* Pentagon orders 31 more F-35s in sixth production batch
* Details of contract to be worked out next year
* Company welcomes deal, says focused on cutting costs
By Andrea Shalal-Esa
WASHINGTON, Dec 28 Lockheed Martin Corp
on Friday was awarded up to $4.9 billion in additional funding
for its F-35 Joint Strike Fighter program, the Pentagon
announced on Friday, providing a significant end-of-year boost
in orders for the largest U.S. defense contractor.
The U.S. Defense Department said it had reached agreement
with Lockheed on a preliminary contract valued at up to $3.68
billion for 31 F-35s in a sixth batch of planes to be built for
the U.S. military, with details to be finalized the coming year.
It also awarded Lockheed additional separate contracts
valued at up to $1.2 billion for spare parts and sustainment of
the new radar-evading warplane.
The Pentagon plans to spend $396 billion to buy a total of
2,443 F-35 fighter jets from Lockheed over the next decades for
the U.S. Air Force, Navy and Marine Corps, making the Joint
Strike Fighter the costliest weapons program in U.S. history.
Lockheed is developing the single-seat, single-engine plane
for the U.S. military and eight international partners --
Britain, Australia, Italy, Canada, Turkey, Denmark, Norway and
the Netherlands, which helped pay for the plane's development.
The production contract announced on Friday includes 18
conventional takeoff and landing jets for the Air Force, six
short takeoff and landing variants for the Marine Corps; and
seven carrier variants for the Navy.
It does not include three F-35 fighters to be purchased by
Italy and two to be purchased by Australia as part of the sixth
lot of low-rate, initial production.
Those agreements will be negotiated next year, said Joe
DellaVedova, spokesman for the Pentagon's F-35 program office.
He said an agreement reached earlier this month on a fifth
batch of jets had helped speed up negotiations on the
preliminary sixth production contract.
"The F-35 Joint Program Office continues to work diligently
to ensure that managing jet cost, remaining on schedule during
test and production and driving production efficiencies ... are
incentivized in contract negotiations while ensuring that
respectable profit is available to the contractor," he said.
He said the Pentagon continued to push the company to reduce
its "rework" rate, which refers to production work that has to
be redone because of mistakes, and also the amount of time
needed to make any required changes to the plane's design.
Lockheed welcomed the agreement with the Defense Department.
"We remain committed to reducing costs while building upon
our excellent production performance in 2012," said spokesman
Mike Rein. "Our top priority remains to deliver the F-35's 5th
generation capability to our U.S. and partner nations."
The agreement also does not include engines for the
fighters, which are purchased under separate contracts
negotiated directly between the Pentagon and engine maker Pratt
& Whitney, a unit of United Technologies Corp.
Sources familiar with the government's talks with Pratt &
Whitney said they were making good progress.
The Defense Department two weeks ago finalized an agreement
with Lockheed for a fifth batch of F-35 planes, a $3.8 billion
deal to buy 32 of the aircraft.
At the time, company executives and defense officials said
that agreement paved the way for a deal on early funding for the
next group of planes by the end of the year.
The agreement obligates a significant portion of the funding
for that next group of F-35s, safeguarding that money from cuts,
even if U.S. lawmakers do not reach a deal to avert automatic
reductions due to start taking effect on Jan. 2.
The agreement also removes a potential $1.1 billion
liability that Lockheed said it faced on the program for work
done by it and its key suppliers without a signed contract.
Lockheed shares closed $1.49, or 1.6 percent, lower at
$91.34 on the New York Stock Exchange on Friday.