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Pentagon Gives Lockheed Billions to Keep Working on F-35s

The Defense Department has awarded Lockheed Martin Corp. a $4.49 billion undefinitized contract action to continue production on the latest batch of F-35 Joint Strike Fighters even as it continues to negotiate a firm price for the fifth-generation jets.

The UCA -- a type of contract in which bottom-line terms or prices have not been agreed upon before performance is begun -- stipulates a max price of $5.6 billion for Lockheed to continue working on the Low Rate Initial Production, or LRIP, lot 11 jets, according to the F-35 Joint Program Office.

Lockheed is "expending money to keep the production line going," JPO spokesman Joe DellaVedova told Military.com via telephone on Friday. So "we want to pay them for the work they they're doing [to] obligate funds for the Lot 11 aircraft."

The prices for individual jets are still being determined, according to the office.

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"We are confident the final negotiated Lot 11 aircraft unit prices will be less than Lot 10," officials said in a statement released by JPO.

 

The Pentagon aims to procure a total of 141 F-35s for the U.S. military services, international partner nations, and foreign military sale customers -- with deliveries starting in 2019 through 2020, the statement said.

The money continues production of 91 U.S. aircraft (63 requested by the military, and another 28 thanks to a Congressional plus-up) and "provides the contract vehicle for our International Partners and FMS teammates to obligate their $2.28B in funding within the month of July for their 50 total aircraft," the statement said.

"This first award is for U.S. aircraft, with the second award anticipated later this summer that will provide UCA authorization for the International F-35 Partners and Foreign Military Sales customers," it said.

"We appreciate the actions taken by the JPO to ensure delivery of F-35s to our warfighter customers," Lockheed officials said separately of the LRIP 11 announcement.

For the U.S., the funding would provide 48 F-35A aircraft for the Air Force, 18 F-35B aircraft for the Marine Corps, and eight F-35C aircraft for the Navy and Marine Corps.

DellaVedova said the remaining 17 U.S. aircraft come from previously awarded fiscal 2015 and 2016 aircraft contracts.

In February, DoD announced an $8.2 billion deal for its LRIP 10 batch of F-35 fighters. That batch cut costs by $728 million from the previous LRIP 9 lot, Defense Department officials said at the time.

Around that time, President Donald Trump said he had been negotiating with Lockheed officials to bring the cost down significantly since he became president-elect.

"I got involved in that about a month ago," he said during a meeting with business leaders at the White House on Jan. 30. "There was no movement, and I was able to get $600 million approximately off those planes."

The LRIP 10 contract will distribute 44 F-35As to the Air Force, 9 F-35Bs to the Marine Corps and 2 F-35Cs to the Navy, with other planes going to the United Kingdom, Norway, Australia, Turkey, Japan, Israel and South Korea, in 2018.

By comparison, the Pentagon in November handed down a unilateral contract action, dubbed LRIP 9, of $6.1 billion for 57 more F-35s after months of negotiations -- a move that disappointed Lockheed officials.

"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 at the time. "The government needs to recognize what an F-35 really costs for a fair fee."

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