F-35 WILL ONLY GET CHEAPER: The Pentagon’s latest contract with Lockheed Martin includes innovative incentives to promote more efficient assembly of F-35s, which should bring the unit cost of the fighter jet under $80 million by the time the plane moves to full-rate production around 2020, Vice Adm. Mat Winter, the F-35 program director, told reporters yesterday.

RED STORM RISING: The Pentagon confirmed yesterday that Defense Secretary Jim Mattis has canceled plans to visit China this month after Chinese officials refused to say who if anyone Mattis would be able to meet with. It’s just another indication of increasing tensions with Beijing over its militarization of islands in the South China Sea and its trade war with Trump.

Word that the planned “two-plus-two” security talks that were also to include Secretary of State Mike Pompeo were being scrapped came a day after the destroyer USS Decatur, asserting the right to sail through international waters, passed within 12 miles of reefs claimed by China near the Spratly Islands and was forced to change course by a Chinese destroyer, which reportedly came within 45 feet of the U.S. ship.

China has also complained about two flights of U.S. B-52 bombers over the area, which the U.S. said was just part of routine training. China in response canceled a planned visit by the head of its navy to Washington and denied a request for the amphibious assault ship USS Wasp to make a port call at Hong Kong.

IT’LL BE FINE: Mattis is in Paris today, en route to the NATO Defense Ministerial that begins tomorrow in Brussels. As he did last week, he downplayed the downturn in U.S.-China relations. “There’s tension points in the relationship, but based on discussions coming out of New York last week and other things that we have coming up, we do not see it getting worse,” Mattis told reporters traveling with him, according to the Associated Press. “We’ll sort this out.”

MONEY IN THE BANK: You could almost hear the collective sigh of relief around the Pentagon yesterday as the building’s military and civilian workers began their day without the usual start of the fiscal year budget woes. When Trump signed the defense appropriations bill Friday, it meant the money started flowing from Day 1.

The bipartisan budget deal was lauded by Joint Chiefs Chairman Gen. Joseph Dunford, who said it makes a big difference in how the Pentagon can be better stewards of the taxpayers’ money.

“It took us years to get into this problem and you don’t spend money efficiently, you don’t spend money as a good steward, if you lurch from year to year,” Dunford told reporters traveling with him to Europe. “You can’t plan a program and develop capabilities over time.”

“We need to have predictability to properly prioritize what we are going to invest in,” he said. “Every year, no matter how big the budget is, you have to make choices. We are much better at making choices if we are informed by a three-to-five-year look ahead and predict what level of funding we will have.”

IRAN’S ‘RECKLESS’ TARGETING: The Pentagon is criticizing an Iranian missile attack that purportedly targeted ISIS militants in southeastern Syria, calling it “reckless, unsafe and escalatory.”

In a statement provided to Voice of America, Pentagon spokesman Cmdr. Sean Robertson said Iran took no measures to notify other military forces operating in Syria of Monday’s predawn missile strike. “Given the complex nature of the battlespace, such strikes potentially jeopardize the forces who are actively fighting ISIS in Syria,” Robertson said. “Any Iranian activity in this area is reckless, unsafe and escalatory.”

MISSILE COUNT: Iran has launched as many as 39 ballistic missiles since July 2015, according to a count by Behnam Ben Taleblu, a research fellow with the Foundation for Defense of Democracies, who closely follows Iran’s ballistic and cruise missile programs.

“This is the third time in less than two years that Iran has used ballistic missiles in an operation against targets in Syria and Iraq,” Taleblu said. “Iran’s increased willingness to fire ballistic missiles from its own territory into another state’s backyard is both a political signal of its defiance against the West as well as measure of its confidence that these measures will not invite kinetic reprisal against their own homeland.”

STATE DEPARTMENT’S REMINDER: National security officials shouldn’t forget about the dangers posed by the threat of nuclear terrorism, according to a senior State Department official.

“It is, in a sense, our solemn charge to do everything we can to make sure you don’t have to hear about it because it has been entirely suppressed,” Christopher Ashley Ford, the assistant secretary of state for international security and nonproliferation, told a national security conference Monday. “But it’s still good to talk about nuclear smuggling and nuclear terrorism from time to time, to ensure that everyone remains focused upon keeping this true.”

THE RUNDOWN

Defense News: DoD hands out $7.54 billion in year-end contract bonanza

Reuters: U.S. and Turkey begin training for joint patrols in Syria’s Manbij

Bloomberg: Blame a Spark Plug for U.S.-Japan Missile Failure, Pentagon Says

Military Times: Adopted daughter of military family will have to leave the country, court rules

Air Force Magazine: Is DOD Missing the Boat on High-Tech Innovation?

Task and Purpose: The National Guard Officer Accused Of Taking An APC On A Joyride Will Have His Day In Court

Army Times: ‘We can do a little better for that soldier’: A Green Beret just got his Silver Star upgraded to a Medal of Honor

Breaking Defense: NATO Ops Center Goes 24/7 To Counter Russians: Gen. Scaparrotti

Defense One: Want Better Peacekeeping Ops? Add Women