Lockheed Martin [LMT] and the Defense Department have agreed on a new $11.5 billion contract that drops the price of an F-35A below $90 million for the first time.
The new contract, which covers 141 F-35s and will go into effect in 2019 with low-rate initial production (LRIP) Lot 11, represents an average price reduction of 9.2 percent across the joint strike fighter’s three variants.
Under the new pricing structure, a conventional-takeoff-and-landing F-35A will cost $89.2 million, down 5.4 percent from the $94.3 million one cost in LRIP 10. The short-takeoff-and-landing F-35B, the most expensive of the three variants, will cost $115.5 million, down 5.7 percent from its LRIP 10 price tag of $122.4 million. The carrier-compliant F-35C’s price has been lowered 11.1 percent, to $107.7 million from $121.2 million.
“Driving down cost is critical to the success of this program,” Vice Adm. Mat Winter, executive officer of the F-35 program, said. “We remain focused on aggressively reducing F-35 cost and delivering best value.”
The price cut marks a step closer to the goal of an $80 million F-35A that Lockheed Martin has long chased.
“As production ramps up and we implement additional cost savings initiatives, we are 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,” said Lockheed Martin Vice President and General Manager of F-35 Greg Ulmer.
This contract marks the 11th consecutive year that Lockheed Martin and DoD have cut prices on the F-35. To reach the $80 million unit cost goal, another 10.3 percent will need to be shaved off of F-35A prices.