U.S. buys 90 military jets in $8.9M deal, largest F-35 contract in history with lowest price per air vehicle

WASHINGTON. Officials at the U.S. Department of Defense in Washington and Lockheed Martin in Bethesda, Maryland, reached an agreement on Low-Rate Initial Production Lot 10 (LRIP-10), which includes 90 F-35 stealth fighter military aircraft and totals $8.9 billion. It is the largest F-35 contract, officials say, and boasts the lowest per-unit price for the fifth-generation combat jet to date.

The unit price of the F-35A variant, which accounts for roughly 85 percent of the program of record, is roughly seven percent lower in LRIP-10 than the previous LRIP-9 contract, including aircraft, engine, and fee. The price of the F-35A has dropped 12 percent over the past two procurement lots (LRIP-9 and 10), and more than 60 percent since the first LRIP-1 contract, officials say.

The new contract marks the first time the price for an F-35A has fallen below $100 million. F-35B and F-35C variants price were also reduced. In total, officials say, the Lot 10 contract represents a $728 million reduction when compared to Lot 9.

"The LRIP-10 contract is a good and fair deal for the taxpayers, the U.S. Government, allies, and Industry," says F-35 Program Executive Officer Lt. Gen. Chris Bogdan. “We continue to work with industry to drive costs out of the program.” (More on this statement, and what it means for the global aerospace and defense supply chain, in an upcoming Howard’s Tower blog.)

In addition to procuring air vehicles, this contract funds manufacturing-support equipment and ancillary mission equipment.

Deliveries of 90 aircraft begin in early 2018.

The LRIP 10 contract includes 55 jets for the U.S. and 35 jets for international partners and foreign military sales customers:

44 F-35A for the U.S. Air Force

9 F-35B for the U.S. Marine Corps

2 F-35C for the U.S. Navy

3 F-35B for UK

6 F-35A for Norway

8 F-35A for Australia

2 F-35A for Turkey

4 F-35A for Japan

6 F-35A for Israel

6 F-35A for South Korea

The Lot 10 contract represents a $728 million reduction in total price when compared to Lot 9. The approximate per variant unit prices, including jet, engine and fee are:

F-35A: $94.6 million (7.3% reduction from Lot 9)

F-35B: $122.8 million (6.7% reduction from Lot 9)

F-35C $121.8 million (7.9% reduction from Lot 9)

“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,” according to Lockheed Martin F-35 Vice President and General Manager Jeff Babione.

To date, more than 200 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 plans to produce more than 3,000 aircraft with approximately 600 of those aircraft planned to be procured by international allies.

“It will also create 1,800 new jobs at our Fort Worth, Texas, factory and support thousands more jobs in our U.S. supply chain,” according to a statement from Lockheed Martin.

Currently, the F-35 program includes more than 1,300 suppliers in 45 states, directly and indirectly employing more than 146,000 people, Lockheed Martin officials say. Hundreds of suppliers around the world also support the F-35 program, including 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.

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