Trump Blows the Whistle on Boeing’s $3.2 Billion Air Force One Contract
Policy + Politics

Trump Blows the Whistle on Boeing’s $3.2 Billion Air Force One Contract

White House

President-elect Donald Trump’s bold gesture last week of persuading Indianapolis-based Carrier Corporation to cancel plans to shift about 800 jobs to Mexico – and his threat to punish other companies contemplating similar moves -- has been met with widespread voter approval.

The hard-nosed New York real estate magnate signaled last week that he intends to use his formidable bargaining skills to bend U.S. industry to his will in pursuit of his “America First” agenda of preserving manufacturing jobs at home while imposing protective tariffs and tearing up international trade deals.

Related: Carrier Gets State Incentives, Trump Pledge for Keeping U.S. Jobs

“Companies are not going to leave the United States anymore without consequences,” Trump said during a tour of the Indianapolis furnace plant last Thursday that employs more than 1,100 workers. “Not gonna happen. It’s not gonna happen.”

A new Morning Consult/Politico survey released on Tuesday found that six out of ten voters across the political spectrum view Trump in a more favorable light following his efforts to persuade Carrier officials to keep those jobs in this country. Even among those who supported Democrat Hillary Clinton for president, 32 percent said the deal in which Carrier would receive $7 million in tax incentives from the state and assurances of major federal tax relief improved their view of Trump.

Now the president-elect appears to have his eyes on much bigger fish.

Trump on Tuesday called for the federal government to cancel a deal with Boeing, the premier aircraft manufacturer, for the development of a new generation of Air Force One, insisting that the multi-billion-dollar contract is far too costly. The Air Force signed agreements with Boeing in January and July to design and develop aspects of the new presidential aircraft, including its interior and electrical and power systems, according to USA Today. While only a small fraction of the total cost has been accounted for so far in the procurement process, the entire program likely will cost about $3.2 billion through fiscal 2020, the U.S. Government Accountability Office estimated in March.

Related: The Pentagon Wasted $125 Billion and Buried the Evidence

However, without explaining how he came up with his figure, Trump insisted today that the real cost would be $4 billion and that as far as he was concerned that was out of the question. He tweeted:

“Well, the plane is totally out of control,” Trump later told reporters who were camped out in the lobby of Trump Tower in New York. “It’s gonna be over $4 billion for the Air Force One program, and I think it’s ridiculous. I think Boeing is doing a little bit of a number. We want Boeing to make a lot of money, but not that much.”

Trump’s pronouncement clearly caught the Pentagon and Air Force by surprise, and the government had no immediate response. Boeing was first awarded the contract in January 2015 with virtually no competition, according to The Washington Post. That’s because Boeing’s 747-8 was the only plane manufactured in the U.S. that could meet the stringent national security and safety standards for a plane to carry the president, his family and top aides and guests around the world. The current Air Force One will be 30 years old next year and is slated to be replaced by 2020 at the earliest.

Todd Blecher, a spokesperson for Boeing, issued a statement saying that the company was currently under contract for $170 million “to help determine the capabilities of these complex military aircraft that serve the unique requirements of the President of the United States.” He added, “We look forward to working with the U.S. Air Force on subsequent phases of the program allowing us to deliver the best planes for the President at the best value for the American taxpayer.”

Related: The Pentagon Wasted $125 Billion and Buried the Evidence

Trump, the master dealmaker who made billions of dollars in business ventures worldwide by keeping his rivals and contractors off balance, appears to be applying his same tactics as a successful CEO in trying to run roughshod over government bureaucrats and private contractors. In a conference call with reporters today, Trump spokesperson Jason Miller said that the president-elect intends to closely examine the Defense Department’s budget in search of potential big savings.

“I think this really speaks to the President-elect’s focus on keeping costs down across the board with regard to government spending,” Miller said. “I think people are really frustrated with some of the big price tags that are coming out for programs, even in addition to this one. So we’re going to look for areas.”

Trump’s concern about runaway defense spending and waste is clearly justified. The Pentagon has routinely been hit with criticism of massive waste and cost overruns, as in the case of the F-35 Joint Strike Fighter program. The Washington Post reported today that the Pentagon had “buried” an internal audit that revealed $125 billion of administrative waste for fear that Congress would retaliate with cuts in its budget.

However, Trump may be signaling far bigger concerns about Boeing than simply what he is portraying as excessive spending on the next generation of Air Force One planes. The Obama administration reportedly is negotiating a deal with India that would allow Boeing and Lockheed Martin to build U.S. combat aircraft in India that would replace that country’s aging fleet of mostly Russian-built aircraft.

Related: Pentagon’s Sloppy Bookkeeping Means $6.5 Trillion Can’t Pass an Audit

Under that arrangement, Lockheed Martin and Boeing would outsource manufacturing of the F-16 Fighting Falcon and the F/A-18 Super Hornet to India to substantially save labor costs. In both cases, the aviation contractors would be building production plants in India, according to The Post. Indeed, Lockheed Martin is proposing to shift its entire F-16 assembly line from Texas to India, “making India the sole producer of the single-engine combat aircraft,” the newspaper reported.

It wouldn’t be surprising if Trump – with his sharp focus on keeping U.S. jobs at home and bringing others back from overseas -- might have a different idea once he takes office Jan. 20. Although the president-elect made no mention about the brewing deal with India, which was first reported late yesterday. He may have decided to yank Boeing’s chain over the Air Force One contract to give company executives fair warning of a much bigger confrontation to come over their efforts to export manufacturing jobs.

Or, he may have been vexed by a speech delivered by Boeing CEO Dennis Muilenburg to a group of Illinois manufacturers last Friday that suggested that Trump and his allies temper their rhetoric about trade policy, as the Chicago Tribune noted today. "Anyone who paid attention to the recent campaigns and the election results realizes that one of the overarching themes was apprehension about free and fair trade," he said, without specifically mentioning Trump by name.

Afterward, Muilenburg told reporters that “Free and fair global trade is important, and it definitely creates U.S. manufacturing jobs. We want to make sure that doesn’t get lost in the political rhetoric,” he added.