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

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

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

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 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