Lockheed, Pentagon reach handshake deal for next 2 F-35 production lots

WASHINGTON — After protracted negotiations, the Pentagon and Lockheed Martin have reached an informal agreement, known as a “handshake deal,” for the next two production lots of the F-35 Joint Strike Fighter, the parties confirmed to Breaking Defense.

“We have reached an initial agreement as part of ongoing negotiations for the Lot 18/19 Air Vehicle Production Contract,” the F-35 Joint Program Office (JPO) and Lockheed said in a joint statement. 

The statement did not share final quantities or prices, saying only that those figures will be disclosed “when a final agreement is signed.” The news was first reported by Air & Space Forces Magazine, which stated the agreement covers roughly 300 aircraft.

Progress on F-35 negotiations is likely welcome news to Lockheed, which has recently been funding the tri-variant stealth fighter’s production out of pocket as talks dragged on. A Lockheed executive told Breaking Defense last year that the aerospace giant aimed to finalize the lot 18/19 deal by the end of 2023, marking a significant delay for the negotiations. The program has recently battled inflation woes, supply chain challenges and technical problems that halted deliveries of upgraded jets for a full year.

It’s not clear what the price might be for the forthcoming jets, though Lockheed has telegraphed that inflation may hike costs. Jets in lots 15 through 17 came in at an average price of $82.5 million for the conventional takeoff and landing F-35A, $109 million for the short takeoff and vertical landing F-35B and $102.1 million for the carrier-launched F-35C, Breaking Defense previously reported. 

Unlike the previous contract structure that included three production lots, the upcoming F-35 deal only covers two. Officials have discussed lot 20 serving as the first multi-year production agreement. Lockheed maintains that its Fort Worth, Texas, plant can build 156 jets annually. 

If the past is any guide, it could be several months before an agreement is inked. When the two parties reached a similar handshake agreement for lots 15-17 in July 2022, the contract was not finalized until December of that year. 

Asked when Lockheed planned for the 18/19 deal to become official, a company spokesperson referred Breaking Defense to comments from Chief Financial Officer Jay Malave during the firm’s third quarter earnings call in October. Malave said then that company officials anticipated the lot 18/19 contract will be awarded this year.