Lockheed Martin Co. has a nominal agreement on pricing for the next round of F-35 Joint Strike Fighter aircraft, for the first time cutting the unit cost for one model (the F-35A) below $80 million. Reportedly, the "handshake agreement" between Lockheed and the U.S. Dept. of Defense is worth about $34 billion over three years and covers 478 aircraft. It would be the first multi-year cost agreement in the long-term program.
The F-35 is a series of three, Stealth-enabled single-engine aircraft designed for ground attack and combat, and deployed by the U.S. Air Force, U.S. Navy, and U.S. Marine Corps, and the defense forces of multiple allied nations. More than 350 of the aircraft have been built and deployed since 2006, with Lockheed the lead contractor among several hundred suppliers.
The program is currently proceeding toward Lot 12, which is worth $22.7-billion and covers 255 aircraft, for the USAF, USN, and USMC, as well as some foreign military sales.
The F-35 program has been under steady scrutiny and criticism for the high cost of individual aircraft, and Lockheed and other contractors have made steady efforts to contain the costs for future deliveries. Also, in addition to the high production costs, the aircraft have incurred unexpectedly high maintenance and operating costs. In 2018 the Pentagon briefly stopped accepting most deliveries of new F-35 aircraft due to maintenance costs on more than 200 jets already in service with the U.S. Air Force, U.S. Marine Corps, and U.S. Navy.
Current reported delivery costs for the program are $89.2 million/unit for the F-35A, for conventional takeoff and landing; $115.5 million/unit for the F-35B, for short take-off and vertical-landing; and $107.7 million for the F-35C, for Catapult-Assisted Take-Off But Arrested Recovery.
Under Secretary of Defense Ellen Lord stated to Reuters that the new pricing agreement will deliver an estimated 8.8% savings from Lot 11 to Lot 12 for F-35A’s, and an estimated average of 15% cost reduction across all variants from Lot 11 to Lot 14.
“The unit price for all three F-35 variants was reduced and the agreement will include an F-35A unit cost below $80 million in Lot 13, exceeding the Pentagon and Lockheed Martin’s long-standing cost reduction commitment earlier than planned,” stated Lockheed Martin F-35 program general manager Greg Ulmer.