Date
22 May 2017
A man looks at a model of Lockheed Martin's F-35 fighter jet. The F-35 is the Pentagon's costliest arms program. Photo: Reuters
A man looks at a model of Lockheed Martin's F-35 fighter jet. The F-35 is the Pentagon's costliest arms program. Photo: Reuters

Pentagon, Lockheed finalize talks on F-35 fighter jets

US defense officials and Lockheed Martin Corp. representatives have concluded negotiations on a ninth contract for F-35 fighter jets after 14 months of negotiations on the US$6.1 billion deal.

The unilateral agreement on the contract for 57 of the new war planes will give profit margin certainty to Lockheed and its partners who have been producing the jet under a placeholder agreement known as an “undefinitized contract action”, Reuters reports, citing the Pentagon.

People familiar with the contract negotiations who spoke on condition of anonymity said the 10th production contract, a 94-plane deal, was still under negotiation.

In a statement, Lockheed said that the contract was “not a mutually agreed upon contract, it was a unilateral contract action, which obligates us to perform under standard terms and conditions, and previously agreed-to items.”

“We are disappointed with the decision by the government to issue a unilateral contract action.”

People familiar with the procurement process said that the unilateral decision is rare.

The previous lot of 43 jets, lot 8, had an average unit price of US$108 million per plane.

Planes in lot 9 are about US$107 million per plane, 3.7 percent less, making it the lowest price per jet thus far.

The F-35 is the Pentagon’s costliest arms program.

The US Defense Department expects to spend US$391 billion to develop the plane and buy 2,443 of the supersonic, stealthy new warplanes, in the coming decades.

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RA

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