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Lockheed Reaches Cost-Cutting Target for F-35

A $34-billion agreement with the U.S. Dept. of Defense for a total of 478 Joint Strike Fighter jets reduces the unit cost below the $80-million target

Lockheed Martin Corp. and the U.S. Dept. of Defense reached an agreement worth $34-billion covering production and delivery of a 478 F-35 Lightning II aircraft, for the U.S. Air Force, U.S. Navy, and U.S Marine Corps, as well as F-35 program international partners, and foreign military sales.

The F-35 is a single-engine, Stealth-enabled aircraft designed for deployment for ground attack and combat, and available in three variants: F-35A, for conventional takeoff and landing (CTOL); F-35B, for short take-off and vertical-landing (STOVL); and the F-35C carrier-based variant for Catapult Assisted Take-Off But Arrested Recovery (CATOBAR) variant.

The agreement covers 291 aircraft for the USAF, Navy, and USMC; 127 for the F-35 International partners; and 60 for F-35 foreign military sales customers.

Lockheed is the aircraft’s primary contractor, along with Pratt & Whitney supplying the F-135 engine and BAE Systems providing the electronic warfare systems. The program has produced 435 aircraft since 2006, and is currently in its fourth-generation design and eleventh round of production. But, the program has been plagued by high unit production costs.

According to Lockheed, the new agreement will mean the program "meets and exceeds its long-stated cost reduction targets" for each of design variant. In particular, Lockheed noted that the F-35A unit process drops below $80 million per unit for both Lot 13 and Lot 14. This represents an estimated 12.7% decrease in the unit cost across all three variants from the F Lot 11 price.

Lockheed noted that the sub-$80 million/unit cost for an F-35 reflects the fifth-generation weapon system, and that this unit cost includes items that add additional procurement and sustainment costs to legacy fourth-generation aircraft.

"With smart acquisition strategies, strong government-industry partnership and a relentless focus on quality and cost reduction, the F-35 enterprise has successfully reduced procurement costs of the fifth-generation F-35 to equal or less than fourth-generation legacy aircraft," stated Greg Ulmer, Lockheed Martin, F-35 program vice president and general manager. "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."

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