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Lockheed, Pentagon Strike $34B Deal for 478 F-35s

Jeff Brody

Lockheed Martin (NYSE: LMT) and the Department of Defense have finalized a $34B contract for the company to produce and deliver 478 F-35 Lightning II fighter jets for lots 12 through 14 in support of U.S. service branches, allies and foreign military sales clients.

Lockheed said Tuesday the latest agreement reduces the price of the F-35A variant to less than $80M per unit in both 13th and 14th batches, reflecting a 12.8 percent cost reduction from lot 11.

The contract covers the production of 291 jets for U.S. military branches, 127 units for allies and 60 aircraft for FMS customers and reaches an average of 12.7 percent cost reduction across all three F-35 variants from lot 11 to 14.

"With the F-35A unit cost now below $80 million in Lot 13, we were able to exceed our long-standing cost reduction commitment one year earlier than planned,” said Greg Ulmer, vice president and general manager of Lockheed’s F-35 program.

Ellen Lord, undersecretary for acquisition and sustainment at DoD and a 2019 Wash100 award winner, said in a statement issued Tuesday the agreement with Lockheed includes 149 F-35s for lot 12, 160 units for lot 13 and 169 aircraft for lot 14.

Air Force Lt. Gen. Eric Fick, F-35 program executive officer, said the contract includes 351 of the F-35A variant, 86 of F-35B model and 41 of the F-35C variant.

"With this award we see from a production perspective the most dramatic rate increases in the production line are now behind us," Fick said. "This dramatic production rate increase has proven to be challenging for the supply chain, but the comparatively minor quantity changes across lots 12 through 14 should give it some breathing room as we move forward."

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