UPDATE 1-Pentagon finalizes $7.8 bln in F-35 contracts with Lockheed 27 Sep 2013 Andrea Shalal-Esa
"(Reuters) - The Pentagon on Friday said it had finalized two contracts with Lockheed Martin Corp valued at $7.8 billion for 71 more F-35 fighter jets, citing what it called significant reductions in the cost of the new radar-evading warplane.
The U.S. Defense Department said it signed a $4.4 billion contract for a sixth batch of 36 F-35 aircraft, with the average cost of the planes down 2.5 percent from the previous deal. All but $743 million of that amount had already been awarded to the company under a preliminary contract.
The two sides also signed a $3.4 billion contract for 35 aircraft in a seventh batch, which reflected a 6 percent drop in the average price from the fifth group, it said in a statement.
The Pentagon's F-35 program office said the cost of each F-35 conventional takeoff A-model jet would drop to $98 million in the seventh batch of jets, excluding the engine, from $103 million in the sixth lot. It marks the first time the price of the jet will have dipped below $100 million.
The U.S. government buys the engines directly from Pratt & Whitney, a unit of United Technologies Corp, under a separate contract....
...The Pentagon said the price of the B-model that Lockheed is building for the Marine Corps, would drop to $104 million in the seventh group from $109 million in the sixth. It said the cost of the C-model variant, which will be able to land and take off from aircraft carriers, would drop to $116 million a jet from $120 million in the sixth lot.
The contracts also reduce the government's exposure to cost overruns, according to the Pentagon's statement, with Lockheed agreeing to cover any cost overruns. The government and Lockheed would share returns on a 20-80 split basis if costs come in below target, it said.
The two sides will share equally the costs of all known retrofits needed for the aircraft, while any newly discovered changes could result in higher contract costs, the Pentagon said."
UPDATE 1-Pentagon finalizes $7.8 bln in F-35 contracts with Lockheed | Reuters