As the clock ticks down toward the end of the Pentagon's fiscal year, Department of Defense acquisitions specialists have thrown caution to the wind -- and announced a simply mind-boggling 113 separate contract awards on Friday. Worth a combined $10.92 billion, this single day's spending came close to equaling two weeks' worth of contract awards at any other time of the year.
Of the defense contracts awarded, Lockheed Martin (NYSE:LMT) won nine, including a pair of megacontracts for the production of a total of 40 F-35 Lightning II fighter jets of various varieties, worth $4.15 billion in all.
Lockheed's larger contract, worth $3.405 billion, is a contract modification requiring Lockheed to produce and deliver a total of 35 "Low Rate Initial Production Lot VII" F-35s. Specifically:
- 19 Conventional Take-Off and Landing F-35A aircraft for the U.S. Air Force.
- Six Short Take-Off and Vertical Landing F-35B aircraft for the U.S. Marine Corps.
- Four Carrier Variant F-35C aircraft for the U.S. Navy.
- Three F-35A aircraft for Italy.
- Two F-35A aircraft for Norway.
- A single F-35B fighter jet for the United Kingdom.
Also funded by this enormous contract are ancillary equipment required to support LRIP Lot VII, including paying for production equipment, pilot flight equipment, and technical modifications to the planes, whose modifications are ongoing as the first models built "gets the bugs worked out." All 35 planes covered by this contract modification are to be delivered to their buyers by October 2016.
Lockheed's other huge win of the day was a $742.6 million contract modification, this one referring to Low Rate Initial Production Lot VI -- the production lot preceding the big one I described. Under this contract, Lockheed will produce an additional two F-35A fighter jets for Australia, and three more F-35As for Italy. As with the larger contract, this smaller modification also pays for ancillary equipment and ongoing changes required by technical modifications to the planes. The five planes covered by the LRIP Lot VI contract are due for delivery by April 2016.
Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.