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By Debbie Gregory.

We previously wrote about the deal for two new Air Force One airplanes that President Trump was trying to negotiate with Boeing CEO Dennis Muilenburg. After talks stalled, the president stepped in to push through a fixed-price deal that would require Boeing to buy the planes at an agreed price. Boeing would then be responsible to absorb any cost overruns.

The list price for one of Boeing’s 747-8s is $351.4 million, but the stock jumbo jets require significant and timely modifications before they will be ready to transport a president.

The president asked for the new planes to be done by 2021, the beginning of what would be a second term, which is three years sooner than the original plan of 2024. The two 747s are in California now, and although Boeing will be done upgrading the planes by then, but the Air Force testing requirements could take an additional three years.

And upon closer investigation, it now looks like that “informal” $3.9 billion deal for the two planes may not be such a deal.

It appears that a “fixed-price contract” is not the same thing as a “firm, fixed-price” contract. And that could be a problem.

Boeing officials have always been and remain adamantly opposed to a firm, fixed-price deal. Given that Boeing has had to absorb more than $2 billion in cost overruns while developing the Air Force’s new refueling tanker, it is no wonder that the company is trying to avoid the same situation with refitting the two commercial 747s for presidential use.

The current Air Force One planes began service in 1990 under former President George H.W. Bush and they are reaching near the end of their planned life.

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The Boeing Company was awarded a contract Jan. 29 for risk reduction activities for the Presidential Aircraft Recapitalization program, which will field the next Air Force One.

This is the first contract the Air Force has awarded for this program. Additional modifications will be made to this contract in the future to purchase the commercial 747-8 aircraft, as well as to design, modify and test those aircraft to meet the presidential mission.

These efforts are the first step in a deliberate process to control program risks and life cycle costs. These activities will include the definition of detailed requirements and design trade-offs required to support informed decisions that will lead to a lower risk Engineering and Manufacturing Development program and lower life cycle costs.

“This is the start of our contractual relationship with Boeing. It will allow Boeing to begin working on what will be the next Air Force One,” said Col. Amy McCain, the Presidential Aircraft Recapitalization program manager. “This initial effort is about reducing risk, really understanding where the tough work will be, finding affordability opportunities, and getting the best value for the taxpayer, while continuing to meet the needs of our commander in chief.”

The secretary of the Air Force has made it clear that affordability will be a key element of the Presidential Aircraft Recapitalization program.

“We will continue to insist upon program affordability through cost conscious procurement practices,” said Secretary of the Air Force Deborah Lee James.

“The presidential aircraft is one of the most visible symbols of the United States of America at home and abroad,” James said. “We will ensure the next Air Force One meets the necessary capabilities established to execute the presidential support mission, while reflecting the office of the president of the United States of America consistent with the national public interest.”

The Air Force wants to own enough of the technical baseline to permit competition for modifications and sustainment throughout the aircraft’s planned 30-year life cycle. Competition can keep costs down, spur innovation and provide technical options.

“We are focused on ensuring this program is affordable,” McCain said. “This contract gets us started on determining how to modify a 747-8 to become the next Air Force One, and finding opportunities for cost reduction through detailed requirements choices, competition of subsystems, and in the sustainment of the aircraft after it has been fielded.”

“The current fleet of VC-25A presidential aircraft has performed exceptionally well, a testament to the Airmen who support, maintain and fly the aircraft,” James said. “Yet, it is time to replace them. Parts obsolescence, diminishing manufacturing sources and increased down times for maintenance are existing challenges that will increase until a new aircraft is fielded.”

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