The U.S. Department of Defense (DoD) and Lockheed Martin have finalized a landmark contract for the production and delivery of up to 296 F-35 Lightning II stealth fighters across production Lots 18 through 20. The multiyear deal—valued at approximately $34 billion—covers deliveries through the end of the decade and includes aircraft for both U.S. services and international partners.
Contract Scope Covers Three Production Lots
The finalized agreement encompasses three consecutive low-rate initial production (LRIP) lots—Lot 18 (FY2024), Lot 19 (FY2025), and Lot 20 (FY2026). While the base contract includes a firm order for approximately 145 aircraft in Lot 18 alone, the total number across all three lots could reach up to 296 units if all options are exercised.
This deal marks one of the largest single procurement packages in the history of the Joint Strike Fighter program. It includes all three variants of the fifth-generation multirole fighter:
- F-35A: Conventional takeoff and landing (CTOL) variant used by the U.S. Air Force and most international customers.
- F-35B: Short takeoff/vertical landing (STOVL) variant operated by the U.S. Marine Corps and Royal Navy.
- F-35C: Carrier-based variant designed for catapult launches and arrested landings aboard U.S. Navy aircraft carriers.
The contract also covers mission equipment, logistics support elements, software integration efforts—including Technology Refresh 3 (TR-3)—and sustainment components necessary to field operationally relevant capabilities across multiple theaters.
Technology Refresh 3 Integration Remains Critical
A key component of this procurement is integration of Technology Refresh 3 (TR-3), a long-delayed hardware/software upgrade package that underpins future capability enhancements such as Block 4 upgrades. TR-3 introduces improved processing power via new core processors (CPUs), panoramic cockpit display units, memory modules, and advanced avionics interfaces needed to support next-generation sensors and weapons.
However, TR-3 has faced significant delays due to software development issues. As a result, many aircraft from Lot 15 onward are being delivered in a “TR-3-ready” configuration but will require retrofitting once stable TR-3 software becomes available—currently projected sometime in late FY2025 or early FY2026.
The Pentagon’s Joint Program Office has confirmed that deliveries under this new contract will be aligned with TR-3 readiness timelines where possible but may still require post-delivery modifications depending on software maturity at time of handover.
International Partners Play Major Role in Procurement
This multiyear agreement is not limited to domestic U.S. requirements; it also includes orders from several Foreign Military Sales (FMS) customers as well as partner nations under the Joint Strike Fighter consortium framework.
Nations expected to receive aircraft under this contract include:
- United Kingdom
- Italy
- Netherlands
- Australia
- Norway
- Japan
- South Korea
- Finland, (first deliveries expected FY2026)
The inclusion of these partner nations underscores the global footprint of the F-35 program—now involving over a dozen countries—and its role in enabling allied interoperability through shared platforms with common logistics chains and datalink architectures such as Link-16 and MADL (Multifunction Advanced Datalink).
Sustainment Costs Still Under Scrutiny
While acquisition costs per unit have declined over successive lots—the average flyaway cost for an F-35A is now estimated around $82 million—the long-term sustainment burden remains a concern among both U.S. lawmakers and international operators.
The Government Accountability Office (GAO) has repeatedly flagged issues with spare parts availability, depot-level maintenance capacity shortfalls, Autonomic Logistics Information System (ALIS)/ODIN transition challenges, and overall cost-per-flight-hour metrics exceeding targets set by DoD affordability caps.
The current goal remains reducing operational costs below $25K per flight hour by mid-decade—a target that will require continued investment in predictive maintenance tools, digital twin modeling techniques for lifecycle management, supply chain reform initiatives led by Lockheed Martin’s sustainment division based in Fort Worth TX, and increased MRO participation from global partners like Leonardo (Italy) or Kongsberg Defence & Aerospace (Norway).
A Strategic Win Amid Budget Pressures
This multiyear procurement represents a strategic win for both Lockheed Martin’s Aeronautics division and DoD planners seeking cost predictability amid tightening defense budgets. By locking in pricing across three lots with economies-of-scale incentives built into unit pricing formulas—and avoiding annual renegotiations—the Pentagon expects savings exceeding $1 billion compared to single-year buys.
The deal also provides stability to key suppliers within the global industrial base supporting over 1,800 companies across North America and Europe involved in manufacturing components ranging from radar arrays to titanium airframes.
This comes at a time when geopolitical tensions—from Indo-Pacific deterrence postures against China to NATO reinforcement missions along Eastern Europe’s frontlines—are driving demand for survivable multirole platforms capable of penetrating contested airspace while executing ISR-strike missions under joint C4ISR networks.
Outlook: Toward Full Rate Production?
This latest contract brings total global orders past the ~1,000-unit mark out of an eventual projected fleet size exceeding 3,000 aircraft worldwide—including over ~1,700 units planned just for U.S. services alone through mid-century service life projections.
If TR-3 integration stabilizes by late FY2025 as forecasted—and Block IV capability insertion proceeds on schedule—the program could finally transition into full-rate production status after years of delay caused by concurrency challenges during earlier LRIP phases.
A decision on full-rate production status is now expected no earlier than Q4 FY2025 pending successful completion of Initial Operational Test & Evaluation milestones tied directly to TR-3-equipped jets’ performance validation against threat-representative scenarios at test ranges like Nellis AFB or NAS Patuxent River.
