The company is looking for loopholes in its $4 billion contract.
Boeing is looking for contract loopholes to get the Pentagon to fork over more money for work on two new Air Force One jets, a project that has cost the planemaker billions of dollars, a top Air Force official said Friday.
The company and the Air Force are going back and forth over the terms of a 2018 contract, which stipulates that Boeing, not taxpayers, must pay for any cost overages.
“Boeing is highly incentivized to finish as fast as possible, because it's a fixed-price contract, and every additional day they don't deliver the airplane, it costs them more, and they're losing money,” Andrew Hunter, the Air Force’s top weapons buyer, told a small group of reporters during a Friday afternoon briefing at the Pentagon.
But there’s also a “problematic incentive that's in place,” Hunter said, where it’s in Boeing’s interest to scrutinize the contract language in an attempt to get more money from the Air Force.
“You get this dynamic, where they [Boeing] become very focused on ‘We need to finish. We're going to finish what's in the contract. Anything that appears to us to be in any way, shape, or form, not 100% required explicitly in the contract is an extra bill,’” Hunter said.
Boeing used the same tactic to get the Air Force to pay for upgrades to KC-46 aerial refueling tankers, according to people familiar with the program. The company has lost more than $5 billion on the KC-46.
Hunter did not specify what work Boeing wants more money for.
Boeing declined to respond to Hunter’s comments.
“We continue to make steady progress on the VC-25B program, while navigating through some challenges,” a company spokesperson said in an emailed statement. “It’s an honor to be entrusted with this responsibility and we take particular pride in this work. Our focus is on delivering two exceptional Air Force One airplanes for the country.”
In April, Boeing CEO Dave Calhoun lamented that his predecessor had agreed to the terms of the $4 billion Air Force One contract, which was negotiated in part by former President Donald Trump.
Already two years behind schedule, Boeing has lost $1.1 billion during the complicated process of converting a pair of passenger 747 airliners into a high-tech flying White House. Boeing has blamed the majority of its problems on a subcontractor and pandemic-related supply chain and workforce issues. Earlier this month, the Government Accountability Office said Boeing was having trouble hiring enough skilled workers to build the plane due to a competitive job market and the high-level security clearances needed to work on the plane.
Hunter said that Bill LaPlante, defense undersecretary for acquisition and sustainment, has not yet approved a new formal schedule for the project, but expects the planes won’t be ready to fly the president until 2026 or 2027.
“Because there is a schedule slip...we'll have to have a conversation [and] dialogue with Boeing about what is the consequence of that,” Hunter said.