LM Receives $7B F-35 Order, F-35A Price Dips Below $80M

 - October 30, 2019, 6:20 AM
A price tag of below $80 million is a powerful tool in the effort to sell more F-35As. (photo: U.S. Air Force)

On October 28, the Pentagon announced a contract modification worth just over $7 billion that covers the acquisition of 114 Lockheed Martin F-35 aircraft for U.S. forces and foreign customers. The procurement comprises 48 F-35As for the U.S. Air Force; 20 F-35Bs for the U.S. Marine Corps; nine F-35Cs for the U.S. Navy; 12 F-35As for the Royal Norwegian Air Force; 15 F-35As for the Royal Australian Air Force; and eight F-35As plus two F-35Bs for Italy.

In addition, this modification adds scope for the Air System Diminishing Manufacturing Sources integration, software data loads, critical safety items, non-recurring and recurring engineering, and the Joint Strike Fighter Airborne Data Emulator. The contract announcement notes that 57 percent of the work is to be conducted by Lockheed Martin at Fort Worth, Texas, with 17 percent being conducted outside the U.S. in the UK, Italy, Japan, and elsewhere.

At the same time, Lockheed Martin and the F-35 Joint Program Office have agreed to a new $34 billion pricing structure for 478 F-35s that sees the unit price of the F-35A conventional take-off/landing version fall below the goal of $80 million for the first time, ahead of an aggressive cost-reduction schedule.

The structure covers aircraft in production Lots 12, 13, and 14, comprising 291 for U.S. forces, 127 for F-35 international partners, and 60 for Foreign Military Sales customers. The cost of an F-35A and its engine falls from $82.4 million in Lot 12 to $79.2 million in Lot 13, and $77.9 million in Lot 14. The latter figure represents a 12.8 percent reduction compared with Lot 11 pricing.

Similar cost-savings have been achieved for the other two versions. The price of an F-35C carrier variant falls to $94.4 million by Lot 14, a reduction of 13.2 percent, while a Lot 14 F-35B STOVL aircraft will cost 12.3 percent less, at $101.3 million. The F-35B has always been the most expensive due to its sophisticated propulsion system.

The sub-$80 million unit price is significant as the F-35 competes for international business while also facing domestic competition for funding from Boeing’s Advanced Eagle. “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,” said Greg Ulmer, Lockheed Martin, F-35 program vice president and general manager.

Lockheed Martin also comments that the price includes the F-35’s embedded sensors and targeting systems, which would incur additional procurement and sustainment costs in the case of fourth-generation aircraft.