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Contracts · Aircraft

Pentagon and Lockheed discuss multiyear F-35 production and sustainment deal, Breaking Defense reports

Neither chamber's version of the fiscal 2027 defense authorization bill explicitly authorizes multiyear sustainment, Breaking Defense reported.

The Department of War and Lockheed Martin are discussing an F-35 deal that could span up to a decade and cover both production and sustainment, Breaking Defense reported Friday, citing people familiar with the negotiations. Lockheed told the outlet it "continues to advocate for a multi-year contracting approach," and the F-35 Joint Program Office and the Pentagon declined to comment.1

Neither version of the bill explicitly mentions or authorizes a multi-year sustainment agreement

The fiscal 2027 defense authorization bill

Senate Armed Services Committeewould permit the Pentagon to enter into multi-year procurement contracts for the F-35contingent

Both the House and Senate will need to hammer out agreed upon language before Congress passes the finalized bill

House version of the billthe Pentagon must also demonstrate the multi-year contract achieves cost savings of at least 5 percentcontingent

would not authorize F-35 multiyear procurement until the defense secretary certifies the contract includes the full complement of initial spare parts and alternate mission equipment for each aircraft

The Pentagon and Lockheed Martin are in discussions over an F-35 deal that could span up to a decade and include both production and maintenance, according to people familiar with the negotiations.

Reported by Breaking Defense, Oct. 9, 2026

Sources
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Matt Milas, president of Honeywell Aerospace's defense division, told Breaking Defense in September the "big benefit" would largely be on the sustainment side, since production is expected to stay at 156 jets a year. He said the deal could include "bulk buys" of spare parts, with more components flowing from around the 21st production lot, expected in roughly three years. Sustainment is the half neither chamber's bill explicitly authorizes, Breaking Defense reported.1

The Senate Armed Services Committee's bill and the House version would permit F-35 multiyear procurement contracts, Breaking Defense reported. The House adds conditions: certification that the contract includes "the full complement of initial spare parts and alternate mission equipment" for each jet, and a demonstration of cost savings of at least 5%.1

Lockheed previously pushed for a larger sustainment deal, a five-year performance-based logistics (PBL) contract. Lawmakers required the Pentagon to certify such a deal would cut maintenance costs or raise readiness, a hurdle officials couldn't clear, Breaking Defense reported. One source familiar with the negotiations called the sustainment proposal "PBL by another name." Dina Halvorsen, Lockheed's vice president of F-35 global sustainment, told reporters Sept. 14 that a multiyear performance-based contract "is still in discussion," adding, "I wouldn't necessarily call it a PBL."1

The source familiar with the negotiations doubted Lockheed "can successfully propose something that demonstrates long-term cost savings," the kind of case officials could not certify for the earlier PBL, Breaking Defense reported. The final bill, once both chambers agree on language, will show whether the House's savings test and spares certification survive and whether its text explicitly covers sustainment.1

Sources (1)
  1. Breaking Defense: Pentagon, Lockheed weigh multi-year F-35 production, sustainment deal (Oct. 9, 2026) breakingdefense.com
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Contracts · Combat aircraft

A U.S. Air Force F-35A Lightning II aircraft, assigned to the 4th Fighter Squadron, is towed by members of the 34th Fighter Generation Squadron, both assigned to Hill Air Force Base, Utah, at the National Museum of the U.S. Air Force, Wright-Patterson AFB, Ohio, May 24, 2025.
Archive photograph · A U.S. Air Force F-35A Lightning II aircraft, assigned to the 4th Fighter Squadron, is towed by members of the 34th Fighter Generation Squadron, both assigned to Hill Air Force Base, Utah, at the National Museum of the U.S. Air Force, Wright-Patterson AFB, Ohio, May 24, 2025. Tech. Sgt. Daniel Peterson / DVIDS Taken 2025-05-24. public-domain; reuse terms. The appearance of U.S. Department of War (DoW) visual information does not imply or constitute DoW endorsement.

Lockheed to self-fund at least $7 billion under F-35 framework

The framework sets a minimum of 850 U.S. aircraft over 10 years; execution depends on congressional authorization and appropriations.

The Department of War and Lockheed Martin finalized a 10-year framework for F-35 production and sustainment on Oct. 22, 2026.12 The department says Lockheed will self-fund at least $7 billion in initiatives supporting the program in exchange for the decade-long commitment.1

Lockheed Martin will self-fund at least $7 billion

10-year F-35 framework agreement

Lockheed Martin will self-fundat least $7 billionplanned

initiatives that support the F-35 Program

formal contract awardwill work to finalize contract terms, pricing, and schedulescontingent

If granted multiyear authority and associated appropriations in the coming months

Execution of the agreement remains subject to Congressional authorization and appropriations.

Sources: Department of War; Lockheed Martin. As of Oct. 22, 2026.

Sources
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Execution remains subject to congressional authorization and appropriations.1 If multiyear authority and associated appropriations are granted in the coming months, Lockheed says it and the F-35 Joint Program Office will work to finalize contract terms, pricing and schedules through a formal award.2

The department describes 850 U.S. aircraft as the framework’s minimum floor over 10 years.1 The framework includes initial spares and 10 years of modification kits and sustainment.2

It also includes international customer orders across Lots 21–30. Lockheed describes a continued production rate of 156 aircraft a year under the framework.2

Lockheed CEO Jim Taiclet said the greater certainty would let the company make upfront investments to expand capacity, improve efficiency and build a more resilient supply chain.2

Sources (2)
  1. Department of War: Department of War and Lockheed Martin Finalize Landmark 10-Year F-35 Deal, Securing $7B in Private Investment (Oct. 22, 2026) www.war.gov
  2. Lockheed Martin: New Framework Agreement for Multiyear F-35 Production and Sustainment (Oct. 22, 2026) news.lockheedmartin.com

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Industry · Prime contractors

Lockheed's missiles segment sales rise 24% with margin nearly steady

Missiles and Fire Control accounts for most of Lockheed's backlog increase from year-end through the third-quarter close.

Lockheed Martin's Missiles and Fire Control segment increased sales 24% in third-quarter 2026.1 Sales reached $4.5 billion. Its operating margin edged down to 14.0% from 14.1% a year earlier.2 Companywide, sales rose 11% to $20.7 billion.1

Lockheed's missiles segment outpaces companywide sales growth

Year-over-year sales growth, third quarter 2026 (%)

Missiles and Fire Control24%
Lockheed Martin companywide11%

Companywide sales include Missiles and Fire Control.

Source: Lockheed Martin third-quarter 2026 financial results. As of Oct. 22, 2026.

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Lockheed attributed the segment's sales increase primarily to production ramps on Patriot Advanced Capability-3, Terminal High Altitude Area Defense, Guided Multiple Launch Rocket Systems and Precision Strike Missile programs.1

Also announced

Costs on the F-35 Lot 20 advance acquisition contract began exceeding current contractual authorization and funding during the quarter. Production contracts for lots 20 and higher remain under negotiation. Lockheed warned that without additional authorization and funding from the government, its operating results, cash flows and financial condition will suffer in future periods.1

Missiles and Fire Control accounted for about 97% of Lockheed's backlog increase from the prior year-end through the third-quarter close, by our calculation.2 Total backlog reached $292.0 billion.1–2 It included $52.5 billion associated with the multi-year award to produce PAC-3 Missile Segment Enhancement interceptors.1

Sources (2)
  1. Lockheed Martin Reports Third Quarter 2026 Financial Results news.lockheedmartin.com
  2. Lockheed Martin 8-K, Exhibit 99.1, Oct. 22, 2026 www.sec.gov