Lockheed Martin wins ‘undefined’ contract for 145 F-35s worth $11 billion

The contract comes after Lockheed Martin said in October that it was internally financing the F-35 production line while negotiations for Lots 18 and 19, ongoing since 2023, were underway.

The Pentagon has awarded Lockheed Martin an “undefined” contract, worth $11.8 billion, to produce under Lot 18 a total of 145 F-35 Lightning IIs by June 2027, a announced the Department of Defense (DoD) on December 20. , 2024. An “undefined” contract means that details and terms would be finalized later, perhaps by the early months of 2025.

Undefined contract action also allows the company to receive funds and maintain production while finer details, like cost and number of aircraft, are decided, as was done in 2018. DoD’s announcement also called it a “don’t.” “exceed” the price, meaning that regardless of the outcome of the negotiation, the cost of the contract cannot exceed $11 billion. Exact costs by aircraft type and service were not mentioned.

According to the procurement notice, the 145 jets include 48 F-35A aircraft for the Air Force, 16 F-35B aircraft and five F-35C aircraft for the Marine Corps, 14 F-35C aircraft for the Navy, 15 F-35A aircraft. and one F-35B aircraft for non-U.S. DoD F-35 program partners, as well as 39 F-35A aircraft and seven F-35B aircraft for foreign military sales. (FMS).

Geology course at the Ecole d’Armes, F35 pic.twitter.com/yV8utSM6pW

– jmh.creates (@JarodMHamilton) December 27, 2024

On November 21, Romania signed a LoA (Letter of Acceptance) to acquire 32 F-35A Lightning IIs in an FMS deal worth $7.2 billion, making it the 20th country to select this aircraft. Previously, in July, Greece announced the acquisition of 20 F-35s, as the 19th international user of the F-35. It is unclear whether any of these are included in the Lot 18 contract.

Relief for Lockheed Martin

The contract comes after Lockheed Martin said in October that it was internally financing the F-35 production line while negotiations were underway. During a third-quarter 2024 earnings conference call, Lockheed Martin CEO Jim Taiclet said the company delivered 48 F-35s during that period.

It also added that it plans to deliver 90 to 110 aircraft by the end of 2024, and “the remainder of the aircraft from Batch 15 to Batch 17 thereafter.” This means that deliveries of these earlier batches, slowed by Tech Refresh 3 issues which led to a halt in deliveries, will continue until 2025.

In the press release, Lockheed Martin said it was incurring losses on Lot 18 and Lot 19 aircraft as “costs began to exceed the value of the acquisition contract brought forward to the third quarter of 2024.” As a result, the company was unable to realize “revenue and profit on approximately $400 million in costs incurred under the program” during this period.

The release then adds that the company “expects to receive contractual authorization and funding for the batch 18-19 production contract with the U.S. Government, to resume billing for costs incurred and to recover sales, profits and liquidity in the fourth quarter of 2024”. The impacts are expected to continue until a final agreement is reached.

Long-awaited contract amid delays and price increases

Lockheed Martin and Pentagon officials have been negotiating a deal for Lots 18 and 19 since 2023, but have failed to reach agreement on sticking points like inflation. This was followed by what Air and Space Forces Magazine described as an informal “handshake deal” in November for the same lots.

The F-35 program faces inflation, cost overruns, supply chain disruptions and other technical problems. For example, according to Break the defenseLot 15-17 jets cost approximately $82.5 million for the F-35A, $109 million for the F-35B, and $102.1 million for the carrier-launched F-35C.

Negotiations on Lots 18 and 19 were further delayed and complicated by the Pentagon’s year-long hold on F-35 deliveries between mid-2023 and July 2024. This was due to problems with the TR-3 ( Technology Refresh-3). hardware and software configurations. The TR-3 supports Block 4 upgrades, which provide greater sensing, computing, data processing, weapons and target acquisition capabilities.

The F-35 JPO (Joint Program Office) also withheld payments, worth $7 million per aircraft, to Lockheed Martin, while the company waived $60 million in award fees. The halt on deliveries was lifted when the problems with the TR-3 were finally resolved.

On July 19, JPO and Lockheed Martin announced deliveries of the first two TR-3-configured F-35A Lightning IIs, one to Dannelly Field, Alabama, and the other to Nellis Air Force Base, in Nevada. During the earnings conference call, CEO Jim Taiclet said flight testing of the TR-3 continues, “validating 95 percent of combat capabilities.”

Midway through this year, until the suspension was lifted, about 100 F-35 jets were piled up at Lockheed facilities, awaiting delivery, as U.S. lawmakers proposed cutting plane orders as part of the FY25 National Defense Authorization Act. PPP cited unidentified officials, who said the F-35 unit cost for lots 18 and 19 would be significantly higher, due to the “triple whammy of inflation since the last multi-lot deal, greater complexity and capabilities inherent in current and future configurations of the jet, and the military services reducing their annual F-35 purchases.

The future of the F-35

Elon Musk, CEO of SpaceX and associate of new President Donald Trump, recently said he called manned fighter jets “obsolete in the age of drones.” In addition to criticizing the F-35 project itself, Musk also threw shade at the program, using expletives to describe the aircraft and its makers, and calling it “the worst military value for money in history.” “.

Trump, who is expected to appoint Musk as head of the Department of Government Effectiveness (DOGE), cannot be ruled out that his military spending plans are influenced by the tech mogul’s views. Comments on the obsolescence of piloted fighters could also influence the decisions that the new administration will have to make regarding the Next Generation Air Dominance (NGAD) program.

F-35 detachment deployed to Ämari Air Base for NATO air policing mission

The fifth generation jets are the first #NATO jets will be launched from the airfield after the completion of major runway renovation works

The Royal Dutch Air Force
Learn more: pic.twitter.com/Fe5rQZUaPz

– NATO Air Command (@NATO_AIRCOM) December 4, 2024

The extent of resistance to such initiatives from U.S. military and industrial leaders remains to be seen. We can expect a big “non-kinetic” fireworks display in Washington’s strategic landscape once the new administration takes over.