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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.


"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.



"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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