US seeks fixed-price F-35 deal in bid to control costs

The US military's top acquisition official is planning to switch to a fixed-price contract for the F-35 Lightning II Joint Strike Fighter programme in place of the current 'cost-plus' arrangement, amid growing concerns about ballooning costs.

Ashton Carter, Under Secretary of Defense for Acquisition, Technology and Logistics, said on 12 March that the Pentagon plans to switch to the fixed-price scheme in order to get a handle on F-35 costs, which have escalated under the current cost-plus arrangement with prime contractor Lockheed Martin.

The cost-plus system reimburses companies for their expenses in addition to providing additional money to guarantee them a profit.

Under the fixed-price structure, Lockheed Martin would propose costs for the F-35 based on specific government requirements for the aircraft, which would be laid out ahead of time. The company would then receive the fixed-price amount, regardless of the unanticipated time and resources spent completing the project.