WASHINGTON — The Pentagon says that inflation, an ever-rising cost of raw materials and supply chain woes are to blame for a “significant price increase” of Lot 18 F-35 fighter jets, including those currently under negotiation with the Swiss military.
Following a cost dispute with Switzerland that threatens to cut Bern’s planned buy of 36 F-35As, a defense official explained in a statement to Breaking Defense last month that “costs associated with the F-35 program, particularly for airframes and engines, have been trending higher than the initial estimates outlined in the F-35 Letter of Offer and Acceptance (LOA)” that Switzerland signed in 2022.
The rising costs are “primarily attributed to inflation, significant global price increases for raw materials, and supply chain disruptions,” the official said.
“Switzerland’s 2022 F-35 LOA faces a projected $610M price increase due to significant price increases in the Lot 18 production contract being finalized by the Joint Program Office (JPO),” they added.
The official’s claim of rising prices for Lot 18 comes amid ongoing negotiations between the JPO and F-35 manufacturer Lockheed Martin, which was awarded an $11.8 billion undefinitized contract — meaning dollar amounts and quantities were not settled — in December to kickstart production as details were hammered out. It’s not clear whether rising prices were already baked into that contract, which was issued before a global trade war initiated by the Trump administration in April that threatens to drive up prices of critical materials.
Lockheed referred questions about Lot 18 negotiations to the JPO and queries about Switzerland’s order to the Swiss and US governments.
A JPO spokesperson said in a statement to Breaking Defense on Wednesday that the “cost per aircraft varies as a function of quantity, variant mix, and economic forces.
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“The global economy has experienced significant inflationary pressures since the Lot 15-17 contract was signed. Nevertheless, the F-35 Joint Program Office and Lockheed Martin arrived at a cost per air vehicle” — an estimate limited only to the airframe and excludes key components like the engine — “below the relevant inflation indices, underscoring the F-35 Enterprise’s commitment to control costs.”
When adjusting for inflation, the spokesperson added that “the cost per air vehicle” in Lot 18 “is consistent with the cost of those in Lot 15-17,” and said that more detailed information “will be available once Lot 18-19 are definitized,” the spokesperson added. F-35 engine-maker Pratt & Whitney referred a request for comment about engine prices to the JPO.
Swiss Cheese (As In Money)
The Pentagon’s estimate of the $610 million price increase is notably lower than that offered by Swiss officials, who last month projected a range of 650 million to 1.3 billion Swiss francs (at the time, roughly $807 million to $1.6 billion). The Swiss armament procurement department, or armasuisse, explained to Breaking Defense that the numbers “align” after taking into account “domestic cost increases,” including taxes, exchange rates and “increased spending” on infrastructure at Swiss airbases.
“We would also like to emphasize that the Swiss Government remains committed to the procurement of the F-35A. Armasuisse and its U.S. government counterparts are working closely to continue implementing this procurement,” the spokesperson added.
Overall, the Swiss government emphasized the deal should be fixed at 6 billion Swiss francs, or over $7.4 billion in current dollars.
When Swiss officials announced the impasse over fixed pricing for their F-35 order, a press release from the Swiss government said that it was “not possible at the present time to calculate precisely the total cost of the procurement,” estimating that the final price “will depend on a range of factors such as inflation in the USA, the development of commodity prices on the global markets and other factors such as price increases due to the tariffs imposed by the USA worldwide.”
Switzerland in particular has been reeling from the Trump tariffs after being slapped with a shocking 39 percent duty, leading some Swiss lawmakers to call for rejecting the F-35 buy.
In August the US defense official said that “Switzerland requested a special note in its F-35 LOA to clarify that the aircraft will be procured using fixed-price contracts once the Foreign Military Sales case enters the procurement process.” However, the official said, “[f]ixed-price contracts account for inflation and provide cost predictability but do not guarantee that the estimated LOA price will match the final contract price, a distinction outlined in the LOA and accompanying messaging for transparency. Under U.S. law, Foreign Military Sales (FMS) purchasers must pay the actual costs incurred by the U.S. Government (USG) to acquire defense articles and services.
“The U.S. Government recognizes the importance of maintaining trust and transparency in the Swiss F-35 procurement process, particularly given our longstanding productive bilateral relations with Switzerland,” the official continued. “The U.S. remains committed to working closely with Switzerland to address any concerns and to strengthening the bilateral defense relationship between our nations.”
Switzerland’s first F-35 was originally expected to be handed over in 2027, with deliveries continuing until 2030.
The December Lot 18 contract between Lockheed and the Pentagon specifically covered 145 airframes and was previously expected to be finalized in the spring, but Lockheed officials now predict the deal will be clinched in the second half of this year, Chief Financial Officer Evan Scott said during an earnings call in July.
The JPO has since issued an over $2.8 billion undefinitized contract for 141 Lot 18 engines — four fewer than the number of airframes and a figure that Pratt said in a press release includes spares.
The JPO is also expected to exercise an award for Lot 19 as part of a “combined” production deal around the time of finalizing the Lot 18 contract, though values and quantities for the subsequent lot have not been disclosed. (The JPO previously told Breaking Defense that Lot 18 is structured as a base year and 19 as an option, and that lawmakers’ passage of a full-year continuing resolution for FY25 furnished the funds necessary to award Lot 19.)
The Trump administration’s fiscal 2026 budget notably slashed the Pentagon’s own F-35 buy, cutting the Air Force’s purchases essentially in half. Lawmakers have indicated support for restoring some of those aircraft, though an FY26 budget has not yet been finalized by Congress.