(Corrects eighth paragraph in story originally published on Sept. 22 to clarify the planes being replaced by the F-35.)
Sept. 22 (Bloomberg) -- Lockheed Martin Corp. agreed to build 32 Joint Strike Fighters, and absorb some of any cost increases, in a U.S. Defense Department order that may be valued at more than $5 billion.
The contract is for the fourth batch of early production-model jets on a so-called fixed-price plus incentives basis. Defense companies usually work on a cost-plus basis during a weapon’s development, with taxpayers picking up any growth in expenses.
The F-35 Joint Strike Fighter is the most expensive U.S. weapons program, with costs surging 65 percent since 2002 to $382.4 billion. Defense Secretary Robert Gates has said the country may withhold from Lockheed as much as $614 million in fees because of delays on the warplane, pending improvements in flight tests.
The accord “brings us to 63 production aircraft on contract for five services in three countries,” Jeffery Adams, a spokesman for the Bethesda, Maryland-based company, said in an e-mail.
The U.S. will purchase 30 of the jets, the U.K. will buy one and the Netherlands may also take one, Cheryl Irwin, a Pentagon spokeswoman, said in a statement.
The contract will include for the first time all three variants of the fighter jet: the conventional take-off, short take-off and aircraft-carrier models, Jennifer Whitlow, a Lockheed spokeswoman, said in an e-mail. The order’s value includes the jet’s production as well as maintenance and production tooling, she said.
Development and combat testing of the F-35 is more than four years behind schedule. The warplane is designed to be used, with modifications, by the Air Force, Navy and Marine Corps, instead of each service buying its own aircraft.
The jet will replace models such as the Air Force’s F-16 and A-10, and the Harrier jet flown by the Marines and the U.K.
The U.S. plans to buy about 2,473 jets and eight international partners may buy 700 more.
Lockheed rose 39 cents to $72.04 at 2:28 p.m. in New York Stock Exchange composite trading. The shares declined 4.9 percent this year before today.
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