{"id":38483,"date":"2020-04-29T20:07:45","date_gmt":"2020-04-29T20:07:45","guid":{"rendered":"https:\/\/one.sightlinemg.com\/defensenews\/uncategorized\/2020\/04\/29\/the-new-air-force-one-just-racked-up-its-first-cost-overrun\/"},"modified":"2026-08-07T23:00:22","modified_gmt":"2026-08-07T23:00:22","slug":"the-new-air-force-one-just-racked-up-its-first-cost-overrun","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/defensenews\/air\/2020\/04\/29\/the-new-air-force-one-just-racked-up-its-first-cost-overrun\/","title":{"rendered":"The new Air Force One just racked up its first cost overrun"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">WASHINGTON \u2014 Boeing will have to pay $168 million out of pocket to cover increased costs <a href=\"https:\/\/www.defensenews.com\/air\/2020\/04\/16\/a-key-milestone-of-the-air-force-one-replacement-program-was-conducted-using-virtual-tools-it-wont-be-the-last\/\" target=\"_blank\">on the VC-25B Air Force One replacement program<\/a>, the company said Wednesday.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Boeing attributed the overrun to \u201cengineering inefficiencies\u201d caused by the impact of COVID-19, but Chief Financial Officer Greg Smith said <a href=\"https:\/\/www.defensenews.com\/air\/2018\/02\/27\/trump-boeing-reach-handshake-agreement-to-cap-air-force-one-program-at-39b\/\" target=\"_blank\">the program remains on schedule <\/a>with a projected delivery of the first VC-25B in 2024.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, Boeing\u2019s quarterly report to the Security and Exchange Commission noted future risk to the program\u2019s cost and schedule as a result of the engineering challenges. \u201cWe believe these inefficiencies will result in staffing challenges, schedule inefficiencies and higher costs in the upcoming phases of the program,\u201d the company stated in the report.<\/p>\n\n\n\t<aside class=\"smg-interstitial-link wp-block-smg-interstitial-link\">\n\t\t<a href=\"https:\/\/one.sightlinemg.com\/defensenews\/air\/2020\/04\/29\/boeing-gets-another-827m-charge-on-the-kc-46-program\/\" class=\"smg-interstitial-link__inner\">\n\t\t\t\t\t\t\t<div class=\"smg-interstitial-link__media\">\n\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"200\" src=\"https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/5087809.jpg.jpg?w=300\" class=\"smg-interstitial-link__image wp-post-image\" alt=\"\" \/>\t\t\t\t<\/div>\n\t\t\t\t\t\t<div class=\"smg-interstitial-link__content\">\n\t\t\t\t<span class=\"smg-interstitial-link__kicker\">Related<\/span>\n\t\t\t\t<h3 class=\"smg-interstitial-link__title\">Boeing gets another $827M charge on the KC-46 program<\/h3>\n\t\t\t\t\t\t\t\t\t<p class=\"smg-interstitial-link__excerpt\">Most of the charge is the result of expenses associated with the tanker&#039;s troubled Remote Vision System.<\/p>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/a>\n\t<\/aside>\n\t\n\n\n<p class=\"wp-block-paragraph\">It was not immediately clear how <a href=\"https:\/\/www.defensenews.com\/air\/2017\/08\/25\/a-contracting-official-grew-a-beard-to-help-get-an-air-force-one-deal-seriously\/\" target=\"_blank\">work on the VC-25B program<\/a> had been disrupted.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cThat charge was really associated with COVID-19,\u201d Smith told reporters in an April 29 phone call. \u201cAs we have folks working virtually \u2014 particularly on the engineering side \u2014 as well as that\u2019s gone, we certainly experienced some inefficiencies that has caused us to re-evaluate our estimates to complete those efforts. And that\u2019s essentially what you saw today in our results and the charge associated with that.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Smith added that although the program team has done a \u201cgood job\u201d of managing the program in the face of changes caused by the novel coronavirus pandemic and is \u201cexecuting very well on many fronts,\u201d Boeing could not mitigate the added cost to the program this financial quarter.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Air Force acquisition executive Will Roper said he spoke with Boeing Defense CEO Leanne Caret last night about the problem, but because the issue was \u201clate breaking,\u201d he referred detailed questions to the program office.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">On Wednesday night, the Air Force released a statement that \u2014 like Boeing \u2014 attributed the cost increase to \u201cengineering inefficiencies.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Just two weeks ago, Roper praised the progress of the program, which used virtual tools to complete its critical design review in March and wrap up a modification readiness review in April. At the time, the program was on schedule with no disruptions due to COVID-19, he said then.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Air Force One replacement drew considerable attention in 2016 after then-President-elect Donald Trump tweeted that the program <a href=\"https:\/\/www.defensenews.com\/air\/2016\/12\/06\/trump-tweets-us-should-cancel-air-force-one-replacement\/\" target=\"_blank\">was too expensive and should be cancelled <\/a>unless the cost\u2014then projected as more than $4 billion\u2014came down. In 2018, the Air Force <a href=\"https:\/\/www.defensenews.com\/air\/2018\/07\/18\/boeing-gets-air-force-one-contract-and-next-gen-air-force-ones-to-get-a-new-paint-job\/\" target=\"_blank\">awarded Boeing a $3.9 billion fixed-price contract <\/a>to modify two 747s into the VC-25B configuration.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&#8221; There has not been an increase to the $3.90B firm-fixed price contract with Boeing or the $5.3B VC-25B total acquisition cost,&#8221; said Air Force spokeswoman Ann Stefanek.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Although the total price of the program is estimated to hit $5.3 billion once ancillary costs such as new hangars and revised technical manuals are included, the fixed-price ceiling on the $3.9 billion deal ensures that Boeing will have to pay for any cost growth incurred while building the two new Air Force Ones.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In February, Boeing began making structural changes to two Boeing 747s at its facility in San Antonio, Texas \u2014 paving the way for those jets to become VC-25Bs. The jets will also receive upgrades including enhanced electrical power, specialized communication systems, a medical facility, a customized executive interior and autonomous ground operations capabilities.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cAs planned in the baseline schedule, the next phase of modification is on course to begin in June 2020,\u201d Stefanek said.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The COVID-19 pandemic is to blame for the loss, Boeing 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