Pentagon Gets 8.8% Discount In $34 Billion F-35 Jet Deal (excerpt)
(Source: Reuters; published June 10, 2019)
By Mike Stone
WASHINGTON --- The U.S. Department of Defense has a “handshake” agreement with Lockheed Martin Co to cut 8.8 percent from the price of its latest order of F-35A fighter jet, shaving a year from the time frame in which each aircraft will cost less than $80 million, a Pentagon official said on Monday.
The Pentagon said over three years the agreement will be worth $34 billion for 478 F-35 fighter jets. It is preliminary and a final deal is expected to be sealed in August for the 12th batch of jets, one of the most expensive aircraft ever produced.
The preliminary agreement details the first year, and lays out agreed upon options for two additional years. The options are there because official purchases cannot be made until the U.S. Congress approves an annual budget for those years.
This year’s agreement will lower the cost of each F-35A, the most common version of the aircraft, to $81.35 million, Under Secretary of Defense Ellen Lord said, down from $89.2 million under a deal inked in August 2018.
Under the options covering the second and third years of the purchase, the price of each jet will drop below $80 million, Lord said. In those later years production would be around 160 jets per year.
The F-35 program has long aimed at growing the fleet to more than 3,000 jets and bringing the unit price of the F-35A below $80 million through efficiencies gained by ordering larger quantifies. (end of excerpt)
Click here for the full story, on the Reuters website.
Pentagon and Lockheed Martin Reach Handshake Agreement on F-35 Production Contract
(Source: Lockheed Martin; issued June 10, 2019)
The Pentagon and Lockheed Martin have reached a handshake agreement for the F-35 Lot 12 production contract, with options for Lots 13 and 14. Further information and quotes from senior leadership are below.
Statement from the Under Secretary of Defense for Acquisition and Sustainment Ellen Lord
"The U.S. Department of Defense and Lockheed Martin have made great progress and now have a handshake agreement on the Lot 12 production contract, with options for Lots 13 and 14. This is a historic milestone for the F-35 Enterprise, and marks the largest procurement in the history of the Department. The $34B agreement for F-35 Low Rate Initial Production Lots 12-14 will see the delivery of 478 F-35 aircraft, 157 for Lot 12, in support of our U.S. Military services, our Partner Nations, and our Foreign Military Sales customers.
“When the statutory certification is completed, we will be able to formally announce the final Unit Recurring Flyaway (URF) prices for each variant in each Lot. Until that time, I am proud to state that this agreement has achieved an estimated 8.8 % savings from Lot 11 to Lot 12 F-35As, and an approximate average of 15% URF reduction across all variants from Lot 11 to Lot 14.
“This framework estimates the delivery of an F-35A for less than $80M in Lot 13, one year earlier than planned. This agreement symbolizes my commitment to aggressively reduce F-35 cost, incentivize Industry to meet required performance, and to deliver the greatest capabilities to our warfighters at the best value to our taxpayers.
“I want to recognize the strong coordination and cooperation of our government and industry teams. The F-35 Joint Program Office team and our Industry Partner will now work to finalize the required statutory certification details with a planned formal award by August. Their work ensures that the F-35 remains an affordable, multi-mission, next generation joint strike fighter for our Nation, our Partners and our Foreign Military Sales Customers."
Statement from Greg Ulmer, Lockheed Martin Vice President and General Manager, F-35 Program
“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.
“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.”