The contract comes after Lockheed Martin said in October that it was internally funding the F-35 production line while negotiations for Lots 18 and 19, which had been ongoing since 2023, were underway.
The Pentagon has awarded Lockheed Martin an “undefinitized” contract, worth $11.8 billion, to produce as a part of Lot 18 a total of 145 F-35 Lightning IIs by Jun. 2027, the Department of Defense (DoD) announced on Dec. 20, 2024. An “undefinitized” contract means the details and modalities would be finalized later, possibly by the early months of 2025.
An undefinitized contract action also allows the company to receive funds and keep up the production while finer details, like the cost and the number of jets, are being decided, as was done in 2018. The DoD announcement also called it a “not-to-exceed” pricing, meaning whatever the outcome of the negotiation, the cost of the contract cannot exceed $11 billion. The exact costs per aircraft type and service were not mentioned.
According to the contract notice, the 145 jets include 48 F-35A aircraft for the Air Force, 16 F-35B aircraft and five F-35C aircraft for the Marine Corps, 14 F-35C aircraft for the Navy, 15 F-35A aircraft and one F-35B aircraft for F-35 non-U.S. DoD program partners, and 39 F-35A aircraft and seven F-35B aircraft for Foreign Military Sales (FMS) customers.
Geology class at Weapons School, F35 pic.twitter.com/yV8utSM6pW
— jmh.creates (@JarodMHamilton) December 27, 2024
On Nov. 21, Romania signed a LoA (Letter of Acceptance) to acquire 32 F-35A Lightning IIs through an FMS deal worth $7.2 billion, making it the 20th country to select the jet. Prior to that in July, Greece announced the acquisition of 20 F-35s, as the 19th F-35’s international user. It is unclear if any of these are included in the Lot 18 contract.
Relief for Lockheed Martin
The contract comes after Lockheed Martin said in October that it was internally funding the F-35 production line while negotiations were underway. In a third quarter 2024 earnings call, Lockheed Martin’s CEO Jim Taiclet said that the company delivered 48 F-35s in that period.
He also added he expects to deliver 90 to 110 aircraft by the end of 2024, and “the remaining balance of the Lot 15 to Lot 17 aircraft thereafter.” This means the deliveries of these earlier Lots, slowed down by the problems with the Tech Refresh 3 which prompted a stop in the deliveries, will head well into 2025.
In the earnings call’s statement, Lockheed Martin said it was sustaining losses on the Lots 18-19 aircraft as the “costs began to exceed the advanced acquisition contract value in the third quarter of 2024.” Thus, the company could not realize “revenue and profit on approximately $400 million of costs incurred on the program” in this period.
The statement then added that the company “expects to receive contractual authorization and funding on the Lots 18-19 production contract with the U.S. Government and resume invoicing costs incurred and recover sales, profit, and cash in the fourth quarter of 2024.” The impacts were expected to continue until a final agreement was reached.
Long overdue contract amid delays and price increase
Lockheed Martin and Pentagon officials have been negotiating a deal for Lots 18 and 19 since 2023, but failed to reach an agreement over sticking points like inflation. This was followed by what Air and Space Forces Magazine described as an informal “handshake deal” in November for the same lots.
The F-35 program has been struggling with inflation, cost overruns, supply chain disruptions and other technical problems. For instance, according to Breaking Defense, jets in lots 15 through 17 came in at roughly $82.5 million for the F-35A, $109 million for the F-35B and $102.1 million for the carrier-launched F-35C.
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The negotiations on Lots 18 and 19 were further delayed and complicated by the year-long hold on F-35 deliveries by the Pentagon between mid-2023 to July 2024. This was owing to problems with the TR-3 (Technology Refresh-3) hardware and software configurations. TR-3 supports the Block 4 upgrades, which offers greater sensing, computing, data processing, weapons and target acquisition capabilities.
The F-35 JPO (Joint Program Office) also withheld payments, worth $7 million per jet, to Lockheed Martin while the company forfeited $60 million in award fees. The halt on the deliveries was lifted when issues with the TR-3 were finally addressed.
On Jul. 19, the JPO and Lockheed Martin announced the deliveries of the first two TR-3-configured F-35A Lightning IIs, with one going to Dannelly Field, Alabama, and the other to Nellis Air Force Base, Nevada. In the earnings call, CEO Jim Taiclet said that TR-3 flight testing has continued, “validating 95% of combat capabilities.”
By the middle of this year until the hold was lifted, around 100 F-35 aircraft had piled up at Lockheed’s facilities, awaiting delivery, with U.S. lawmakers proposing to cut the jet’s orders in the FY25 National Defense Authorization Act. ASF quoted unidentified officials, who said the F-35 unit cost under Lots 18 and 19 will be significantly higher, owing to the “triple whammy of inflation since the last multi-lot deal, greater complexity and capability inherent in current and future configurations of the jet, and the military services reducing their yearly buys of the F-35.”
F-35’s future
SpaceX CEO and incoming President Donald Trump’s associate Elon Musk recently commented calling manned fighter jets “obsolete in the age of drones.” Beside being critical of the F-35 project itself, Musk has also cast a shadow on the program, using expletives to describe the aircraft and its manufacturers, as well as calling it the “worst military value for money in history.”
Trump, who is expected to appoint Musk to head the Department of Government Efficiency (DOGE), cannot be ruled out to have his military spending plans influenced by the tech tycoon’s views. The comments about the obsolescence of manned fighters might also influence the decisions that the new administration will have to take about the Next Generation Air Dominance (NGAD) program.
🇳🇱F-35 detachment deployed to Ämari Air Base 🇪🇪 for NATO Air Policing Mission
The fifth generation jets are the first #NATO jets to launch from the airfield after completion of major runway renovation works
📸The Royal Netherlands Air Force
Read more: https://t.co/v2tpbJJ7h3 pic.twitter.com/Fe5rQZUaPz
— NATO Air Command (@NATO_AIRCOM) December 4, 2024
The scale of resistance to such moves from the U.S’s military and industrial leadership remains to be seen. One can expect great churning and ‘non-kinetic’ fireworks in Washington’s strategic landscape, once the new administration takes over.
