UPDATE 1-Dutch to purchase 37 F-35 fighter planes - sources
* Costs seen coming down from Pentagon projections
* Dutch F-16s being phased out by 2023
* Netherlands joins six countries in Lockheed project
AMSTERDAM/WASHINGTON, Sept 17 (Reuters) - The Netherlands will purchase 37 F-35 Joint Strike Fighter planes, two sources with knowledge of the matter told Reuters on Tuesday, a decision that should end years of political wrangling over ballooning costs and delays.
The decision is a boost for Lockheed Martin and Washington, which had urged the Netherlands in April not to turn to other suppliers because of fears of rising costs in a project that has been blighted by technical faults and delays.
Defence Minister Jeanine Hennis-Plasschaert was due to announce the decision later on Tuesday in a policy paper setting out her long-term vision for the armed forces, the sources said.
The decision brings the number of countries with firm commitments to purchase the F-35 to seven after Britain, Australia, Italy, Norway, Israel and Japan also placed orders.
The F-35 is designed to be the next-generation fighter for decades to come for U.S. forces and their allies in NATO.
The F-35 programme, hit by technical faults, is several years behind schedule and 70 percent above early cost estimates.
The Dutch, who are phasing out their F-16s by 2023, had initially planned to buy 85 F-35s, but people close to the discussions said earlier this year they wanted to scale back the order to between 52 and 68 amid deep budget cuts.
Some Dutch politicians, concerned about rising costs, had suggested going for an alternative such as Saab AB's Gripen, Boeing Co's F/A-18 E/F Super Hornet, or the EADS Eurofighter.
The reluctance by the Netherlands prompted the U.S. Department of Defense in April to urge The Hague to reconsider, saying it could end up paying more in the long run.
The price of the jets would be around $85 million, including inflation, according to the most recent Pentagon projections.
But actual prices for the F-35 have been coming in about 10 percent lower than that figure, one source familiar with the programme said.
The Dutch government has budgeted 4.5 billion euros ($6.01 billion) for the warplanes and an additional 270 million euros per year in operating costs.