Pentagon, Lockheed Martin Reach Handshake Agreement on F-35 Production Contract

The U.S. Department of Defense (Pentagon) and Lockheed Martin have reached a handshake agreement for the F-35 Lot 12 production contract, with options for Lots 13 and 14.

The $34 billion agreement marks the largest procurement in the history of the Pentagon and is a historic milestone for the F-35 Enterprise. The agreement for F-35 Low Rate Initial Production (LRIP) Lots 12-14 will see the delivery of 478 F-35 aircraft, 157 for Lot 12, in support of U.S. Armed Forces, partner nations, and Foreign Military Sales (FMS) customers.

According to Ellen Lord, Under Secretary of Defense for Acquisition and Sustainment, the agreement has achieved an estimated 8.8 % savings from Lot 11 to Lot 12 F-35A’s, and an approximate average of 15% Unit Recurring Flyaway (URF) reduction across all variants from Lot 11 to Lot 14.

The final URF prices for each variant in each lot will be formally announced when the statutory certification is completed.

“This framework estimates the delivery of an F-35A for less than $80M in Lot 13, one year earlier than planned”, Ms. Lord said.

“With smart acquisition strategies, strong government-industry partnership and a relentless focus on cost reduction, the F-35 enterprise has successfully reduced procurement costs of the 5th Generation F-35 to equal or less than 4th Generation legacy aircraft. The handshake agreement, once finalized, will represent the largest F-35 production contract and the lowest aircraft prices in program history”, said Greg Ulmer, Vice President and General Manager-F-35 Program at Lockheed Martin.

“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. We look forward to working with the Joint Program Office to finalize the agreement and will share more details as the process continues”, he added.

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