Lockheed likely to lower F-35 cost for new Pentagon contract

The Pentagon reached a “handshake deal” with defense contractor Lockheed Martin for a new order of F-35 fighter jets, the agency said, while the price per aircraft is expected to be reduced.

The deal, announced by the Pentagon’s head of acquisitions Ellen Lord, is for 141 jets. Although Lord did not detail the price of the contract, she did say F-35 program prices continue to come down. Sources told Reuters it would be worth about $13 billion, bringing the price per F-35 down to $89 million. The cost per F-35 was more than $94 million for the last Defense Department deal – which was cemented in the beginning of 2017 – so the prospective reduction would represent a 6% decline in cost.

Continue Reading Below

The Pentagon and Lockheed are said to have been negotiating the terms of the contract for months, including haggling over the price of the aircraft. Final details are expected to be announced in the coming weeks, Reuters reported.

President Donald Trump has been critical of the F-35 program, saying in a December 2016 tweet that the “program and cost is out of control: Billions of dollars can and will be saved…”

He also appeared to take credit for bringing down the price of the jets in 2017, saying the government saved more than $700 million when he got involved in the negotiating process.

At the time, Lockheed said Trump’s criticisms helped accelerate negotiations and put a larger emphasis on cost cutting, but the defense contractor has been focused on increasing pricing efficiencies for years. Ordering jets in larger quantities also allows for a lower-priced product, as U.S. allies also ramp up purchases of the fighter aircraft.

Advertisement

Other lawmakers and government officials have also criticized Lockheed for the cost of the program and production delays in the past.

The F-35 program is the U.S. military’s most expensive.

Source: Read Full Article