28 Oct 19. Bloomberg reported that Lockheed Martin Corp. and the Pentagon announced a final agreement on a long-awaited contract for the next-generation F-35 jets that would be the biggest yet, according to three people familiar with the decision.
The purchase of the stealthy F-35 for U.S. and allied militaries is likely to be valued at about $34bn for 478 fighters.
The deal concludes years of discussions aimed at lowering the price for the advanced fighter to about $80m for some variants, while guaranteeing production stability for Lockheed’s largest source of profit, said Bloomberg Intelligence analyst Douglas Rothacker.
“It’s a big positive for the company,” he said. “It’s a huge show of support from the government that they’re going to extend a contract of this size for their most important weapons program.”
Falling production costs will open up additional international sales opportunities for the F-35, Ken Possenriede, chief financial officer for Bethesda, Maryland-based Lockheed Martin, said during the company’s Oct. 22 earnings call. Lockheed is on track to hit the $80m target in production lot 13, he said, about the middle of the multiyear contract.
Lockheed rose as much as 1.3% to $375.45 Monday after Bloomberg reported that the so-called block buy talks were concluded. The stock had advanced 42% this year through Friday, double the gain of the S&P 500.
The latest agreement brings to about 978 the number of U.S. and allied jets on contract out of a planned total of at least 3,100. The jet is still months away from the completion of rigorous combat testing against the toughest Russian and Chinese threats.
Officials disclosed earlier this month that a formal “full-rate” production decision would be delayed as much as 13 months until the tests are complete, using a high-fidelity simulator that’s still not running.
The F-35 has faced years of delays and cost overruns. The long-term cost of operating and supporting the fleet of fighters over more than six decades has increased to $1.196trn, according to the Pentagon’s latest cost assessment of major projects. (Source: News Now/Bloomberg)
Detail of Order for 114 F-35
28 Oct 19. Lockheed Martin Corp., Lockheed Martin Aeronautics Co., Fort Worth, Texas, is awarded a $7,027,643,109 modification to a previously awarded firm-fixed-price, fixed-price-incentive-firm-target, cost-reimbursable contract (N00019-17-C-0001).
This modification provides for the procurement of 114 F-35 aircraft for Air Force, Marine Corps and Navy; non-Department of Defense (DoD) participants, and Foreign Military Sales (FMS) customers. Specifically the modification procures 48 F-35A aircraft for the Air Force, 20 F-35B aircraft for the Marine Corps, nine F-35C aircraft for the Navy, 12 F-35A aircraft for the government of Norway, 15 F-35A aircraft for the government of Australia, and eight F-35A and two F-35B aircraft for the government of Italy. The above U.S. aircraft quantities are inclusive of fiscal 2019 (Lot 13) plus up aircraft.
In addition, this modification adds scope for the Air System Diminishing Manufacturing Sources integration, software data loads, critical safety items, red gear, non-recurring engineering, recurring engineering and the Joint Strike Fighter Airborne Data Emulator.
Work will be performed in Fort Worth, Texas (57%); El Segundo, California (14%); Warton, United Kingdom (9%); Cameri, Italy (4%); Orlando, Florida (4%); Nashua, New Hampshire (3%); Baltimore, Maryland (3%); San Diego, California (2%); Nagoya, Japan (2%); and various locations outside the continental U.S. (2%), and is expected to be completed in March 2023. Fiscal 2019 aircraft procurement (Air Force, Marine Corps and Navy); non-DoD participants; and FMS funds in the amount of $7,027,643,109 will be obligated at time of award, none of which will expire at the end of the current fiscal year. This modification combines purchases for the Air Force ($2,812,512,346); Marine Corps ($1,297,487,314); Navy ($612,389,812); non-DoD participants ($2,243,321,947); and FMS ($61,931,690) customers. The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity.