Following closed-door meetings with senior military officials and the chief executives of both Boeing [BA] and Lockheed Martin [LMT], President-elect Donald Trump claims to have secured lower-cost deals on two major defense programs he previously skewered on social media.
Lockheed Martin CEO Marillyn Hewson and Boeing CEO Dennis Muilenberg made the pilgrimage to Trump’s Mar-a-Lago estate in Florida on Wednesday to speak with Trump and his transition team about a range of issues, including defense contracts each company holds for programs that the president-elect singled out on Twitter for cost overruns.
Trump sent industry stocks tumbling twice within a week earlier this month by targeting the Boeing Air Force One contract and Lockheed F-35 Joint Strike Fighter as being out of control and candidates for cost cutting.
Muilenberg spoke briefly with pool reporters after his meeting with Trump and promised to build two Air Force One jets for less than the $4 billion price tag Trump referenced in his tweet.
“We’re going to get it done for less than that and we’re committed to working together to make sure that happens,” Muilenberg said. “I was able to give the president-elect my personal commitment on behalf of the Boeing Company. This is a business that’s important to us. We work on Air Force One because it’s important to our country and we’re going to make sure that he gets the best capability and that it’s done affordably.”
Both executives described their meetings as “productive” and said they were given the opportunity to explain their program requirements, cost schedule and importance to the president-elect.
“It went great,” Muilenberg said. “Very productive and really encouraged by the dialogue. Good, open discussion. And we’re all focused on the same thing here. We’re going to make sure that we give our warfighters the best capability in the world and that we do it in a way that is affordable for our taxpayers.”
Trump later took questions from pool reporters and said he wrangled assurance from Muilenberg that the Air Force One contract price would come down.
“I think we’re looking to cut a tremendous amount of money off the program,” Trump said.
Though Boeing has not begun construction of the two presidential aircraft recapitalization 747-800 jets yet, Muilenberg said he and the Trump team would work to speed up the production timeline once requirements are finalized and the work is deemed affordable. Attempts to contact Boeing for further comment on Thursday were unsuccessful.
“We haven’t actually started the build of the airplane yet, but once we finalize the requirements and make sure that it’s affordable, we’ll launch on building the aircraft,” Muilenberg said, according to the pool report. “We’ve got a hot production line and we’re ready to go.”
Hewson did not speak with reporters but released a statement following the meeting.
“I had a productive meeting with President-elect Trump this afternoon,” she said. “I appreciated the opportunity to discuss the importance of the F-35 program and the progress we’ve made in bringing the costs down. The F-35 is a critical program to our national security, and I conveyed our continued commitment to delivering an affordable aircraft to our U.S. military and our allies.”
The notoriously troubled F-35 program was the target of a Trump tweet last week in which he called the program “out of control.” He went on to say during subsequent television interviews that the program was “a disaster.”
Trump had the opportunity to relay that message to Air Force Lt. Gen. Christopher Bogdan, head of the F-35 Joint Program Office (JPO), on Dec. 21. Bogdan and a bevy of Navy and Air Force brass also made the trek to Florida to meet with the president-elect on a range of issues. Calls to the JPO on Thursday seeking further comment on the meeting were not returned.
Bogdan disagrees with Trump’s assessment that the program is out of control, he said during a roundtable with reporters at the JPO Dec. 19 outside Washington, D.C. Bogdan said he has no strategy for how to engage with Trump and his advisers other than to “tell the truth.” Bogdan is a fierce advocate for the F-35’s capability, but emphasized he is not a salesman for the aircraft.
“This program is not out of control,” Bogdan said. “Since 2011 we have basically been on schedule. Since 2011 we have basically been on budget. We are delivering now, today, 50-plus airplanes a year…This airplane’s capabilities are necessary for the United States and its allies to retain air dominance for the next 50 years.”
Still, Bogdan and Trump see eye-to-eye on the need to rid the program of waste and inefficiency. Bogdan said he sympathizes with Trump’s larger message that the Pentagon should get the best value it can for the money it spends, even at the expense of industry profits.
“I understand the new administration’s position on wanting to get the best value for every dollar that the Department of Defense spends,” Bogdan said. “The new administration, I believe, is putting everyone on notice – not just industry but the department on notice – that what it wants is better value for its dollar…I applaud the new administration for that because that’s what we should all be striving for: removing waste and inefficiency so that every dollar we spend for the warfighter, we get a dollar’s worth of value.”
Trump said the focus of the conversation with Hewson and Bogdan was reducing the price of the F-35 program. He said the parties had begun a “dance” that would result in “beautiful” cost reductions.
“Trying to bring costs down—costs. Primarily the F-35, trying to get the costs down. A program that is very, very expensive,” Trump said. “We’re just beginning, it’s a dance. It’s a little bit of a dance. But we’re going to get the costs down and we’re going to get it done beautifully.”
Bogdan has made cost-reduction a priority of his tenure at the JPO and has succeeded in generally driving down the unit cost of the jest from one low-rate initial production (LRIP) lot to the next. Asked how he would advise trimming fat from the program, Bogdan suggested a block buy or multi-year procurement of aircraft that would allow for advanced procurement of materials. He also offered up cost initiatives for both prime and sub-contractors and opening some component manufacturing up to competition.
“The last place I would go is to start looking at reducing requirements in terms of capability,” he said. “Are there other things we can do to reduce the cost of this airplane? Absolutely. Are we doing some of those now? Absolutely.”
“Competition is a big deal,” Bogdan added. “There are plenty of places for competition on the F-35 program, plenty of places. If you have a single-source supplier of a particular component on this airplane right now and you’re not sure if that person can build you 3,000 airplanes worth of that, you probably might want to open up a second source. Once you open up a second source, now you have natural competition. We should explore some of that.”
Navy leaders briefed the Trump team on several key shipbuilding and aviation programs, including the Columbia-class ballistic missile submarine, the Ford-class aircraft carrier and the F-35, a Navy official said. The Navy contingent included Adm. Bill Moran, vice chief of naval operations; Vice Adm. David Johnson, principal military deputy to the Navy acquisition chief; and Vice Adm. Thomas Moore, head of Naval Sea Systems Command.
The “discussions went well, as have all of the transition discussions to date,” the Navy official said.
In addition, Navy Vice Adm. Jim Syring, director of the Missile Defense Agency, briefed the Trump team on missile defense programs. Riki Ellison, chairman and founder of the Missile Defense Advocacy Alliance, called Syring’s participation a positive development for missile defense.
“This attention on missile defense from the president-elect as a top priority to be briefed on is significant for the future of missile defense,” Ellison wrote in an e-mail “alert” entitled “Christmas Comes Early.”