Pentagon, Lockheed reach $34B deal for 478 F-35s as price per aircraft drops

Oct. 29 (UPI) -- A $34 billion deal between Lockheed Martin and the Pentagon, announced on Tuesday, calls for delivery of 478 F-35 fighter planes at a cost below $80 million each.

It is the largest contract for military materiel and the lowest price per plane for the F-35 series.

A statement by Lockheed Martin on Tuesday noted that the cost per plane in each of three delivery cycles known as Lot 12, Lot 13 and Lot 14 is reduced from the previously-delivered planes in Lot 11.

The U.S. Army's F-35A, for example, a variant of the plane with conventional takeoff and landing capabilities, will cost $84.2 million per plane in Lot 12, $79.2 million in Lot 13 and $77.9 million in Lot 14. The cost savings of the final lot, compared to Lot 11, is 12.8 percent per plane.

Similarly, the Lot 14 price of the short take-off and vertical-landing F-35B of the Marine Corps is $101.3 million per plane, 12.3 percent lower than in Lot 11, while the catapult-assisted take-off and arrested recovery, carrier-based F-35C of the Navy will cost $94.4 million each in Lot 14, a 13.2 percent reduction over Lot 11.

"This is the first time the F-35 Joint Program Office will award a significant F-35 aircraft procurement in the same fiscal year as the congressional appropriation year," Pentagon acquisition head Ellen Lord said. "We will reach a unit-recurring flyaway-cost-per-aircraft target of $80 million for a U.S. Air Force F-35A price by Lot 13, which is one lot earlier than planned, a significant milestone for the department."

The cost overrun of the plane and its constant need for repair and improvement has been an issue at the Pentagon and with the U.S. Congress.

Although it is regarded as the best stealth fighter plane made, faulty ejection seats, delays in software and problems with helmet displays have slowed production and increased costs. It is estimated last week that Lockheed Martin's facilities will not achieve full-scale production for another 13 months.

Lot 12 will produce 149 planes, with 160 in Lot 13 and 169 in Lot 14, for a total of 478 planes. The agreement includes 291 planes for the U.S. military, 127 for international partners and 60 to be sold through the Foreign Military Sales program. About 450 F-35s are currently in use by the United States and 18 allied countries.

The announcement came the day after the Defense Department awarded Lockheed Martin a $7.02 million modification to a previously announced contract, the first drawdown of the new landmark deal. The modification includes the procurement of 114 F-35s by the U.S. Army, Marines and Navy, as well as the military forces of Italy, Australia and Norway.

By noon on Tuesday, Lockheed Martin's common stock increased 2.68 percent in value on the New York Stock Exchange.