Lockheed-DOD Lot 11 Deal Brings F-35A Unit Price Under $90M

Two USAF F-35As from the 4th Fighter Squadron at Hill AFB, Utah, fly over the base and the surrounding area on Feb 14. Lockheed Martin's new Lot 11 deal with the Pentagon is slated to slash the F-35A's unit price by 5.5 percent. Air Force photo by SSgt. Andrew Lee.

Under the Lot 11 contract just signed by Lockheed Martin and the Pentagon, the unit recurring flyaway price for the F-35A—the version the Air Force operates—has fallen to $89.2 million; a decline of 5.5 percent versus the $94.3 million price in Lot 10.

The overall Lot 11 contract is worth $11.5 billion, and includes 141 airplanes for the Air Force, Marine Corps, Navy, international partners, and foreign military sales customers.

The deal marks “the lowest per-aircraft price in program history,” a Joint Program Office spokesman said. This marks the 11th consecutive year that F-35 unit costs have dropped.

The agreement has been a long time in coming and program officials suggested they had reached a “handshake deal” in July, but details remained to be worked out.

The contract calls for 91 aircraft for the US, 28 for international program partners, and 22 for foreign military sales customers. The Air Force’s share is 53 F-35A airplanes, the Marine Corps will buy 24 F-35Bs, and the Navy 14 F-35Cs. Deliveries begin in January.

The Marine Corps jet is the priciest, as it features a “lift fan” vertically-mounted engine auxiliary and additional control ducting in addition to its main engine to allow the jet to achieve vertical takeoffs and landings. Its unit cost under Lot 11 is $115.5 million, 5.7 percent less than the $122.4 million each in Lot 10. The Navy’s C-model is heavier than the A-model due to its larger wings and elevators and heavier structure to cope with aircraft carrier launches and landings. Its unit cost in Lot 11 is $107.7 million, an 11 percent reduction from the Lot 10 price of $121.8 million.

In a statement, F-35 program director Vice Adm. Mat Winter said the agreement “represents a fair deal for the US government, our international partnerships, and industry. We remain focused on aggressively reducing F-35 cost and delivering best value.” Driving down cost is “critical to the success of this program,” Winter said.

Lockheed Martin Vice President and F-35 General Manager Greg Ulmer said the program is “on track to reduce the cost of the F-35A to $80 million by 2020, which is equal to or less than legacy aircraft, while providing a major leap in capability.”

Lot 11 is the last before the “Block Buy” of Lots 12, 13, and 14, during which allies and FMS customers can, if they wish, lump together three years of F-35 purchases into a single contract, with an expected substantial reduction in price. While the US is going along with the block buy to the effect of buying “economic order quantities” of parts and materials, the US will not be buying multiple years’ worth of entire aircraft. That would be considered a “multiyear contract” and the F-35 has not been deemed mature enough for that contract vehicle. The US will buy its F-35s in single-year lots through at least Lot 14.

More than 320 F-35s of all types have been delivered, and they are operating at 15 bases worldwide. According to Lockheed Martin, more than 680 pilots and 6,100 maintainers have been trained on the jet, and the fleet has passed 155,000 cumulative flight hours.

Winter is set to brief reporters on the Lot 11 contract and other aspects of the program on Monday.