Striking a Deal

The Defense Department announced on Friday that it has come to an agreement with Lockheed Martin for the fifth lot of Joint Strike Fighter aircraft, and that lot -- which will include 30 planes -- will cost DOD about $4 billion. In a contract announcement, DOD states that Lot 5 of F-35 low-rate initial production will be made up of 21 conventional-takeoff-and-landing jets for the Air Force, six carrier variants for the Navy and three short-takeoff-vertical-landing aircraft for the Marine Corps. The contract also includes mission support equipment, flight test instrumentation for those 30 aircraft and flight test equipment for the United Kingdom.

Two-thirds of the work to be performed under Lot 5 will be done in Fort Worth, TX, where Lockheed has its primary F-35 production line. The rest of the work will take place at several locations around the United States, except for a small portion to be done in the United Kingdom by BAE Systems. The Lot 5 work “is expected to be completed in January 2014,” the announcement states.

DOD says $2.6 billion of the contract value, or about 66 percent, will come from Air Force accounts; $937 million, more than 23 percent, from Navy accounts; and $426 million, close to 11 percent, from the Marine Corps. The United Kingdom is also paying a tiny fraction of the contract value, around $4 million.

The estimated cost of the non-aircraft portion of the Lot 5 contract is unknown, but a simple division of $4 billion by 30 aircraft would give the Joint Strike Fighter's fifth production lot a unit cost of more than $133 million. The actual cost -- assuming no cost or schedule overruns -- is likely to be slightly less than $133 million because of the inclusion of mission-support equipment in the contract.