The Air Force One Deal May Be Less Rosy Than Claimed

By Marcus Weisgerber

February 28, 2018

An “informal” $3.9 billion deal for new Air Force One jets — brokered by President Donald Trump and Boeing CEO Dennis Muilenburg — might not be as clear a win for taxpayers as advertised.

Although White House spokesman Hogan Gidley touted a “fixed-price” deal on Tuesday, only a “firm, fixed-price” contract would put all potential cost overruns squarely on Boeing.

Moreover, Gidley appeared to inflate the projected savings. He said the handshake deal would save $1.4 billion, implying a projected cost of $5.3 billion. But previous estimates had been around $4.4 billion, a number that President-elect Trump himself lambasted in December 2016.

Government officials had been pushing Boeing to sign a firm, fixed-price deal, according to sources with knowledge of the discussions. Without that kind of contract, the Air Force would have to eat at least some of the extra costs if the company fails to deliver the two highly customized planes on budget, according to these sources.

But the company’s negotiators balked, bringing talks to a standstill and prompting last week’s White House meeting between Trump and Muilenburg.

So just what kind of deal did the president and CEO shake hands on?

The Air Force declined to comment, referring all questions about the new jets to the White House. A White House spokesman did not respond by press time. Boeing merely proclaimed the deal an “outstanding value to taxpayers.”

But throughout the negotiations, Boeing officials have remained adamantly opposed to a firm, fixed-price deal. That reflects recent painful experience — the aerospace firm has eaten more than $2 billion in cost overruns while developing the Air Force’s new refueling tanker — and the expectation that refitting two commercial 747s for presidential service will prove more complicated than hoped.

Sources with knowledge of the negotiations say it’s unlikely Boeing would agree to one.

Sources in Pentagon and industry expect the jets to ultimately cost more than $3.9 billion — and also that Trump’s unprecedented involvement will in fact save some money. But the actual extent of the savings, if any, will remain a mystery until the two planes land at Joint Base Andrews outside Washington some time next decade.

By Marcus Weisgerber // Marcus Weisgerber is the global business editor for Defense One, where he writes about the intersection of business and national security. He has been covering defense and national security issues for more than a decade, previously as Pentagon correspondent for Defense News and chief editor of Inside the Air Force. He has reported from Afghanistan, the Middle East, Europe, and Asia, and often travels with the defense secretary and other senior military officials.

February 28, 2018