America's most expensive weapons system sees the lowest price in its 16-year history

Amanda f35cUS NavyAn F-35C carrier variant joint strike fighter lands aboard the aircraft carrier USS Nimitz.

WASHINGTON — The Pentagon and its top weapons supplier agreed on the lowest set of prices for the F-35 — the US’s most expensive weapons system — since the program began in 2001.

On Friday, the F-35 Joint Program Office released the finalised price for the most recent production contract for America’s fifth generation stealth fighter. The 10th Low Rate Initial Production (LRIP-10) contract for 90 F-35 jets came in $728 million less than LRIP-9.

On Monday, President Donald Trump announced that the latest contract with Lockheed Martin for the F-35 will be reduced by $600 million.

And though it would appear that Trump — after publicly criticising the crown jewel in the defence giant’s portfolio — is the reason for the savings, the price reduction was in the works.

Rewinding the tape back to a December 19 briefing, Lt. Gen. Chris Bogdan, head of the F-35 Joint Program Office, said the price for LRIP-10 contract would be reduced “significantly.”

“I fully anticipate that when we do settle LRIP-10 you’ll see all three variants, the A, the B, and the C come down in price significantly,” Bogdan said.
And by “significantly” Bogdan added that he believes “somewhere on the order of 6 to 7 per cent per aeroplane, per variant.”

F35bUS NavyAn aviation boatswain’s mate maneuvers BF-04, front, the U.S. Marine Corps variant of the F-35B after a vertical landing aboard the amphibious assault ship USS Wasp.

The finalised price for LRIP-9, which took 14 months of negotiations between the Department of Defence and Lockheed Martin, for 57 F-35 jets was valued at $6.1 billion.

The unit price for an F-35A in current year dollars (including aircraft, engine, and fee) is $102.1 million. If you take the 6 to 7 per cent reduction into account, the savings on LRIP-10 are ballpark to the price point laid out by the Joint Program Office back in December.

Most notably in LRIP-10, the total price for an F-35A falls below $100 million for the first time.

The LRIP-10 contract includes 55 jets for the US and 35 for seven international partners and foreign military sales clients.

The following is a breakdown of the unit price per variant in current year dollars (including aircraft, engine, and fee):

Here’s the price tag for the latest batch of F-35s:

F-35A model aircraft: $94.6 million a jet

F-35 model aircraft: $122.8 million a jet

F-35C model aircraft: $121.8 million a jet

NOW WATCH: This is how pilots train to fly the F-35 — America’s most expensive fighter jet

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.