Reductions in Pentagon's planned F-35 orders not significant-Lockheed

(Adds details of plan, quotes)

By Andrea Shalal

WASHINGTON, Feb 25 (Reuters) - The Pentagon's plans to defer some orders for F-35 fighter jets over the next five years should not have a significant impact on efforts to lower the jet's costs, said Jeff Babione, who manages the $391 billion program for Lockheed Martin Corp.

The U.S (Other OTC: UBGXF - news) . Defense Department's fiscal 2017 budget plan includes plans to spend $56.3 billion for 404 F-35 fighter jets over the next five years, deferring the purchase of about 24 jets until after fiscal 2021.

Babione told reporters at the Air Force Association's annual Air Warfare Symposium in Orlando that the company and its key suppliers were continuing broad-based efforts to lower the cost of the new radar-evading warplane.

Given growing international orders, the small number of jets to be deferred by the Pentagon was "not significant," he said.

Lockheed is continuing negotiations with the Pentagon's F-35 program office about a ninth and tenth batch of jets, and expects to reach an agreement in March, Babione said. That deal would mean that the overall cost of the planes had been reduced by well over 60 percent since the program's start in 2001.

Air Force Lieutenant General Chris Bodgan, who runs the F-35 program for the Pentagon, told reporters earlier this month that he expected to reach agreement in March on the two contracts, which will be worth a combined $15 billion.

Babione said it was taking longer than expected to finalize the agreement largely due to the sheer size and complexity of the program, but the talks were "going well."

Babione said Lockheed could shave several billion dollars off the cost of the program through a multiyear block buy agreement with international partners, but details were still being worked with interested countries and the United States.

Lockheed is building three models of the F-35 for the U.S. military and nine international customers - Britain, Australia, the Netherlands, Norway, Turkey, Italy, Japan, Israel (Other OTC: IRLCF - news) and South Korea. The Pentagon expects to spend $391 billion to develop the plane and buy 2,457 of the supersonic, stealthy new warplanes. (Reporting by Andrea Shalal; Editing by Chizu Nomiyama)