Lockheed Martin has confirmed it expects to sign a fixed price contract for the fourth batch of low rate initial production (LRIP) F-35 jets in the next few weeks.
Speaking to media in Canberra on June 17, Lockheed Martin’s executive vice president for F-35 program integration, Tom Burbage, said company CEO Bob Stevens had undertaken to sign a fixed price contract instead of the more traditional cost-plus arrangement for the 32 aircraft to be built in LRIP 4 to show the faith the company has that its costs can come in significantly below those projected by the various US budget estimate processes in recent months. “We had intended the acquisition plan up to now to go fixed price in the sixth production lot, but our CEO decided to pull that forward and take the current lot fixed price just to try to put some stability in the cost discussions that are going on,” Burbage said.
Burbage’s comments were echoed a day later in Washington by Stevens in a similar brief to US media. “We are doing that because of the confidence we have in the program,” the CEO said.
Negotiations on the price of the LRIP 4 contract are ongoing, with the Pentagon reportedly asking for a price significantly below Lockheed’s initial offer, which itself was 20 per cent below the cost budgeted for. Burbage said he expected a handshake agreement to be reached soon and a contract to be signed before the US Congress rises for mid term elections later this year.
Burbage added that Lockheed Martin still expected the F-35 unit cost across all three variants to average about US$60m (A$70m) in 2010 dollars.