Lockheed, Pentagon Agree Initial Deal for 850 F-35 Jets

Lockheed Martin has entered an initial production and sustainment agreement with the US Department of Defense for at least 850 F-35 Lightning II fighter jets over the next 10 years, the two sides said on Thursday, October 22.

Key Terms

• Lockheed will self-fund at least $7 billion in initiatives supporting the F-35 programme, according to the department.

• The company aims to maintain annual production at 156 aircraft.

• The agreement is not an order but counts as a prearranged long-term contract. If multi-year authority is granted in the coming months, the F-35 Joint Program Office and Lockheed will work to finalise terms, pricing and schedules through a formal contract award.

• It also covers international orders, initial spares and modification kits.

Officials and Company Estimates

Under Secretary of Defense Michael Duffey said the agreement shows the department has changed how it stabilises the US defence industrial base to produce at speed and scale, by aligning financial incentives with performance. Lockheed estimates the arrangement will support 317,000 US jobs and generate nearly $79 billion in annual economic activity over the decade, while lowering production costs and easing supply-chain constraints.

The F-35 is built with stealth technology and is considered the world’s most advanced fighter jet. It is at the core of Lockheed’s aeronautics division, which forms close to 40% of its quarterly revenue.