DOD awards Lockheed three-year F-35 sustainment deal worth up to $6.6B

By Courtney Albon  / September 13, 2021

The Defense Department today awarded Lockheed Martin an F-35 sustainment deal worth up to $6.6 billion across three years that could lead to a future performance-based logistics contract.

Today’s contract covers aircraft and supporting infrastructure sustainment for fiscal year 2021 and includes options for FY-22 and FY-23. Negotiations are underway with engine-maker Pratt & Whitney for a separate propulsion system sustainment contract.

In a press release today, the F-35 Joint Program Office said the contract reflects a fleet-wide reduction in the jet’s cost-per-flight-hour of 8%, from $36,100 in 2020 to $33,400 projected in 2023 then-year dollars. For the Air Force’s F-35A variant, the CPFH drops from $33,600 in 2020 to $30,000 in 2023.

“Working together with our industry partner, the F-35 joint program office team negotiated aggressive cost savings and performance targets that will benefit the global F-35 sustainment enterprise, and all F-35 customers,” F-35 Program Executive Officer Lt. Gen. Eric Fick said in the release. “This ’21-’23 contract agreement is a positive step in securing affordable life-cycle costs for our customers.”

Lockheed said in a press release today the company remains “committed to partnering with our customers and teammates to drive F-35 sustainment costs down.”

The JPO notes the contract “lays the groundwork” for a future supply support and demand reduction PBL contract. The possible reduced-scope PBL is not as expansive as the five-year, fixed-price version Lockheed proposed in 2019, which the company estimated would save the government approximately $1 billion. Instead, the supply-focused PBL would target spare parts availability, capacity and quality.

While the department did not embrace Lockheed’s original PBL proposal, it prompted a study of long-term sustainment options that would meet the needs of the Air Force, Navy and Marine Corps while also reducing costs and improving performance. That business case analysis was expected to be released this summer.