Lockheed, Pentagon announce $8.5 billion F-35 order

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The Defense Department said the F-35 program supports more than 1,300 suppliers in 45 states, directly and indirectly employing over 146,000 workers. Trump had tweeted in December that program costs were "out of control", and summoned Lockheed CEO Marillyn Hewson to a meeting.

The Pentagon and Lockheed Martin have reached a deal on the 10th batch of F-35 Joint Strike Fighters, White House Press Secretary Sean Spicer announced on Friday.

The next production run of 90 F-35s will see the Air Force version of the plane, the F-35A, produced at a unit cost of $94.6 million, marking a 7.3 percent reduction from an earlier batch and pushing the price per plane below $100 million for the first time.

In November, the JPO imposed the Lot 9 contract on Lockheed Martin after negotiations over price bogged down. General Chris Bogdan, the F-35 Program Executive Officer, said that a 6-7% reduction was likely. "The agreement represents $728 million in savings and a almost 8 percent reduction in price over our last contract for the air vehicle delivered by Lockheed Martin and our industry partners".

The JPO and the prime contractor for years now have promised to reduce the unit cost of an F-35 through economies of scale and manufacturing efficiencies as the program transitions from development to production. "We continue to work with Industry to drive costs out of the program". He even went so far as to ask one of Lockheed's competitors, Boeing, to "price out a comparable F-18 Super Hornet", as an alternative to the F-35. "The agreement was reached in a matter of weeks and represents significant savings over previous contracts".

The contract was under negotiation for more than a year, and Defense Department officials were already working toward the reduction in cost before Trump tweeted his dissatisfaction.

But in what may be a savvy political move, Lockheed has not been shy about embracing Trump's claim, noting in a statement that "President Trump's personal involvement in the F-35 program accelerated the negotiations and sharpened our focus on driving down the price".

The Pentagon said the new order includes 55 jets for the US and 35 planes for global partners. And the F-35C used on aircraft carriers will cost $121.8 million.

Lockheed stock was up 1 percent at $254.64 near the close of trading Friday.

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