The US Department of Defense reached a US$34bn (A$50bn) agreement with Lockheed Martin in October for 478 F-35 Joint Strike Fighters over three production lots.
The deal was reached in late October, and covers a total 351 F-35As, 86 F-35Bs, and 41 F-35Cs for operators including the USAF, US Navy, USMC, Norway, Italy, and Australia. Of that total, 291 F-35s are for the US services, 127 for JSF program partner nations, and 60 are for foreign military sales (FMS) customers.
The multi-year agreement covers production Lots 12, 13 and 14. Despite the large numbers, these production lots are still considered to be low-rate initial production (LRIP), as the JSF program is yet to receive the all-important Milestone C approval to progress to multi-year full-rate production.
Australia will receive 15 aircraft from each of the three production lots for a total of 45 jets, and these will be delivered from 2020 to 2022. These aircraft will add to the 18 RAAF F-35As already in service at Luke AFB in Arizona, and at RAAF Williamtown. The RAAF’s final nine F-35As are due to be delivered in 2023 from Lot 15 which is yet to be negotiated.
Due to the complex nature of US contracting which includes government furnished equipment (GFE) and the prior commitment of funding for long-lead production items such as titanium and other components, many of the lot 12 aircraft are already in advanced stages of production, and it is difficult to ascertain the final cost of each aircraft.
But US undersecretary of defense for acquisition and sustainment, Ellen Lord said the program had reached its target price of US$80m for the F-35A. “We will reach a unit recurring flyaway cost-per-aircraft target of (US)$80 million for a US Air Force F-35A price, by Lot 13 — which is one lot earlier than planned,” she said in an October 29 statement. “A significant milestone for the department.”
JSF program executive LtGen. Eric Fick added, “With this award we see from a production perspective the most dramatic rate increases in the production line are now behind us. This dramatic production rate increase has proven to be challenging for the supply chain, but the comparatively minor quantity changes across lots 12 through 14 should give it some breathing room as we move forward.”
Because Australia is a partner nation on the JSF program and our aircraft are identical to US F-35As, its prices will be the same as those paid by the USAF. According to a Lockheed Martin statement, the prices for each aircraft in each lot are as follows:
Lot 12: F-35A US$82.4m (A$122m), F-35B US$108m (A$159.5m), F-35C $US103.1m (A$152.3m)
Lot 13: F-35A US$79.2m (A$117m), F-35B US$104.8m (A$155m), F-35C $US98.1m (A$145m)
Lot 14: F-35A US$77.9m (A$115.1m), F-35B US$101.3m (A$149.7m), F-35C $US94.4m (A$139.5m)
Taking these figures into account, Australia’s 45 F-35As from these three Lots should cost US$3.592bn (A$5.31bn).
“Driving down cost is critical to the success of this program,” LtGen Fick added. “I am excited that the F-35 Joint Program Office and Lockheed Martin have agreed on this landmark three-lot deal. This agreement achieves an average 12.7 percent cost reduction across all three variants…This $34 billion agreement is a truly historic milestone for the F-35 Enterprise.”