BELFAST — Switzerland has decided to cut an order of 36 Lockheed Martin F-35A fifth-generation fighter jets due to a price increase of roughly $610 million enforced by the US government, and following a contract dispute between the two sides.
In a statement today, the Swiss Federal Department of Defence, Civil Protection and Sport said that “due to foreseeable additional costs, it is not financially viable to maintain the originally planned number” of aircraft, instead signaling that a “maximum” quantity of the stealth jets will be acquired in line with an approved 6 billion Swiss Franc (7.5 billion USD) budget. The statement did not reveal a revised aircraft figure to be acquired.
“Talks held with the US in the summer revealed that Switzerland cannot enforce the contractually agreed fixed price for the F-35A fighter jet,” noted the Swiss statement. “The US cites increased costs due to inflation, rising raw material prices, and other factors.”
At the time the contract dispute initially emerged in August, a DoD official told Breaking Defense 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), originally offered to Switzerland.”
The official went on to say that an “estimated $610” million price hike is the result of inflation, global raw material price increases and supply chain disruptions.
Additionally, the DoD official added then that a specific note requested by Bern, labelled “Note 55” confirms that “the [Swiss] aircraft will be purchased using fixed-price contracts but clarifies that the price estimated in the LOA may differ from the actual contract price. Fixed-price contracts account for inflation and provide cost predictability but do not guarantee that the estimated LOA price will match the final contract price.”
The Office of the Secretary of Defense deferred questions about the reduced buy to the Swiss government today.
As Breaking Defense reported, Switzerland previously argued that a fixed-price had been “abandon[ed]” despite “intensive discussions” between Swiss and American officials, leading to inflationary and tariff pressures that could drive up the cost of the order between anywhere from 650 million to 1.3 billion Swiss francs.
Switzerland initially selected the F-35 in 2021, before agreeing a contract in 2022. Deliveries were originally slated to begin in 2027 and run through 2030.
Lockheed Martin and the F-35 Joint Program Office did not respond to requests for comment at the time of publication.