Boeing seeks increase in $3.9bn Air Force One fixed-price contract

Boeing is trying to renegotiate the cut-price deal it agreed for supplying two Air Force One planes to the White House, a government official revealed on Tuesday, and says it needs an extra year to deliver them.

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

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

She told the House armed services subcommittee on seapower and projection that Boeing had cited supplier trouble and Covid-19 to ask for a one-year extension on the contract.

The planes originally were supposed to be ready in 2024.

Costello also said the Chicago manufacturer had sent the government a letter of intent asking to increase the payment on the contract — what is known as a “request for equitable adjustment”.

Boeing’s letter of intent is the first step in asking to increase the programme’s price tag, Costello said, “then we start that negotiation process”.

The company’s trouble with the programme surfaced in April when it announced it had cancelled its contract with supplier GDC Technics, which installs aircraft interiors, after it failed “to meet contractual obligations”.

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

Boeing reported a $318m charge in the first quarter related to the programme.

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

“We have received from Boeing notification of a revised schedule on their part. We are in the midst of doing a schedule risk assessment . . . 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, Democratic Congressman from Connecticut, said the changes were “a disappointment to all of us. We thought this was maybe a programme where the government got a good deal.”