The Pentagon's newly signed deals for two lots of F-35s codifies for the first time that it will cost the U.S. Air Force less than $100 million per airframe for the single-engine, stealthy aircraft. The cost for all the aircraft in low-rate initial-production (LRIP) Lots 6 and 7 will be $8.4 billion. Prime contractor Lockheed Martin has delivered the first two of 32 aircraft in LRIP 5.

The per-unit airframe price for LRIP 6 is an average of 2.5% lower than LRIP 5; LRIP 7 prices are about 6% lower than LRIP 5. Lockheed Martin's pricing excludes the cost of the Pratt & Whitney F135 engine, which is handled under a separate contract.

Thus far, the Pentagon has awarded $3.7 billion for LRIP 6 of the total $4.4 billion contract. Funds will be awarded incrementally as aircraft reach specific milestones in the production process. LRIP 7 is valued at $3.9 billion.

This is the first deal in which Lockheed Martin assumes all responsibility for overruns of target cost. The government and contractor shared at varying levels for overruns in the first five lots.

The target F-35A airframe price in LRIP 7 is $98 million. Neither the F-35 Joint Program Office nor Pratt & Whitney have released the target cost of the engine in each successive lot, though Pratt officials say the price has decreased 16% over the last three engine lots. “Disclosing publicly the price of our military engines would put us at a competitive disadvantage in the commercial engine market, so as a company policy we consider this as proprietary information,” says company spokesman Matthew Bates.

Based on the last known engine pricing, the LRIP 7 F-35As are expected to cost roughly $115.7 million (a figure that also includes the projected cost of retrofitting those aircraft).

The contracts call for Lockheed Martin to assume more responsibility for so-called concurrency costs associated with the aircraft in LRIPs 6 and 7. This refers to the price of retrofitting aircraft in these lots with fixes that are discovered in the development program as it continues through fiscal 2016. LRIPs 6 and 7 include aircraft for the U.K., Norway, Australia and Italy, as well.

Deliveries of LRIP 6 aircraft will begin in the second quarter of 2014, with LRIP 7 aircraft following a year later.

Lockheed Martin officials are “extremely pleased” with the deals. They are a “significant milestone for the F-35 program and its path to enhanced affordability,” a company statement says.

Rear Adm. Randolph Mahr, F-35 deputy program manager, says the program office hopes to nail down terms for LRIP 8 early next year.

Projected F-35 LRIP 6 and 7 Costs (U.S. $millions)
Variant and Lot`Size Target Airframe Cost Estimated Retrofit Cost Estimated Engine Cost Total Estimated Aircraft Cost
LRIP 5 (22) $105 $10 $14 $124
LRIP 6 (23) 103 7.4 14 120.7
LRIP 7 (24) 98 7.4 14 115.7
LRIP 5 (3) 113 10 38 156
LRIP 6 (6) 109 7.4 38 150.7
LRIP 7 (7) 104 7.4 38 145.7
LRIP 5 (7) 125 10 14 144
LRIP 6 (7) 120 7.4 14 137.7
LRIP 7 (4) 116 7.4 14 133.7
Sources: U.S. Defense Department and Lockheed Martin