Lockheed hopes to firm up F-35 Lot 6 & 7 contracts before mid-year

Lockheed Martin hopes to "definitize" previously awarded F-35 low rate initial production (LRIP) Lot 6 and 7 contracts in the first half of 2013, top company officials told investors on 24 January.

"We are in direct discussions right now at the programme level on Lots 6 and 7 and the intent is to negotiate both of those together and get that done in the first half of the year," says Marillyn Hewson, the company's newly anointed president and chief executive officer.

Hewson says that over the course of the past five LRIP negotiations, Lockheed and the government have gained a better perspective on their respective positions. "We had an opportunity to spend time with our customer and let them share with us how they viewed all of the cost elements. We had an opportunity, likewise, to share that with them and I think through that process we were able to come to a mutual understanding," she says.

Altogether, Lockheed currently has a backlog of 88 F-35 aircraft. "Our maturing production lines, operational base stand-up and expanded pilot training are all strong indicators of the F-35 programme's positive trajectory," Hewson says.

Lockheed also hopes to secure funding for long-lead production items for LRIP 8 aircraft this year. "I think an important one, and I think is worth mentioning, is we expect to get long-lead funding for Lot 8 of the F-35 program for some 48 aircraft," says Bruce Tanner, Lockheed's chief financial officer. "Just the quantity alone versus the prior year's quantities is worth mentioning. Think of that as 29 domestic aircraft and 19 international aircraft including nine FMS [foreign military sales] for military sales outside of the eight initial partners."

Meanwhile, deliveries of the F-35 are proceeding smoothly with four aircraft delivered by the end of 2012. "We'll deliver all remaining Lot 4 aircraft in 2013," Tanner says. "Somewhere in the middle of the year, third quarterish time of the year, we'll start delivering Lot 5 aircraft and those will be the aircraft that we deliver all the way through the end of the year."

Tanner says that the company has started to gain "efficiencies" in manufacturing the F-35. He points out the company delivered 30 aircraft in 2012 even with a workers' strike. "We started 2012 for the goal of delivering 30 aircraft. We had multiple strikes at our Fort Worth facility, and we still delivered 30 aircraft," he says. "The efficiencies we are getting in the production line are starting to be self-evident."

Those efficiencies could translate into savings for the US government. "We are working very hard on taking costs out of our business and driving toward a more affordable product for them in all aspects of our business," Hewson says.