Lockheed Martin Wins $4.7 Billion F-35 Lot-8 Contract

The U.S. Department of Defense has awarded $4.7 billion to Lockheed Martin for the eighth F-35 Low Rate Initial Production (LRIP-8) contract today for 43 F-35 Lightning II airframes.

The contract includes $500 million of Advance Procurement funding that was announced at the time of award.

The 43 airframes include 29 jets for the United States and 14 for five international countries. This agreement reflects an average airframes unit cost approximately 3.5 percent lower than the LRIP 7 contract signed in 2013 and a 57 percent reduction since LRIP 1.

US LRIP 8 per variant airframe unit prices (not including engine cost) include 19 F-35A CTOL for US Air Force, 6 F-35B STOVL for U.S. Marine Corps and F-35C CV – U.S. Navy (3) and US Marine Corps.

The LRIP 8 contract procures 29 U.S. airframes including 19 F-35As, six F-35Bs and four F-35Cs. It also provides for the production of the first two F-35As for Israel and the first four F-35As for Japan, along with two F-35As for Norway and two F-35As for Italy. The United Kingdom will receive four F-35Bs.

Lockheed Martin will begin delivering LRIP 8 aircraft in early spring 2016. LRIP 8 contract terms continue to eliminate the government's exposure to risk by having Lockheed Martin cover 100 percent of any cost overruns. The government and Lockheed Martin will share returns derived from any under-runs in target cost (20 percent for government and 80 percent for Lockheed Martin).

The contract also includes a concurrency clause which requires Lockheed Martin to share costs equally with the government (50/50) for known concurrency changes arising from System Development and Demonstration testing and qualification.