November 14, 2018 / 10:09 PM / a month ago

Lockheed gets interim payment for first multi-year F-35 contract -Pentagon

WASHINGTON, Nov 14 (Reuters) - Lockheed Martin Corp has won a preliminary contract valued at as much as $22.7 billion to build a batch of 255 F-35 jets for the U.S. military and its allies, the U.S. Defense Department said on Wednesday.

The department said the deal would allow Lockheed to receive $6 billion in funding immediately, a move aimed at preventing major delays in production of the new stealthy fighter jets.

This contract is the first to lock in multiyear commitments from U.S. allies as Lockheed anticipates that buying components in larger quantities will help move the price of the most common F-35 jet to below $80 million by 2020. The most common variation of the jet, the F-35 A, had a price of $89.2 million after the most recent round of contract negotiations announced in September.

Lockheed is developing and building three models of the new warplanes for the U.S. military and 10 other countries that have signed up to buy the jets: Britain, Australia, Italy, Turkey, Norway, the Netherlands, Israel, Japan, South Korea and Belgium.

The Pentagon's chief arms buyer, Ellen Lord, told Reuters on Tuesday that she expected to finalize the terms of the deal, known as an "undefinitized contract action" or UCA, with Lockheed, its No. 1 supplier, by the spring of next year.

A Lockheed representative said: "This is a smart approach for the taxpayer, the warfighter and for industry."

Reporting by Mike Stone in Washington Editing by Matthew Lewis

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