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The Pentagon is getting a nice fat discount on its next order of super-expensive F-35s
WASHINGTON (Reuters) - The Department of Defense has a "handshake" agreement with Lockheed Martin Co to cut 8.8 percent from the price of its latest order of F-35A fighter jet, shaving a year from the time frame in which each aircraft will cost less than $80 million, a Pentagon official said on Monday.
The Pentagon said over three years the agreement will be worth $34 billion for 478 F-35 fighter jets. It is preliminary and a final deal is expected to be sealed in August for the 12th batch of jets, one of the most expensive aircraft ever produced.
The preliminary agreement details the first year, and lays out agreed upon options for two additional years. The options are there because official purchases cannot be made until the U.S. Congress approves an annual budget for those years.
This year's agreement will lower the cost of each F-35A, the most common version of the aircraft, to $81.35 million, Under Secretary of Defense Ellen Lord said, down from $89.2 million under a deal inked in August 2018.
Under the options covering the second and third years of the purchase, the price of each jet will drop below $80 million, Lord said. In those later years production would be around 160 jets per year.
The F-35 program has long aimed at growing the fleet to more than 3,000 jets and bringing the unit price of the F-35A below $80 million through efficiencies gained by ordering larger quantifies.
"I am proud to state that this agreement has achieved an estimated 8.8% savings from Lot 11 to Lot 12 F-35A's, and an estimated average of 15%" reduction across all variants from Lot 11 to Lot 14, Lord said in the statement. That savings exceeded expectations in a RAND Corp study.
"The unit price for all three F-35 variants was reduced and the agreement will include an F-35A unit cost below $80 million in Lot 13, exceeding the Pentagon and Lockheed Martin's long-standing cost reduction commitment earlier than planned," the Lockheed Martin F-35 program general manager Greg Ulmer said in a statement.
While being a major part of Lockheed's revenue, the F-35 has recently been holding competitions to find less expensive subcontractors to help control costs.
The new pricing could encourage more foreign customers to join the F-35 program. Lockheed executives have said that any country with an F-16 jet, the predecessor to the F-35, is a potential customer. This could put the market size at about 4000 jets, Lockheed CEO Marillyn Hewson recently told an investor conference.
Vice Admiral Mathias Winter, the head of the Pentagon's F-35 office, has testified to Congress, that "future potential foreign military sales customers include Singapore, Greece, Romania, Spain and Poland."
Foreign military sales like those of the F-35 are considered government-to-government deals where the Pentagon acts as an intermediary between the defense contractor and a foreign government.
Other U.S. allies have been eyeing a purchase of the stealthy jet including Finland, Switzerland and the United Arab Emirates.
WATCH NEXT: F-35s Conduct A Mission In 'Beast Mode' In Afghanistan
The Pentagon has identified the two soldiers were killed in combat in Afghanistan on Wednesday as members of U.S. Army Special Forces.
Master Sgt. Luis F. DeLeon-Figueroa, 31, and Master Sgt. Jose J. Gonzalez, 35, both died in Faryab Province from wounds sustained from small arms fire, the Pentagon said in a press release. The incident is under investigation.
JERUSALEM (Reuters) - Israeli Prime Minister Benjamin Netanyahu hinted on Thursday of possible Israeli involvement in attacks against Iranian-linked targets in Iraq.
A series of blasts in the past few weeks have hit weapon depots and bases belonging to paramilitary groups in Iraq, many of them backed by Israel's regional foe Iran. The groups blamed the United States and Israel for the blasts on Wednesday.
President Donald Trump signed an executive order on Wednesday that will make it easier for permanently disabled veterans to have their student loan debt forgiven.
Physical fitness tests were briefly suspended earlier this week and outdoor cardio testing will be curtailed for the remainder of the summer at Eglin Air Force Base, Florida, after an airman died Saturday. She had completed her PT test on Friday.
Navy Secretary Richard Spencer has expanded a review of the Judge Advocate General Corps to include the Marine Corps, a Navy spokesman said on Thursday.
"There is value in applying this review and its subsequent recommendations across the Department of the Navy," Cmdr. Jereal Dorsey told Task & Purpose. "The review's purpose is to confirm the uniformed legal community is structurally and organizationally sound and best supporting the good order and discipline our integrated naval force."