Pentagon: Latest Contract Drops F-35A Cost Below $100 Million

 - February 3, 2017, 3:39 PM
A U.S. Air Force F-35A is shown at RAF Fairford in the UK after landing there last June. (Photo: Lockheed Martin)

The U.S. Department of Defense (DOD) and manufacturer Lockheed Martin have reached agreement on a 10th low-rate initial production (LRIP) lot of F-35 fighters, an order that for the first time sets the cost of the A-model variant below $100 million. Recent criticism of the program’s cost by President Donald Trump served to expedite the contract negotiations, Lockheed Martin acknowledged.

The DOD’s F-35 Joint Program Office (JPO) on February 3 announced the agreement-in-principle for 90 total fighters, including 55 for three U.S. military services and 35 for seven partner countries. Valued at $8.5 billion, the LRIP Lot 10 contract sets the cost of the F-35A conventional takeoff and landing variant and its Pratt & Whitney F135 engine at $94.6 million, the F-35B short takeoff and vertical landing variant at $112.8 million, and the F-35C carrier variant at $121.8 million.

The cost of the F-35A represents a 7.3 percent reduction from the LRIP 9 cost, while the F-35B cost is reduced by 6.7 percent and the F-35C by 7.9 percent, according to the JPO. The contract reflects $728 million in savings compared to prices under the previous contract, valued at $6.1 billion for 57 fighters.

In November, the JPO imposed the Lot 9 contract on Lockheed Martin after negotiations over price bogged down. Trump started crticizing the program cost with a tweet in late December and on January 30 claimed credit for helping wring $600 million in savings from the Lot 10 contract after meetings with Lockheed Martin CEO Marillyn Hewson.

The JPO and the prime contractor for years now have promised to reduce the unit cost of an F-35 through economies of scale and manufacturing efficiencies as the program transitions from development to production. In July 2014, the DOD announced a “Blueprint for Affordability” agreement with Lockheed Martin and suppliers Northrop Grumman and BAE Systems to reduce the F-35 price to that of a fourth-generation fighter by 2019 by implementing manufacturing process improvements. In 2015, Lockheed Martin’s then F-35 program executive vice president Lorraine Martin said the blueprint’s goal was to eventually produce an $80 million fighter.

In a statement accompanying the latest contract announcement, Lockheed Martin said Trump’s intervention hastened the negotiations. “President Trump’s personal involvement in the F-35 program accelerated the negotiations and sharpened our focus on driving down the price,” the manufacturer said. “The agreement was reached in a matter of weeks and represents significant savings over previous contracts. This is a good deal for the American taxpayer, our country, our company and our suppliers.”

Lockheed Martin’s current goal is to reduce the price of an F-35A to $85 million in 2019. The A-model represents about 85 percent of the overall number of jets in the program of record, the JPO and manufacturer said.

“With initiatives like Blueprint for Affordability and the natural learning curve, we are substantially bringing the cost of each aircraft down and at the same time the F-35 program will continue to add thousands of additional jobs to the U.S. economy as we increase production year over year,” said Jeff Babione, Lockheed Martin’s F-35 vice president and general manager.