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Boeing gets $3.9 billion contract for new Air Force One

Bloomberg logoBloomberg 7/18/2018 Tony Capaccio

Capping off a contentious contracting tussle with President Donald Trump, Boeing Co. received a $3.9 billion contract to continue development, modification and testing of two new aircraft to serve as Air Force One, according to two people familiar with the decision.

The planes, Boeing 747-8s, would be delivered by December 2024. That would be Trump’s last full year in office if he wins a second term. Congressional committees were informed of the decision on Tuesday.

Trump reached an informal deal in late February with Chicago-based Boeing for the fixed-price contract that a White House spokesman said at the time would save taxpayers $1.4 billion from an earlier projection for buying and outfitting two presidential jets. But public estimates suggest the savings would be far less -- perhaps a few hundred million dollars.

Trump shook the defense industry -- and put all large U.S. companies with government contracts on notice -- when he began criticizing the Air Force One contract more than a month before he took office in January 2017. On Dec. 6, 2016 he wrote on Twitter that “Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!”

That surprising statement was followed by talks with Boeing Chief Executive Officer Dennis Muilenburg. After a visit to Trump’s Mar-a-Lago resort in January, Muilenburg said, “We’re going to get it done for less than that, and we’re committed to working together to make sure that happens.”

Announcement of the contract came the same day Trump said in an interview with CBS that the new aircraft will be painted “be red, white and blue, which I think is appropriate,’’ instead of its traditional white, blue and light-blue color scheme.

The Air Force said last year that it saved some money when the president reached a preliminary deal with Boeing for two 747 jumbo jets to serve as Air Force One, taking advantage of an unusual limited-time discount on planes once bound for Russia.

Much of the costs for the presidential plane come from pricey and complex modifications required to turn Boeing’s iconic hump-backed jets into the flying fortresses that ferry U.S. presidents around the world.

The jets would be outfitted with dual auxiliary power units, rather than the one electrical power system standard for commercial jets, along with a complex communications system, work and rest quarters for the first family, elevators to ease boarding, self-defense capabilities and other features, according to Air Force budget documents.

The Air Force decided in 2015 to award Boeing a sole-source deal to build the Air Force One replacements without competition while insisting that subcontractors be allowed to bid on its specialized equipment. The service determined then that Boeing’s aircraft was the only one manufactured in the U.S. “that when fully missionized meets the necessary critically important capabilities” that the president needs.

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