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Pentagon and Lockheed Martin agree on $49bn F-35 production contract

Lockheed Martin has announced it has reached a handshake agreement with the US Department of Defense for the F-35 Lot 12 production contract, with options for Lots 13 and 14, which also features a dramatic decrease in cost for the aircraft.

The agreement is worth US$34 billion and will see the delivery of 157 aircraft for Lot 12, with Lots 13-14 including 321 aircraft, according to Under Secretary of Defense for Acquisition and Sustainment Ellen Lord.

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"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 per cent savings from Lot 11 to Lot 12 F-35As, and an approximate average of 15 per cent URF reduction across all variants from Lot 11 to Lot 14," Lord said.

"This framework estimates the delivery of an F-35A for less than US$80 million in Lot 13, one year earlier than planned. This agreement symbolises my commitment to aggressively reduce F-35 cost, incentivise industry to meet required performance, and to deliver the greatest capabilities to our warfighters at the best value to our taxpayers."

Lockheed Martin vice president and general manager, F-35 program, Greg Ulmer, said the reduced cost exceeds their long-standing price reduction commitment much earlier than planned.

"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 fifth generation F-35 to equal or less than fourth generation legacy aircraft," Ulmer said.

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"The handshake agreement, once finalised, 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 US$80 million in Lot 13."

Pentagon and Lockheed Martin agree on $49bn F-35 production contract
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