Donald Trump’s return as the US president and the position of commander-in-chief could result in more stringent negotiations with defense contractors.
Nevertheless, the aerospace industry, which is increasingly apprehensive about contracts that involve high risks, may resist Trump’s emphasis on cost-cutting and his insistence on tough agreements. This is especially true for companies developing expensive aircraft that heavily rely on new, high-risk technologies.
It is uncertain whether a second Trump administration would allocate additional resources for programs such as the next-generation fighter aircraft, as the US Air Force is currently grappling with budget constraints that restrict its capacity to modernize critical components of its forces.
John Venable, a senior fellow at the Mitchell Institute for Aerospace Studies and a retired F-16 pilot, suggested that Trump could use his distinctive capacity to garner public attention and exert pressure on defense contractors that are underperforming. He cited Lockheed Martin’s delays in upgrading the F-35 as an example.
Venable asserted that the board could witness a shift in the direction and intensity of F-35 production if Trump publicly discussed Lockheed Martin. He also says that the elimination of numerous production obstacles is feasible if Trump targets the American defense industry, particularly the military-industrial complex. Trump will not accept excuses like the inability to assemble the item quickly, the unavailability of parts, or software issues. That pressure could be advantageous to both the military and industry.
During a live interview with Tucker Carlson on October 31, Trump recently criticized the government for its “tremendous waste and deception.” President-elect Trump appointed Elon Musk and entrepreneur Vivek Ramaswamy as the heads of a government efficiency commission, tasked with eliminating inefficiencies.
On October 31, Trump declared that he had saved over $1 billion upon his arrival at the White House. He said that he was not paying Boeing “that much” for Air Force One. After a few weeks, he finally admitted that he was not interested in purchasing the aircraft. However, the cost savings on a single plane are more than $1 billion, and there are thousands of similar projects, some of which are even bigger.
The precise figures for Air Force One savings are difficult to verify; however, Boeing suffered a $2.7 billion loss on the VC-25B program. Dave Calhoun, the former CEO of Boeing, acknowledged that the company may not have been prudent to consent to the Trump administration’s terms for the revision of Air Force One.
In April 2022, following Boeing’s quarterly loss of $660 million on the Air Force One program, Calhoun informed investors that the deal was a “completely unique moment,” characterized by unique negotiations and risks that Boeing likely should not have taken.
Fixed-price contracts, a government-approved method of cost control, influenced the Air Force One agreement. The agreement requires contractors to deliver products or services at a predetermined price, absorbing any overruns. Nevertheless, major defense contractors may object if the Trump administration attempts to increase the number of fixed-price contracts. Boeing has pledged to refrain from accepting such contracts in the future as it continues to experience losses associated with them. Lockheed Martin and L3Harris Technologies, among others, have refrained from executing fixed-price agreements, even if it resulted in the loss of critical programs.
A potential increase in military spending under a new Trump administration might ease the Air Force’s modernization challenges, but there are no guarantees.
The United States Air Force is continuing to acquire F-35A Joint Strike Fighters and is introducing the new B-21 Raider stealth bomber, T-7 Red Hawk trainer, and F-15EX Eagle II. Additionally, it is in the process of deploying the first iteration of collaborative combat aircraft, which are unmanned wingmen, and it is currently addressing cost-control measures for the LGM-35A Sentinel intercontinental ballistic missile.
However, the Air Force’s initial concept for the Next Generation Air Dominance (NGAD) sixth-generation fighter system proved to be prohibitively expensive, raising doubts about its future. The cost estimates for NGAD are approximately three times that of the F-35, significantly restricting the potential fleet size. The Air Force is currently in the process of reassessing its air dominance requirements and investigating potential strategies for redesigning NGAD to reduce costs.
On November 1, Air Force Secretary Frank Kendall said that the service is unlikely to be able to fund a next-generation stealth tanker in conjunction with other modernization priorities.
Venable proposed that a potential budget increase under the Trump administration could serve as a lifeline for NGAD or other programs that are anticipated to be implemented within the next seven years. He also mentioned that additional funding would likely be necessary for the tanker equivalent, currently known as the Next Generation Air-refueling System (NGAS).