Lockheed Martin has reached in principle agreement with the US Department of Defense on reduced pricing for the next two low rate initial production – LRIP – batches of F-35s. The savings, which equate to an up to eight per cent saving over previous LRIP batches, should benefit Australia, which is acquiring its first two F-35s under LRIP-6.
The next two F-35 production contracts for LRIP lots 6 and 7, which comprise orders for 71 of the aircraft, will see a decrease in F-35 unit costs, coupled with negotiating lower prices on a number of other smaller contracts. This, Lockheed Martin said, allows “the Department to purchase all the aircraft originally planned, including those that were in jeopardy of being cut due to sequestration budget impacts”.
For the moment no details of the unit costs have been released, however, the unit prices for all three variants of the aircraft in LRIP-6 are approximately four per cent lower than the LRIP-5 contract. LRIP-7 unit prices will show an additional four per cent reduction. Consequently the LRIP-7 price represents about an eight per cent reduction from the LRIP-5 contract signed in December 2012.
“These two contracts represent a fair deal that is beneficial to the government and Lockheed Martin,” said Lt Gen Chris Bogdan, F-35 Program Executive Officer.
“Improving affordability is critical to the success of this program, and by working together we were able to negotiate a lower cost F-35. There is still work to be done, but these agreements are proof the cost arrow is moving in the right direction. We will continue to work with industry to identify areas for savings in future production contracts.”
Deliveries of 36 US and partner nation aircraft in LRIP-6 will begin by mid-2014 and deliveries of 35 US and partner nation aircraft in LRIP-7 will begin by mid-2015. The agreement, which took six months to complete, does not include the Pratt & Whitney engines.