Lockheed and Pentagon Finalize $24.3 Billion Agreement for 296 F-35s in Lots 18 and 19

The Joint Program Office and Lockheed Martin closed a $24.3 billion agreement for 296 F-35s covering production Lots 18 and 19. The package locks in 148 aircraft per lot and ends a two-year negotiation cycle that started after an undefinitized award used to keep factory work moving late last year. Deliveries under this deal start in 2026 and include aircraft for U.S. services, program partners and foreign military sales customers.

The signed modification brings formal terms to a combined award structure for Lots 18 and 19. Program officials communicated in the spring that the government planned a single negotiation covering both lots, a shift meant to streamline pricing talks and schedules.

Contract documentation points to a completion window that extends into 2028, aligning factory cadence and international acceptances over several fiscal cycles. The work profile spans U.S. and export tails.

Lockheed’s F-35 lead, Chauncey McIntosh, publicly welcomed the conclusion of the deal. The government side did not publish a per-variant unit cost at award, consistent with past practice when engines and some support elements remain on separate instruments.

Lot 18 and Lot 19 Contract Terms and Quantities

The modification signed at the end of the fiscal year definitizes Lot 18 at 148 airframes and adds the authorization and funding lines to produce another 148 in Lot 19, for a total of 296 aircraft. Award language lists all three U.S. variants and export quantities under partner and FMS channels. Work scope includes air vehicle production and associated support required to deliver completed airframes to the government.

The government used a fixed-price incentive and firm-fixed-price mix for major production elements, with cost-plus coverage limited to defined support tasks. This split mirrors recent lots and reflects stable production content on the air vehicle.

Program statements emphasize that negotiated air vehicle pricing stayed within inflation benchmarks when adjusted against the Lot 15-17 baseline. That claim rests on indices the program and contractor track for material and labor categories. According to industry sources the effect of raw material prices and currency swings moderated from their 2022-2023 peaks but still weighed on unit lines during the period covered by this award.

The award follows a December 2024 undefinitized action that bridged long-lead and early Lot 18 production while the sides finished negotiations. Combining Lots 18 and 19 into one package formalized that bridge and gave factories a clearer schedule.

Engine Procurement and Definitization Timeline

Engines remain outside the airframe award as government-furnished equipment. The propulsion line is under separate contracting with Pratt & Whitney for F135 production and spares aligned to Lot 18 aircraft. The government issued an undefinitized contract action for those engines in late August with a value of about $2.8-$2.9 billion. Program officials communicated that Lot 18 engine terms would be definitized and a Lot 19 engine contract would follow in early spring 2026.

That split structure drives how analysts discuss “flyaway” cost. A true flyaway number requires both contracts to settle and then fold in variant mix and configuration assumptions. Public reporting across Lots 15-17 set the F-35A average flyaway near $82-83 million, excluding some support accounts. The Lot 18-19 number will firm up once engine definitization occurs.

The propulsion award schedules show deliveries and spares support stretching into 2028. That timeline matches airframe output ramps and depot provisioning across multiple bases.

Pricing, Inflation Effects and Recent Flyaway Cost Figures

Program commentary tied to the award states that the air vehicle price growth in Lots 18-19 came in below broad inflation indices used by the enterprise. That message tracks with prior government statements in recent weeks and suggests the parties used escalation factors anchored to the period since the Lot 15-17 award.

The government and Lockheed have referenced the $24.3 billion headline for the air vehicles across 296 aircraft. Without engines, any per-jet math remains a rough guide. A single-figure average also masks the spread between the A, B and C variants, which differ in complexity and installed equipment. Trade publications still reference the earlier F-35A average across Lots 15-17 near the low-$80 million mark, but that number carries different inflation assumptions and does not reflect current engine pricing.

The parties signaled in May that they were working a combined award for Lots 18 and 19 rather than two separate deals. The final award arriving just before the fiscal year cutoff fits the pattern for major production lots and allowed the program to carry forward with long-lead buys placed under the 2024 bridge.

From a factory-floor view, the award stabilizes rate plans at Fort Worth and across major suppliers while international partners plan for intake windows in 2026-2028. According to industry sources that planning clarity matters for items like avionics modules and mission systems racks that sit on longer vendor lead times.

Block 4 Modernization Schedule to 2031 and TR-3 Status

The program’s modernization track is relevant because near-term aircraft deliver with Technology Refresh-3 hardware and software loads that ultimately support Block 4 capabilities. A Government Accountability Office review published in early September reports that the rescoped Block 4 subprogram now targets 2031 at the earliest for completion, with additional items shifted to future modernization efforts. The same review notes plans to begin delivering combat-capable TR-3 aircraft in 2026, following delays tied to hardware and software maturity.

The acceptance policy, effective since mid-2024, allowed deliveries with training-suitable software, while the combat load continued through testing. That posture eased backlog pressure and enabled unit transitions that needed newer displays and processing hardware in place. The current production lots will rely on that approach for a period, then receive successive software drops as operational testing clears them.

The modernization outlook shapes fielding plans but does not alter the core production math inside Lots 18-19. Contracts signed this week fund air vehicles and the separate engine line on timelines that support deliveries beginning in calendar 2026. The key gating items for full Block 4 use now sit with lab throughput and flight test capacity through the end of the decade, rather than the air vehicle hardware in these lots.

Defense officials confirm the deal’s structure provides predictable batch sizes and dates for international customers who sync budgets to multiyear procurement cycles. Program managers can now plan retrofit windows for TR-3 and later Block 4 software drops against known acceptance months.

According to industry sources, suppliers treated this combined-lot award as the signal to lock material buys for avionics, structures and landing gear kits needed in 2026-2027. Several outlets also highlighted the expected spring 2026 timing for the Lot 19 engine award, which should finalize the last major cost variable before analysts publish updated per-variant flyaway estimates.

Variant-specific pricing will remain opaque until engines are finalized and international offsets settle. The A variant has historically been priced lower than the B and C variants, but the actual spread for Lots 18-19 will reflect current inflation inputs and any variant mix changes driven by partner orders. Defense officials confirm that the program will provide the standard data tables once engine awards are complete.

REFERENCE SOURCES

https://www.defensenews.com/air/2024/07/21/f-35-deliveries-resume-but-upgrade-delays-have-ripple-effects/

https://breakingdefense.com/2025/09/lockheed-pentagon-finalize-deal-for-296-f-35s/

https://www.f35.com/f35/news-and-features/Lockheed-Martin-Finalizes-Contract-to-Add-Nearly-300-F35s.html

https://www.defensenews.com/air/2025/09/30/pentagon-awards-contract-for-newest-f-35s/

https://www.gao.gov/assets/gao-25-107632.pdf

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https://www.rtx.com/news/news-center/2025/08/26/rtx-pratt-whitney-awarded-f135-production-contract

https://www.flightglobal.com/fixed-wing/lockheed-martin-secures-contract-for-296-f-35-fighters/164719.article

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