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Greg Ulmer, Lockheed Martin's F-35 general manager, briefs the media at the Farnborough International Air Show in England on July 17, 2018. Staff photo by Amy McCullough.

FARNBOROUGH, England—The Pentagon and Lockheed Martin announced they have reached a “handshake deal” on the next lot of F-35 strike fighters, saying the agreement sets the stage for future cost savings through multi-year block buys.

Speaking to reporters at the Farnborough International Air Show here, officials said the unit price decreased “significantly” for all three variants of the strike fighter. Although the company declined to provide a total price until the deal is finalized, Reuters reported it was worth about $13 billion.

Greg Ulmer, Lockheed Martin’s vice president and general manager for the F-35 program, said the Pentagon and Lockheed are “still working to definitize the agreement,” which will cover 141 F-35s, including 50 A-variants for the US Air Force.​.

“Lockheed Martin is on track to reduce the cost of an F-35A to $80 million by 2020, at which point the F-35 will be equal to or less than the cost of legacy fighters, while providing a transformational leap in capability,” according to a company statement.

Production continues to ramp up. In Lot 5 Lockheed delivered nine aircraft a year, compared to 66 last year. Ulmer said it is “on track” to deliver the scheduled 91 F-35s this year, and by LRIP 14 that number will grow to 145 aircraft per year. Lockheed has delivered a total of 309 aircraft to date, he added.

“This latest agreement, along with the technical stability of the aircraft, puts us on a great path to negotiate Lots 12, 13, and 14 as a Block Buy, which will generate additional savings for our customers,” according to the statement.

Lockheed, its industry partners, and the Defense Department first rolled out its “blueprint for affordability” in 2014, with the overall goal of getting F-35 costs to fall more in line with the cost of fourth-generation fighters by 2020. Ulmer said the first iteration generated about $4 billion of savings over the F-35’s life cycle, and there are “many hundreds of projects in the works” today associated with blueprint for affordability two.

“We’re already forecasting greater than $2 billion of initial savings,” he said. “As we go forward, we’re going to continue to look at that cost reduction initiative kind of approach. I can’t tell you there will be a blueprint for affordability three yet, but we’re having discussions with our customer about that and that’s very much in our forefront, not just from a production perspective but also from a sustainment perspective.”