Pentagon seeks at least 5 pct savings on Lockheed F-35 jet, sources

WASHINGTON (Reuters) - The Pentagon and Lockheed Martin Corp could shave at least 5 percent off the price of stealthy F-35 fighter jets in their upcoming annual purchase contract as the standard version of the plane heads toward a price of below $80 million, people familiar with the talks told Reuters.

Two Lockheed Martin Corp F-35 stealth fighter jets flies during a display at the Avalon Airshow in Victoria, Australia, March 3, 2017. Australian Defence Force/Handout via REUTERS

The Pentagon, under the direction of Secretary of Defense Jim Mattis, has been exploring how to cut the costs of its most expensive weapons program.

The deal for last year’s annual purchase contract, struck this February, put the standard takeoff and landing version of the jet at the lowest price ever, $94.6 million, a 7.3 percent reduction from the previous annual purchase price of $102 million.

The current negotiations are for a batch of about 130 planes. The talks could shave 5-7 percent, or $660 million, from the approximately 100 standard takeoff and landing “A-model” jets for the U.S. Air Force and the U.S. allies, the people said.

The F-35 comes in three configurations: the A-model; the B-model, which can handle short take-offs and vertical landings for the Marine Corps and the British navy; and the carrier-variant F-35C jets.

The number and type of jets in the deal as well as the timing for an agreement have not been finalized, the people said. They spoke on condition of anonymity because the talks are private.

The Pentagon’s F-35 Joint Program Office said it remains focused on getting the best deal for the planes and for taxpayers, but would not comment on the negotiations. A Lockheed Martin representative declined to comment.

President Donald Trump and other U.S. officials have criticized the F-35 program for delays and cost overruns, but the price per jet has steadily declined in recent years as production increases.

Speaking at a conference last month, Lieutenant General Chris Bogdan, head of the F-35 program for the Pentagon, said the government hoped that by 2020 the F-35 would cost less than $80 million, a 16 percent drop from its current price.

Lockheed, the prime contractor for the jet, and its partners including Northrop Grumman Corp, United Technologies Corp’s Pratt & Whitney and BAE Systems Plc, have been working to lower costs by building a more cost-effective supply chain for the production line in Fort Worth, Texas.

Reporting by Mike Stone; Editing by Frances Kerry