Daily Management Review

$8.5 Billion F-35 order Announced by Lockheed and the Pentagon


02/05/2017




$8.5 Billion F-35 order Announced by Lockheed and the Pentagon
Noting the lowest price that has been paid to date for the Pentagon's most expensive program, for 90 F-35 jets, the Department of Defense and Lockheed Martin Corp announced on Friday of an agreement worth about $8.5 billion.
 
Marking a total savings of $728 million when compared to $102 million in the previous batch, the deal for the tenth lot of the stealthy fighter aircraft brings the price per jet to below $95 million for the first time.
 
Describing it as "out of control" in December, U.S. President Donald Trump had claimed on Monday that he had been able to shave off from the F-35 program and this deal is more than the $600 million that Trump had claimed.
 
"President Trump's personal involvement in the F-35 program accelerated the negotiations and sharpened our focus on driving down the price", said Lockheed Martin in a statement.
 
Defense analysts have said the discount hailed by Trump was in line with what had been flagged by Lockheed and Pentagon officials for months and that the price per jet has been steadily declining as production ramps up.
 
"The increase in the number of aircraft in this agreement enables us to reduce costs by taking advantage of economies of scale and production efficiencies," Lockheed said.
 
There have been continuous efforts with the aim of building a more cost-effective supply chain to fuel the production line in Fort Worth, Texas by Lockheed, the prime contractor, and its partners which include companies like Northrop Grumman Corp, United Technologies Corp's Pratt & Whitney and BAE Systems Plc.
 
The cost per plane should decrease about "6 to 7 percent" for the latest contract, said Air Force Lieutenant General Chris Bogdan, who runs the F-35 program for the Pentagon, on Dec. 19.
 
Since the previous order, there has been a drop of 7.3 percent in the projected cost of the F-35 A conventional takeoff and landing version of the jet, Friday's announcement said.
 
The U.S. military and 10 allies are the main clients for Lockheed and its main partners who have been developing and building F-35s for these two clients. The carrier-variant F-35C jets for the U.S. Navy, a F-35 B-model which can handle short takeoffs and vertical landings for the Marine Corps and the British navy and the A-model for the U.S. Air Force and U.S. allies are the three configurations that the F-35 comes in. in order to develop and buy 2,443 of the supersonic warplanes, in the coming decades, the U.S. Defense Department expects to spend $391 billion.
 
(Source:www.reuters.com) 






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