Pentagon, Lockheed Martin F-35 agreement is largest defense deal in history

The Pentagon and Lockheed Martin on Monday announced the largest single defense deal in U.S. history, reaching a $34 billion handshake agreement for 478 new F-35 fighter jets at the significantly lower cost per aircraft.

In a joint statement, officials with the Defense Department and the private industry giant say the cost per F-35 will be 8.8% lower than in previous deals — or roughly $81 million per plane for the first lot of jets included in the deal.

“This is a historic milestone for the F-35 Enterprise, and marks the largest procurement in the history of the department,” the Pentagon’s Under Secretary of Defense for Acquisition and Sustainment Ellen Lord said in a statement. “This agreement symbolizes my commitment to aggressively reduce F-35 cost, incentivize industry to meet required performance, and to deliver the greatest capabilities to our warfighters at the best value to our taxpayers.”

The agreement covers the 12th, 13th and 14th batches of F-35s ordered by the Pentagon. Industry officials say that by the end of the massive deal, the total price per plane will drop even further.

“The handshake agreement, once finalized, will represent the largest F-35 production contract and the lowest aircraft prices in program history,” said Greg Ulmer, vice president and general manager of Lockheed Martin’s F-35 program. “The unit price for all three F-35 variants was reduced and the agreement will include an F-35A unit cost below $80 million in lot 13, exceeding the Pentagon and Lockheed Martin’s long-standing cost reduction commitment earlier than planned.”

The F-35 in recent weeks has been at the center of a major dispute between the U.S. and Turkey. The Pentagon this month again warned that if Turkey moves ahead with its purchase of the Russian-made S-400 missile system, it will lose access to the American F-35 program.

Last Friday, the Pentagon said it would suspend its training program for Turkish pilots learning to fly the plane. And U.S. personnel working in joint F-35 production facilities in Turkey are expected to return home by July 31.