LMT Lockheed Martin Corp

By Doug Cameron and Damian Paletta 

President-elect Donald Trump on Thursday continued his pressure on the defense sector by suggesting he could use a Boeing Co. plane as a substitute for the Lockheed Martin Corp. F-35 combat jet.

"Based on the tremendous cost and cost overruns of the Lockheed Martin F-35, I have asked Boeing to price-out a comparable F/A-18 Super Hornet!" he said in a tweet, referring to a Boeing plane that has long been used by the Navy and some overseas allies.

The Pentagon plans to acquire more than 2,400 of the F-35 jets to replace much of its combat fleet in what is by far its costliest program, and Mr. Trump has singled it out for criticism after a legacy of delays and design problems.

It is unusual for a president or a president-elect to publicly negotiate government procurement spending on weapons programs. Mr. Trump's approach of negotiating via Twitter has shaken defense contractors and the complex defense bidding and procurement process. He has said he sees it as his job to try to save taxpayers money, but defense experts have said he is tackling a process that can't be orchestrated in 140-character social media posts.

Daniel Gordon, who worked on government procurement issues for the Government Accountability Office for 17 years before becoming President Barack Obama's administrator for federal procurement policy, said Mr. Trump cannot award government contracts without going through the formal competition and bidding process.

"The government would be violating the law to award a contract to Boeing without a competition [bidding process] unless they go through exceptions to the normal legal requirements for competition," Mr. Gordon said, adding that this process would likely not qualify for any of the exceptions.

Pentagon officials have long said the two planes served very different roles, with the F-35 providing more radar-evading features and serving as an airborne command post. Variants of the F/A-18 are used as attack jets and to provide electronic countermeasures to protect U.S. forces.

Lt. Gen. Christopher Bogdan, the military head of the F-35 program, said this week that the capabilities of the F-35 couldn't be diluted.

Lockheed shares fell 2% in after-hours trade, with Boeing up around 0.7%. The F-35 accounts for more than 20% of Lockheed's annual sales. Mr. Trump met the chief executives of both companies on Wednesday.

The two jets have faced off to win contracts for overseas governments, with the F-35 prevailing in most of them.

However, Canada last month said it would order the Boeing jets after the government dropped plans launched by the previous administration to buy the F-35. The Lockheed plane will still be considered in a future contest to acquire more jets.

Boeing has long pressed the Navy to buy more F/A-18s.

"We have committed to working with the president-elect and his administration to provide the best capability, deliverability and affordability across all Boeing products and services to meet our national security needs," the company said in a statement.

Lockheed Martin declined to comment and Pentagon officials didn't immediately respond to a request

The F-35 entered service with the Marine Corp. in 2015 and with the Air Force earlier this year.

The Pentagon said the average cost of the model used by the Air Force has fallen to $102 million, though some budget watchdogs said this excludes some expenses such as fixing past design problems. Defense analysts estimate the F/A-18 costs $70 million to $80 million.

Write to Doug Cameron at doug.cameron@wsj.com and Damian Paletta at damian.paletta@wsj.com

(END) Dow Jones Newswires

December 22, 2016 19:20 ET (00:20 GMT)

Lockheed Martin (NYSE:LMT)
Historical Stock Chart
From Mar 2024 to Apr 2024

Lockheed Martin (NYSE:LMT)
Historical Stock Chart
From Apr 2023 to Apr 2024