F-35 low-rate initial production lot 10 cost reduced

Washington – The U.S. Department of Defense and Lockheed Martin reached an agreement in principle on the lowest priced F-35 Lightning II aircraft to date, marking the first time the price for an F-35A is below $100 million at $94.6 million each. Known as Low-Rate Initial Production Lot 10 (LRIP-10), the contract for 90 of the fighter aircraft represents more than a 60% price reduction for the F-35A variant since the first LRIP-1 contract. The F-35B and F-35C variants price were also substantially reduced. In total the Lot 10 contract represents a $728 million reduction compared to Lot 9. The increase in the number of aircraft in this agreement enabled Lockheed Martin to reduce costs by taking advantage of economies of scale and production efficiencies, a press release notes. The 90-jet order is more than a 40% increase from LRIP 9’s 57 jets.

"The LRIP-10 contract is a good and fair deal for the taxpayers, the U.S. government, allies, and Industry," said Lt. Gen. Chris Bogdan, F-35 program executive officer. “We continue to work with Industry to drive costs out of the program.”

The supersonic, multi-role F-35 combines radar evading stealth, supersonic speed, and fighter agility with a comprehensive integrated sensor package. The F-35A variant comprises approximately 85% of the program of record. The F-35A unit price in LRIP-10, including aircraft, engine and fee, is roughly 7% lower than the previous LRIP-9 contract. Over the past two procurement lots (LRIP-9 and 10), the price of the F-35A has dropped 12%.

“With initiatives like Blueprint for Affordability and the natural learning curve, we are substantially bringing the cost of each aircraft down and at the same time the F-35 program will continue to add thousands of additional jobs to the U.S. economy as we increase production year over year,” said Jeff Babione, Lockheed Martin F-35 vice president and general manager.

Currently, the F-35 program supports more than 1,300 suppliers in 45 states, directly and indirectly employing more than 146,000 people. There are also hundreds of suppliers around the world supporting the F-35 program creating thousands of international jobs. By the 2020s, at full rate production, direct and indirect job growth is projected to be more than 260,000 with a majority of those in the U.S.

In addition to procuring the air vehicles, this contract funds manufacturing-support equipment and ancillary mission equipment. Deliveries of 90 aircraft begin in early 2018. To date, more than 200 operational F-35s are operated by eight different nations including Australia, Italy, Israel, Japan, Netherlands, Norway, United Kingdom, and United States. In total, the F-35 program today plans to produce more than 3,000 aircraft with approximately 600 of those aircraft presently planned to be procured by U.S. international allies.

A Lockheed Martin statement on the F-35 LRIP 10 agreement states: “President Trump’s personal involvement in the F-35 program accelerated the negotiations and sharpened our focus on driving down the price. The agreement was reached in a matter of weeks and represents significant savings over previous contracts. This is a good deal for the American taxpayer, our country, our company and our suppliers.”

The agreement will create 1,800 new jobs at Lockheed Martin’s Fort Worth, Texas, factory and support thousands more jobs in its U.S. supply chain.

Source: Lockheed Martin