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The Pentagon and Lockheed Martin have reached a final agreement worth $24.3 billion to produce and deliver 296 latest F-35 Joint Strike Fighters under Lots 18 and 19.  The contract concludes negotiations that stretched over several years and follows a “handshake deal” reached ten months earlier.

The deal consists of a $12.5 billion modification for Lot 18, including scope for Lot 19, which builds on a separate $11.8 billion agreement signed in December 2024. The $24.3 billion deal covers 148 aircraft each in production lots 18 and 19, according to the contract announcement.

The average cost across all variants and customers is calculated at $82.4 million per aircraft. This figure does not include the F135 engines, which are contracted separately with RTX’s Pratt & Whitney and provided as government-furnished equipment.

A Pentagon spokesman noted that unit costs increased compared to previous lots but emphasized that the total settlement price remained below inflation indices. “Cost per aircraft varies as a function of quantity, variant mix, and economic forces,” the spokesman said.

Lockheed Martin stated that the increase in price per jet from previous years was “less than the rate of inflation.”

Production and delivery

Lockheed Martin will primarily build the jets at its facility in Fort Worth, Texas. Deliveries under the new lots are expected to begin in 2026. Lot 20 is projected to be negotiated under a multiyear production contract, now that the F-35 is officially in full-rate production.

The contract covers aircraft for the U.S. Air Force, Navy, and Marine Corps, as well as for international partners and Foreign Military Sales customers.

Lot 19 deliveries include:

• 40 F-35As for the U.S. Air Force
• 12 F-35Bs and 8 F-35Cs for the U.S. Marine Corps
• 9 F-35Cs for the U.S. Navy
• 13 F-35As and 2 F-35Bs for program partners
• 52 F-35As and 12 F-35Bs for foreign military sales customers

“The F-35 Lot 18-19 contract represents continued confidence in the most affordable and capable fighter aircraft in production today,” said Chauncey McIntosh, vice president and general manager of the F-35 program at Lockheed Martin. “We are proud to support our customers and further solidify the F-35’s role in enabling peace through strength.”

Lockheed highlighted that more than 1,230 F-35s are currently in service worldwide, operated by 12 nations. The fleet has accumulated more than one million flight hours.

Additional contracts

Alongside the $24.3 billion F-35 production deal, the Pentagon awarded Lockheed several smaller contracts connected to the program:

• A $101 million cost-plus-fixed-fee deal to procure F-35 parts in advance to mitigate potential shortages or diminishing manufacturing sources.
• A $137 million contract for engineering changes to Lot 17 of the F-35 program and to address diminishing manufacturing sources.
• An $11.6 million contract to redesign a sensor circuit card assembly, with completion expected by July 2027.

Economic and inflationary pressures

Global economic conditions have further complicated negotiations for Lots 18 and 19. The Pentagon’s F-35 Joint Program Office (JPO) noted that significant inflationary pressures had affected costs since the Lot 15-17 contract was signed. Despite these challenges, officials emphasized that the settlement price was kept below relevant inflation indices.

“The global economy has experienced significant inflationary pressures since the Lot 15-17 contract was signed,” a JPO spokesman said. “Nevertheless, the F-35 Joint Program Office and Lockheed Martin arrived at a cost per air vehicle below the relevant inflation indices, underscoring the F-35 enterprise’s commitment to control costs. Adjusted for inflation, the cost per air vehicle is consistent with the cost of those in Lot 15-17.”

Negotiations for Lots 18 and 19 had been underway for several years. A handshake deal was reached in late 2024, with officials predicting a final agreement by spring 2025. However, talks dragged on into the summer, and the JPO decided to combine both lots into a single negotiation to be concluded before the end of the fiscal year on September 30, 2025.

The contract is structured as a “fixed-price incentive (firm-target), firm-fixed-price, cost-plus-fixed-fee” agreement. The JPO said this structure ensures cost control while allowing flexibility for adjustments related to variant complexity and economic shifts.

Global reach of the F-35

The F-35 program continues to expand globally. Twelve nations currently operate the aircraft, including the United States, South Korea, and Israel. Foreign military sales are expected to add further customers in the coming years.

The F-35 has become one of the most widely used fifth-generation fighters, valued for its stealth capabilities, sensor fusion, and advanced electronic warfare systems. It is combat-proven and increasingly central to allied airpower strategies.

With Lot 20 negotiations on the horizon, the program is entering a new phase marked by stability in full-rate production. Multiyear procurement could lower costs further, though inflation and supply chain challenges remain key risks.