Boeing seeks to increase Air Force One contract at a fixed price of $3.9 billion

A government official revealed on Tuesday that Boeing is trying to renegotiate the discounted-price deal it agreed to supply the White House with two Air Force One planes, and said it needed an extra year to deliver them.

The aircraft maker signed a $3.9 billion fixed-price contract in 2018, after then-President Donald Trump called the original $5 billion estimate “ridiculous” and tweeted “order cancellation.”

But the contract ran into difficulty and the scale of the problem became clearer Tuesday thanks to congressional testimony from Darlene Costello, the principal deputy assistant secretary of defense for Air Force acquisition.

The House Armed Services Subcommittee on Naval Power and Drop reported that Boeing cited the supplier issue and the COVID-19 virus to request a one-year contract extension.

The planes were originally supposed to be ready in 2024.

Costello also said the Chicago manufacturer sent the government a letter of intent requesting increased payments on the contract — what’s known as a “fair amendment request.”

Boeing’s letter of intent is the first step in asking for a price increase for the program, Costello said, “and then we start this negotiation process.”

The company’s problem with the program surfaced in April when it announced it was canceling its contract with supplier GDC Technics, which installs aircraft interior parts, after it failed to “fulfill its contractual obligations”.

GDC Technics filed for Chapter 11 bankruptcy in the same month. The two companies are now suing each other.

Boeing mentioned $318 million in fees in the first quarter related to the program.

Costello said Congress will receive an update in September on whether the schedule will change, and the timing and cost of the deliveries will be renegotiated together.

“We have received notification from Boeing of a revised schedule from their side. We are in the midst of conducting a risk assessment of the schedule . . . when they complete [the assessment] Later this summer, we will determine if we need to make any adjustments to the schedule.”

Boeing did not immediately respond to a request for comment.

Joe Courtney, a Democrat from Connecticut, said the changes were “a disappointment for all of us. We thought this might have been a program where the government got a good deal.”

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