Trump Says U.S. Should 'Cancel Order' for New Air Force One, Citing Costs -- 5th Update
December 06 2016 - 11:37AM
Dow Jones News
By Damian Paletta and Doug Cameron
President-elect Donald Trump on Tuesday suggested the U.S.
government should cancel an order with Boeing Co. for a new version
of Air Force One, making the aircraft maker the latest company to
come under scrutiny by the incoming commander-in-chief.
In a Twitter post Tuesday, Mr. Trump said the cost for a new
"Air Force One" plane for future presidents was "more than $4
billion. Cancel order!"
Representatives for Boeing and the Pentagon couldn't immediately
be reached for comment.
The $4 billion price tag Mr. Trump referenced for the cost of
the new aircraft couldn't be immediately confirmed.
Boeing hasn't secured deals to build the planes that would
replace the current aircraft used as Air Force One, which have been
in flight since the Reagan administration.
The two heavily modified 747-200 planes used by the president
are due to reach the end of their planned 30-year life in 2017.
In January, Boeing secured a contract from the Pentagon to start
development work on the 747-8 jumbo jets that would replace the
aging planes. The deal includes modifications to the aircraft, from
sophisticated communications equipment to other upgrades such as
antimissile devices, experts said. The development contracts were
worth about $200 million.
Boeing's 747-8 carries a list price of $378 million and uses
General Electric Co. engines.
"The plane is totally out of control," Mr. Trump said in brief
remarks in the lobby of Trump Tower in New York City.
"I think its ridiculous," he said. "I think Boeing is doing a
little bit of a number. We want Boeing to make a lot of money but
not that much money."
The Air Force earmarked $1.65 billion between 2015 and 2019 for
two replacement jets, but hasn't detailed the expected cost or
delivery dates for the replacement planes. The Air Force had
previously said it was looking to introduce the planes in 2021.
There are specific rules about how the U.S. negotiates with
federal contractors, but Boeing relies on U.S. government business
for sizable sales. The Pentagon generated sales of $18.8 billion
for Boeing's defense arm in 2015, according to its annual report.
This excludes foreign sales brokered by the defense department.
Boeing was the U.S. government's second biggest federal contractor
last year behind Lockheed Martin Corp., according to federal
procurement data.
Boeing shares were 0.8% lower in early trading.
This is the first time since becoming president-elect that Mr.
Trump has singled out a particular government contractor in a
procurement deal. If the U.S. were to walk away from the Boeing
deal, the only other manufacturer that makes large planes capable
of such international flights is Airbus Group SE. Boeing and Airbus
frequently compete against each other for large contracts around
the world.
"It's highly irregular for the President of the United States to
become personally involved in an individual contracting action,"
said Steven Schooner, co-director of the government procurement law
program at George Washington University Law School.
"As a general rule, government procurement experts on both
sides, the government and the contractor-side, will be extremely
anxious about not only executive level intervention, but also
unsophisticated off-the-cuff remarks," Mr. Schooner said.
Jason Miller, a spokesman for the Trump transition team, said
Mr. Trump could continue to weigh in when he believes it is
necessary to keep government costs down.
"This really speaks to the president-elect's focus on keeping
costs down across the board with regard to government spending,"
Mr. Miller said on a call with reporters.
He added later that "the message has clearly been sent that we
are looking to save taxpayers' money."
Last week, Mr. Trump appointed Jim McNerney, a former Boeing
chief executive, to be on a new board of executive advisers he
plans to meet with to discuss economic, regulatory, and labor
issues.
Mr. Trump has used Twitter extensively throughout his
presidential campaign and following the election. Tuesday's tweet
is his latest rebuke to a major U.S. company. Mr. Trump has also
used Twitter to hit Ford Motor Co. and United Technologies Corp.'s
Carrier unit for plans to move production overseas.
--Joshua Jamerson contributed to this article.
Write to Damian Paletta at damian.paletta@wsj.com and Doug
Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
December 06, 2016 11:22 ET (16:22 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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