Lockheed Martin and the U.S. Department of Defense have reportedly reached a "handshake agreement” on a $34 billion contract covering the production of F-35 Lightning II fighter jets. The deal is being touted as carrying the lowest per plane cost ($80 million) in the program’s history. This represents a significant reduction from the 2019 price tag of $108.75 million and honors an earlier-than-expected commitment to cut costs.
It’s also the largest F-35 purchase to date, providing for 478 of the fighter jets. Approximately 157 will initially be made for the U.S. military, partner nations, and foreign sales customers. A finalized agreement is expected by August.
For Lockheed to hit these numbers, reducing subcontractor costs will be a primary focus. In April, the defense and aerospace giant announced that subcontractors had been moved into performance-based logistics contracts or master repair agreements. This approach hopes to make more operating capital available for all involved, allowing for ongoing investments focused on new product and operational improvement while reducing costs and improving inventory management.
Since 2015, Lockheed Martin says it has reduced operating costs per aircraft by 15%, and manual labor on its production line by about 75%. The first F-35A was completed at Lockheed’s plant in Fort Worth, Texas, in 2006. The Marine Corps was the first U.S. military branch to declare the plane operational, doing so in 2015.
