Pentagon and Lockheed Martin Ink 10-Year F-35 Jet Production Deal

The Defense Department announced Thursday that the Pentagon and Lockheed Martin reached an initial agreement to produce at least 850 F-35 Lightning II fighter jets over the next 10 years. The Pentagon said Lockheed will invest at least $7 billion of company funds in initiatives supporting the F-35 program. Lockheed said the company aims to produce 156 aircraft annually under the agreement. The agreement also covers international orders, initial spare parts and modification kits.

The Pentagon did not disclose a potential total cost. The agreement is designated a prearranged long-term contract, rather than an order. Implementation requires congressional authorization and appropriations. Lockheed said congressional approval of multiyear authority and associated appropriations in the coming months would allow work toward a formal contract award. Under that condition, the F-35 Joint Program Office and Lockheed Martin will finalize contract terms, prices and schedules, the company said.

Defense contractors have argued that annual congressional appropriations for batches of weapons make consistent production difficult. Lockheed said the agreement removes an annual contracting process that has strained the industrial base. Lockheed said bulk purchases of raw materials and critical parts will shorten turnaround times and reduce logistical constraints.

Lockheed said the agreement is expected to save taxpayers billions of dollars across the F-35's lifecycle. Lockheed estimated that the agreement will support 317,000 U.S. jobs. Lockheed also estimated that the agreement will generate nearly $79 billion in annual economic activity over the next decade.

The F-35 is regarded as the world's most advanced fighter jet. Congress has closely scrutinized the program because of cost overruns and the high price of individual aircraft. Under Secretary of Defense Michael Duffey said the agreement demonstrates a fundamental change in efforts to stabilize the American defense industrial base and expand production. Duffey said linking financial incentives to actual performance ensures that warfighters receive the lethal capabilities needed to win.