F-35 Lot 11 Contract to Incentivize Enhanced Production Processes

F-35 Lightning II Joint Strike Fighter program director Vice Adm. Mat Winter has said that the new contract with Lockheed Martin to produce Lot 11 of the fifth-generation multi-role fighter aircraft will incentivize the defense contractor to enhance its production performance, USNI News reported Monday.

The contract, potentially worth $11.5B, calls for the manufacture of 91 F-35 units for the U.S. military, 28 for international partners and 22 that would be sold to other foreign customers.

Vice Adm. Winter noted that previous agreements rewarded the contractor for keeping costs below the contract price tag but did not result in any consequences when the manufacturer missed monthly production targets or committed production errors.

The new contract will reward Lockheed Martin for avoiding such problems.

“We have taken a portion of that same fee amount, a portion of it – not an increase, same portion – chiseled it out and said, if you don’t increase your performance you won’t get this fee. If you increase your performance, then you get the same fee you have in the past,” Winter said.

Lockheed Martin has said it expects to begin delivering the new aircraft by 2019.