %
Orlando, Fla., 4 %
Nashua, N.H., 3 %
Baltimore, Md. 3 %
San Diego, Calif. 2%
Nagoya, Japan 2%
and various locations outside the continental U.S. 2%
Work is expected to be completed in March 2023. Fiscal 2019 aircraft procurement (Air Force, Marine Corps and Navy); non-DOD participants; and FMS funds in the amount of $7,027,643,109 will be obligated at time of award, none of which will expire at the end of the current fiscal year. This modification combines purchases for the Air Force ($2,812,512,346); Marine Corps ($1,297,487,314); Navy ($612,389,812); non-DOD participants ($2,243,321,947); and FMS ($61,931,690) customers.
With this latest agreement, the total number of U.S. and allied F-35s on contract is approximately 978. It is believed that at least 3,100 will be built eventually.