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Lockheed nabs F-35 sustainment contract worth up to $6.6B

WASHINGTON — The Pentagon on Monday awarded Lockheed Martin a contract worth up to $6.6 billion to sustain the F-35 joint strike fighter from fiscal 2021 to 2023, a deal that will reduce the cost of flying the aircraft by about 8 percent.

The agreement funds the sustainment of the F-35 air system for U.S. and international customers during FY21, with options for FY22 and FY23 that would bring the contract’s total value to $6.6 billion.

During that time, the average cost per flight hour for all F-35 variants will drop from $36,100 in 2020 to $33,400 in 2023, according to a Defense Department statement. For the F-35A conventional takeoff and landing model — the most prevalent variant of the aircraft, used by the U.S. Air Force and most international customers — the cost per flight hour will go from $33,600 in 2020 to $30,000 in 2023.

Lockheed’s share of the cost per flying hour would decrease by more than 30 percent from the 2020 contract, said Bridget Lauderdale, Lockheed’s vice president for the F-35 program.

The deal will also drive improvements in full mission capable rates and supply metrics, the department stated.

“Working together with our industry partner, the F-35 joint program office team negotiated aggressive cost savings and performance targets that will benefit the global F-35 sustainment enterprise, and all F-35 customers,” said Lt. Gen. Eric Fick, who leads the F-35 joint program office on behalf of the Pentagon. “This ‘21-’23 sustainment contract agreement is a positive step in securing affordable lifecycle costs for our customers.”

The contract covers “on-site support of day-to-day operations from LM field service representatives, engineers, and Autonomic Logistics Information System (ALIS) administrators, along with global enterprise support for sustaining engineering, supply chain, repair and replenishment material, and training,” according to the program office.

However, it does not include the cost of sustaining the jet’s F135 engine, which is negotiated in a separate contract with manufacturer Pratt & Whitney.

Importantly, both the program office and Lockheed Martin stated that the deal “lays the groundwork” for a future performance-based logistics contract, which the company has sought over the past few years.

In 2019, Lockheed proposed a performance-based logistics contract it claimed would result in $1 billion in savings for the department, but the Pentagon rejected the offer. Fick in 2020 said the department was still working to “crisply articulate [its] desired role” in sustaining the jet and didn’t want to get locked into a deal that wouldn’t meet its requirements.

Lockheed presented a scaled-down version of the proposal to the Pentagon earlier this year. That offer centered around ensuring the availability of spare parts and accelerating repair times and would have run from 2022 to 2026.

However, some lawmakers are skeptical a performance-based logistics contract will produce the intended results.

The House Armed Services Committee’s version of the FY22 defense authorization bill includes language that would prohibit the Defense Department from entering into such a deal for the F-35 program unless the defense secretary certifies that the program meets cost reduction metrics and that sustainment costs would further decrease under the terms of the agreement.

Valerie Insinna is Defense News’ air warfare reporter. She previously worked the Navy/congressional beats for Defense Daily, which followed almost three years as a staff writer for National Defense Magazine. Prior to that, she worked as an editorial assistant for the Tokyo Shimbun’s Washington bureau.

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