The U.S. Defense Department said it will sign a contract with Lockheed Martin Corp on Friday for a fifth group of 32 F-35 Joint Strike Fighter jets, a long-awaited deal that moves forward the most costly weapons program in U.S. history.

The Pentagon also expects to reach an agreement soon with Lockheed on early funding for a sixth group of F-35s, a step that could help reduce a potential $1.1 billion liability the weapons maker faced from work it had already done on the jets without a signed contract, a senior defense official said.

The Pentagon will pay about 4 percent less for each new Lockheed Martin Corp F-35A fighter jet when it signs a deal worth $3.8 billion with the No. 1 U.S. defense contractor on Friday, according to sources familiar with the deal.

The cost of each conventional takeoff and landing jet in the fifth production contract will be around $107 million, excluding the engine, said the sources, who were not authorized to speak publicly. That compares to a price of $111.6 million in the fourth contract with Lockheed.

The Pentagon is negotiating a separate agreement with Pratt & Whitney, a unit of United Technologies Corp, for the engines that will power the new warplanes. Pentagon officials hope to conclude that agreement by the end of the year as well.

The Pentagon announced on Nov. 30 that it had reached an agreement in principle with Lockheed on the fifth production contract, which will pay for 32 additional jets, and said it expected to finalize terms by the end of the year.

The contract will also pay for manufacturing support equipment, instrumentation for flight testing and other mission equipment needed for the new radar-evading warplanes.

Signing the contract before year-end will safeguard funds for the F-35 from $52.3 billion in automatic budget cuts due to kick in on Jan. 2 for fiscal 2013 unless Congress acts.

It also will allow Lockheed and its suppliers on the program -- Northrop Grumman Corp and Britain’s BAE Systems Plc -- to log additional orders in their 2012 results.