The Trump administration pledged to keep buying Lockheed Martin's F-35 jet fighters for the next decade, its longest commitment yet among a string of recent Pentagon agreements to buy advanced weaponry.
The framework agreement announced Thursday covers 850 F-35 Lightning II aircraft for the U.S. military, hundreds more for international customers and a suite of spare parts and other gear. The deal would lock in the defense contractor's plan to pump out 156 jets annually in the coming years.
Lockheed Martin agreed to self-fund $7 billion of the long-term production effort, which includes investments in spare-parts production and other infrastructure.
The bulk buy is the latest in a string of record-setting Pentagon agreements to strengthen its arsenal.
Similar agreements for missiles from Lockheed, RTX and other suppliers near the start of this year acted as the starting gun for months of negotiations toward firm contracts. Several of those missile deals have since yielded preliminary contracts worth more than $100 billion -- much of that still awaiting congressional funding.
President Trump earlier this year summoned the CEOs from top defense contractors to the White House to press them to increase their production rates. Trump has threatened to use the government's contracting powers to curb companies' stock buybacks and dividend payments if they don't meet performance targets.
Lockheed Martin is among the companies that have wooed the commander in chief with donations to his White House ballroom construction project. The company also contributed more than $5 million to build and then rework a helipad on the White House grounds to handle its newest Marine One aircraft. Lockheed Martin has said the donation was part of the company's history of supporting projects in the capital region.
The F-35 preliminary pact represents a calculated risk for the Pentagon, which is committing to buy years of weapons before lawmakers in Congress have agreed to foot the bill. A contract would likely need tens of billions of dollars of appropriations to cement.
The stealth fighter program has already been called the world's most expensive weapon with a projected $2 trillion cost to buy, operate and maintain over its lifetime.
Deputy Defense Secretary Steve Feinberg has said the novel agreements help defense contractors plan their investments to meet the military's needs.
Suppliers to military programs often complain about challenges in long-term planning as a result of inconsistent levels of appropriations from Congress.
"This multiyear framework strengthens the way we can plan and invest in the F-35 enterprise," Lockheed Martin Chief Executive Jim Taiclet said.
The Defense Department early this year struck deals with Lockheed, RTX and other contractors to order thousands of sophisticated missiles mainly over the next seven years. The agreements included aggressive production targets for Patriot and Thaad interceptors, two defensive weapons in short supply after the U.S. war with Iran.
The recent missile deals and other weapons contracts pushed up Lockheed's pending order backlog to a record $292 billion at the end of its third quarter. Its overall sales grew 11% to $20.7 billion. Shares of the company rose premarket.
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