The White House says President Donald Trump has struck an “informal deal” with Boeing on a $3.9 billion fixed-price contract for two new Air Force One planes.
“Thanks to the president’s negotiations, the contract will save the taxpayers more than $1.4 billion,” White House deputy press secretary Hogan Gidley said today in a widely distributed statement.
The extent of the savings is debatable, however.
Replacing the presidential Air Force One planes became a bone of contention between Boeing and Trump soon after his election, when the then-president-elect complained that the order should be canceled because “costs are out of control, more than $4 billion.”
Boeing CEO Dennis Muilenburg mended fences with Trump at a December 2016 meeting during which Muilenburg made a “personal commitment” to keep the cost below $4 billion.
Today’s statement appears to confirm that the commitment will be kept.
The current Air Force One 747 jets are nearing the end of their 30-year design lifetime, and the plans for replacing them have been in the works for years.
Pentagon officials shaved a significant amount off the cost by opting to buy two 747-8 jets that had been built for a Russian airline but had to be put in mothballs when the company went bankrupt.
The cost of the airframes represents a relatively small percentage of the price tag, however. Most of the expense has to do with designing and installing upgrades, including secure communication systems, in-flight defense systems and beefed-up power systems.
Because of the range of options available for upgrades, there’s fairly wide leeway in the potential price tag. Last September, Defense One said Muilenburg presented options that could have put the price anywhere between $2.28 billion and $4.4 billion.
In a tweet, Boeing said that Trump “negotiated a good deal on behalf of the American people”:
Boeing is proud to build the next generation of Air Force One, providing American Presidents with a flying White House at outstanding value to taxpayers. President Trump negotiated a good deal on behalf of the American people. pic.twitter.com/m0HtGfXVlv
— The Boeing Company (@Boeing) February 27, 2018
Richard Aboulafia, an aerospace industry analyst with the Teal Group, told The Washington Post that to some extent, diplomacy dictated the depiction of the deal.
“Boeing learned first, of all the defense contractors, that you have to flatter Trump, you have to give him credit for any number of things, no matter how fictitious,” Aboulafia was quoted as saying.
The details of the formal deal are likely to come out in the months and years ahead. If the contract has a fixed price of $3.9 billion, Boeing would be responsible for any cost overruns.
The Pentagon’s timetable calls for the planes to be customized starting next year, with presidential service due to start in 2024.