Lockheed Seeks Deal for Fifth Batch of F-35s

Lockheed Chief Executive Robert Stevens told a Morgan Stanley investor conference that discussions with the U.S. Defense Department were ongoing, but an agreement could be reached by the end of the year.

"I think it's possible that we can do that," Stevens said.

The contract discussions between Lockheed and the Pentagon began formally in December 2011 and have dragged on much longer than initially expected, with government officials insisting on extremely detailed pricing data.

In January, Lockheed officials told analysts the contract could be signed in the second or third quarter. Then in July, Chief Financial Officer Bruce Tanner told analysts that he expected a deal "in the not-too-distant" future.

Much of the work on the fixed-price contract has been completed, but the two sides are still about 5% apart on the final financial details, said one source familiar with the talks who was not authorized to speak publicly.

Stevens gave no further details on the contract talks, but says Lockheed was making progress on testing the aircraft, and was working to resolve lingering challenges on the sophisticated helmet that will be used by F-35 pilots and the complex software required for the program.

He said Lockheed had delivered 16 of the 30 jets it was due to deliver this year, and was continuing to press for additional international orders to help drive down the overall cost of the program.