Lockheed Martin [LMT] said yesterday it reached an agreement in principle with the Defense Department on a new batch of 71 F-35 Joint Strike Fighters, Lots 6 and 7, with unit prices for the new buys between four to eight percent less than previous contracts.
Lockheed Martin said in a statement cost details will be released once both contracts are finalized, but the company said low-rate initial production (LRIP) Lot 6 unit prices are roughly four percent lower than the previous contract and Lot 7 unit prices will show an additional four percent reduction. Lockheed Martin said the Lot 7 price represents about an eight percent reduction from the Lot 5 contract signed in December.
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| A F-35 refuels via a KC-135 aerial refueling tanker. Photo: Air Force. |
A Lockheed Martin executive said last week the new buys would add between $4.5 billion and $5 billion to the company’s 2013 order tally (Defense Daily, July 24).
The new contracts will also include the first F-35s for Australia, Italy and Norway and the fourth F-35 for the United Kingdom. In addition to procuring the air vehicles, the contracts also fund manufacturing support equipment and ancillary mission equipment. Deliveries of 36 United States and partner nation aircraft in lot 6 will begin by mid-2014 and deliveries of 35 U.S. and partner nation aircraft in Lot 7 will begin by mid-2015, according to Lockheed Martin.
Israel and Japan have also announced plans to purchase the jet under Foreign Military Sales (FMS) agreements.
The agreement in principle reached between DoD and Lockheed Martin do not include the jets’ propulsion systems. The Lot 6 engine contract is currently being negotiated between DoD and F-35 engine manufacturer Pratt & Whitney, a division of United Technologies Corp. [UTX]
The Lot 6 and Lot 7 aircraft will join the 95 F-35s contracted through Lots 1-5. Sixty-seven F-35s to date, including test aircraft, have been delivered from Lockheed Martin’s production facility in Fort Worth, Texas.
Lockheed Martin is the F-35’s prime contractor with subcontractors BAE Systems and Northrop Grumman [NOC]. The U.S. plans to buy 2,443 F-35s for the Air Force, Navy and Marine Corps at a total cost of $391 billion, up roughly 70 percent over a decade (Defense Daily, June 20).