Published: Sat, February 04, 2017
Economy | By Melissa Porter

Lockheed, Pentagon Reach $8.2 Billion Deal For 90 F-35s

Lockheed, Pentagon Reach $8.2 Billion Deal For 90 F-35s

Lockheed builds the F-35 in west Fort Worth, where it employs about 14,000 including 8,800 working on the who work on the stealth fighter program.

The contract is worth about $8.5 billion, a decrease of $728 million from the last batch.

"We're pleased to have reached an agreement with the US Department of Defense for the next 90 F-35 aircraft", the statement said.

Air Force Lieutenant General Chris Bogdan, the Pentagon's F-35 program manager, told reporters December 29 that the 10th contract would be valued at about $8 billion and that the 90 aircraft would be progressively cheaper than the eighth and ninth batches, in part because of Pentagon negotiations and in part because of economies of scale.

The price per unit will be $94.6 million for the F-35A, $122.8 million for the F-35B and $121.8 million of the F-35C.

The Pentagon echoed Lockheed Martin's assessment.

Lockheed said it was able to lower costs based on an increased number of requested planes, which allowed it to take "advantage of economies of scale and production efficiencies".

F-35 Program Executive Officer Lt. Gen. Chris Bogdan said in a statement the new contract "is a good and fair deal for the taxpayers, the U.S. Government, allies, and Industry".

"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 USA economy as we increase production year over year", said Jeff Babione, Lockheed Martin's F-35 vice president and general manager.

Originally lots 9 and 10 were to be negotiated together, but the Defense Department finalized the deal for lot 9 in November for $6.1 billion in what Lockheed called a "unilateral contract action" that wasn't mutually agreed upon. He even went so far as to ask one of Lockheed's competitors, Boeing, to "price out a comparable F-18 Super Hornet", as an alternative to the F-35.

"President Trump's personal involvement in the F-35 program accelerated the negotiations and sharpened our focus on driving down the price", Lockheed said in a statement Friday.

The unit price for an F-35A in current year dollars (including aircraft, engine, and fee) is $102.1 million. The other 35 jets will be sold to US allies, including Britain, Norway, Australia, Turkey, Japan, Israel and South Korea.

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