The fixed-price contract for the new Air Force One that Donald Trump talked Boeing Co. into signing hasn’t just caused the $1.5 billion in cumulative losses so far that the company’s CEO has lamented. It has also created headaches for the Air Force.
Under a fixed-price agreement, a company’s incentive is to “finish and minimize costs” while the Pentagon wants “to get every single thing that we said in the contract you have to do and get it done, and we are not going to pay you more for it,” Andrew Hunter, the Air Force’s chief weapons buyer, said in an interview. “It creates this inherent conflict between the two sides.”
The tensions stem from the $3.9 billion contract that then-President Trump pressured Boeing Chief Executive Officer Dennis Muilenburg to sign in 2018 requiring it to absorb added costs to modify two 747-8 airliners into new presidential jets, the elaborately outfitted and highly secure planes known as Air Force One when a president is on board.
