Lockheed Martin lands $22.7Bn order for F-35 production.

On November 14, the F-35 Joint Program Office awarded Lockheed Martin a $22.7 billion Undefintiized Contract Action to fund more than 250 F-35 aircraft. This is a significant milestone for the program that reduces costs and demonstrates increased program maturity.

An F-35 Lightning II assigned to Hill Air Force Base, Utah, flies alongside a 100th Air Refueling Wing KC-135 Stratotanker during a flight to Estonia on April 25, 2017
(U.S. Air Force photo /Senior Airman Christine Groening)

The F-35 Joint Program Office (JPO) awarded a modification to the previously-awarded Low-Rate Initial Production Lot 12 (LRIP 12) advance acquisition contract. This award directs the continuation of production activity for all aircraft in the F-35 program’s LRIP 12 contract, as well as aircraft for several international customers in LRIPs 12, 13 and 14 (Fiscal Years 2018, 2019, 2020). This contracting funding strategy provides stability and a steady production rate over a defined period of time, which enables industry to plan and make investments that reduce overall cost and achieve greater manufacturing efficiencies.

Today’s contract action obligates $6 billion in funding from the U.S. Services, International Partners and our Foreign Military Sales customers for 255 F-35 aircraft. F-35 aircraft allocation includes; 106 F-35s for the U.S. Services, 89 F-35s for International Partners, 60 F-35s for our Foreign Military Sales customers. LRIP 12, 13 and 14 aircraft deliveries will begin in 2020, 2021 and 2022, respectively.

This award brings the Department of Defense into compliance with Congressional direction by placing all 20 FY18 (Lot 12) and 16 FY19 (Lot 13) congressional plus up aircraft on contract. It also establishes a $22.7 billion not-to-exceed contract threshold for LRIP 12 aircraft. This Undefinitized Contract Action (UCA) enables F-35 production to continue efficiently while the government and industry teams reach contract agreement. We are committed to reducing costs, and confident the final negotiated LRIP 12 aircraft unit prices will be less than LRIP 11, and enable us to deliver on our goal of an $80 million F-35A by 2020. In parallel, a separate Lot 12 propulsion UCA between the JPO and Pratt & Whitney is currently being negotiated.

"This Undefintized Contract Action will provide critical funds to ensure F-35 production and cost reduction efforts remain on schedule as we partner with the F-35 Joint Program Office to finalize the formal contract agreement. The acquisition approach for Lots 12-14 will deliver significant cost savings and is critical to achieving our joint goal of an $80 million F-35A for aircraft ordered in 2020. This is a smart approach for the taxpayer, the warfighter and for industry. We appreciate the government’s proactive action and partnership to maintain supply chain stability, reduce costs and ensure deliveries remain on track to meet growing demand around the globe," said Lockheed Martin.