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Pentagon, Lockheed Martin reach tentative $34 billion deal for hundreds of F-35 fighter jets

An F-35A Lightning II stealth fighter sits on the Aviano Air Base, Italy, flight line during the Astral Knight exercise on June 4, 2019.

NORMAN LLAMAS/STARS AND STRIPES

By AARON GREGG | The Washington Post | Published: June 11, 2019

The Pentagon and Lockheed Martin have reached a tentative agreement to procure 470 new F-35 fighter jets for the Air Force, Navy and Marines and allied militaries, the Defense Department announced Tuesday. A finalized contract award is expected in August, officials said.

If the massive order for the F-35 Joint Strike Fighters is finalized it will be the largest procurement in the history of the U.S. Department of Defense. Its value is estimated at $34 billion.

The $34 billion agreement "marks the largest procurement in the history of the Department and provides a best value for our warfighter and taxpayer, incentivizes industry to continuously improve their performance and achieves the lowest F-35 unit prices per aircraft to date," F-35 program executive Vice Admiral Mathias Winter said in an emailed to reporters.

Buying the jets in bulk should allow the Pentagon to decrease the average unit cost of the plane by about 15 percent, a Pentagon spokeswoman said. And it should bring the cost of the most common F-35 variant below $80 million one year ahead of schedule.

Lockheed Martin program general manager Greg Ulmer touted the company's cost savings in the most recent contract, which he chalked up to "smart acquisition strategies and a relentless focus on cost reduction."

"Beating our long-stated goal and delivering an F-35A below $80 million ... is a testament to our joint government and industry team - and we look forward to working with the Joint Program Office to finalize the agreement," Ulmer wrote in an email.

Both Lockheed and the Defense Department are trying to address decades of criticism from congressional war hawks and doves alike, who have characterized the F-35 program as too costly.

Almost since its inception, the F-35 has been a lighting rod for criticisms around wasteful defense spending. And it has been a financial bedrock for Lockheed, propelling the Bethesda-based manufacturer to a dominant position atop the defense contracting hierarchy.

Proponents argue that the plane's stealthiness, advanced sensors, targeting capabilities and extended flying range would make it an important asset in a war against a so-called "near-peer" competitor such as Russia or China.

But it is also the single most expensive military program in U.S. history by a wide margin, leading some to worry it will starve the Pentagon of resources it needs for other missions. The late Sen. John McCain called the F-35 a "poster child for acquisition malpractice" a "scandal" and a "tragedy" at different points during his tenure as Senate Armed Services Committee chairman.

President Donald Trump also took an interest in the plane early in his presidency when he criticized its "tremendous cost and cost overruns," and asked the Pentagon to consider buying one of Boeing's F-18 jets instead. In early 2017 the Pentagon awarded Lockheed a contract that shaved roughly $728 million in costs ― an amount roughly equivalent to cost reductions already in place during the Obama administration.

Even Patrick Shanahan, a former Boeing executive who is the acting Secretary of Defense, has chided the plane.

"The F-35, unequivocally, I can say, has a lot of opportunity for more performance," Shanahan said in response to questions about whether he is biased towards his former employer.

Teal Group aerospace analyst Richard Aboulafia said the contract announced Tuesday draws attention to the sheer size of the program. The agreement means Lockheed Martin will benefit from years of taxpayer-funded military contracts, and will be able to predictably plan for the future.

"With contracts you recognize the sheer enormity of the [F-35] program," Aboulafia said. "We could still see four or five more of these [multi-year production] contracts."

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