President Donald Trump on Monday said he’d negotiated $600 million off the most recent lot of F-35 fighters, meaning the value of the Lot 10 contract will be about $6.6 billion. “We cut approximately $600 million off the F-35 fighter,” Trump said at a meeting about small business in the White House. He said the savings apply to 90 of the fighters, and that the savings were due to personal talks with Lockheed Martin CEO Marillyn Hewson, with whom he met in December and again in January. The Pentagon awarded Lockheed $1.28 billion toward Lot 10 in late November, against a contract valued at about $7.2 billion. However, the total contract was “undefinitized” and negotiations have continued into the new year. After months of deadlocked negotiations, the Pentagon stopped negotiations on Lot 9 and simply awarded the company a contract, and Lockheed has not yet said whether it will appeal that decision.
At the Monday event, Trump also claimed to have solved the F-35’s problems. “There were great delays, about seven years of delays, tremendous cost overruns. We’ve ended all that, and we’ve got that program really, really now in good shape,” he said. However, major cost overruns on the F-35 ended in 2012, and costs have come down on every production lot since. At $6.6 billion for Lot 10, costs would be down about seven percent, or almost exactly what was forecast by the System Program Office and Lockheed over the last two years. Hewson, at the Lockheed fourth-quarter earnings call with analysts, said last week that she had not “slashed” company profits on the F-35 in her talks with Trump, but that price reductions were possible due to a long campaign of cost cutting, such as the “Blueprint for Affordability” initiatives, in which the company and government share investment in less expensive processes, design, or materials. Trump said Monday he appreciated “Lockheed Martin for being so responsive” to his demands for lower costs. The F-35 program office said it did not know when the definitized Lot 10 contract would be announced.