Lockheed 'Disappointed' by Pentagon's Latest F-35 Contract


The Pentagon and Lockheed Martin Corp. finally came to an agreement for 57 more F-35 Joint Strike Fighters after months of negotiations.

In an announcement Wednesday, the F-35 Joint Program Office said the Defense Department finalized a Low Rate Initial Production contract for the Lightning IIs -- a $6.1 billion deal.

Lt. Gen. Chris Bogdan, the F-35 Program executive officer, called the ninth batch of production aircraft, dubbed LRIP 9, "a fair and reasonable deal for the U.S. government."

"We will continue to negotiate in good faith with industry to keep the F-35 affordable and provide the best possible value for our customers," Bogdan said in a statement.

Officials at Lockheed Martin have a different assessment.

"We are disappointed with the decision by the Government to issue a unilateral contract action on the F-35 LRIP 9 contract," the company said in a statement.

The government and Lockheed haven't signed a deal for a full batch of F-35s since 2014. The Pentagon is still negotiating LRIP 10, which was supposed to be signed alongside LRIP 9.

"We didn't agree on this contract, but the government just handed this on us," an industry official close to the 18-month-long negotiated deal told Military.com on Wednesday. "The government needs to recognize what an F-35 really costs for a fair fee."

The source said the unilateral decision does not address fundamental issues in manufacturing the F-35s, such as risk assessment and delivery schedules.

The LRIP  9 deal stipulates 42 F-35As, 13 F-35Bs and 2 F-35Cs with a delivery projection in early 2017; the new price "represents a 3.7 percent reduction (weighted average) from the LRIP 8 contract," the program office said. A savings cap resulted in per unit cost reductions of approximately $1.1 million for LRIP 9 aircraft.

The LRIP 8 contract, totaling 43 single-engine jets, was $4.7 billion, including $500 million for advance procurement, according to Aviation Week.

Once production of LRIP 9 aircraft is completed, more than 250 F-35s will be in operation by eight nations, the office said.

The deal comes amid reports that the program needs another $500 million to finish development of the F-35, the most expensive U.S. weapons program. The request would go into the 2018 defense budget proposal.

The Pentagon also has been pushing a separate block buy for international customers, defense officials have said, to create economies of scale and lower the individual unit price of planes for allies.

Story Continues