Boeing and the Navy are working to bring down the cost of a multiyear contract for fighter jets to make the deal more palatable to Pentagon leaders.
As a result, Deputy Secretary of Defense William Lynn on Monday asked for an extension on the deadline to notify Congress of a new multiyear contract to have Boeing build F/A-18 E/F Super Hornets.
Lynn told the congressional defense committees on Monday that the Pentagon would need more time to evaluate a contract offer it received from Boeing.
A spokesman for Navy acquisition said the Navy had recently received a “viable offer” from Boeing on a multiyear contract to build 124 F/A-18 series aircraft.
“The Navy has been working with the Office of the Secretary of Defense and Congress, and needs additional time to properly evaluate the offer. No decision has yet been made, and the department will work with Congress on how to best move forward,” said Cmdr. Victor Chen, a spokesman for Navy acquisition. “The Navy is committed to reducing acquisition costs while delivering capability to the war fighter.”
The Navy had been expected to inform Congress on Monday whether it planned to strike the deal.
Boeing and its congressional supporters have been pressing for a long-term contract for several years. The idea is to save money on the planes by offering the contractor the predictability of production and deliveries over four to five years.
Congressional supporters also aim to stave off a shortfall of fighter jets on the decks of the Navy’s carriers. The shortfall, expected to peak in 2016-2017, has been a matter of debate between Congress and the Pentagon for several years.
That debate is fresh on lawmakers’ minds. Pentagon leaders recently restructured the F-35 Joint Strike Fighter program that would build next-generation fighters for the Navy, Marine Corps and Air Force. Lawmakers fear this could lead to delays in the delivery of the F-35 to the Navy and Marine Corps.
The F-35 is supposed to replace the older versions of the F-18. Super Hornets, the newest version of the F-18, are supposed to share carrier deck space with the F-35 until 2030.
Defense Secretary Robert Gates and other Pentagon officials, including the Chairman of the Joint Chiefs of Staff, Adm. Mike Mullen, are standing strongly by the F-35 as the next-generation fighter aircraft.
Gates in February hit against the notion of another multiyear contract for the Super Hornets, arguing that it would not bring the 10 percent in savings customary for such long-term contracts. Instead, Gates argued that a multiyear contract would shave only 6.5 percent off the price of a Super Hornet.
Meanwhile, Mullen told the House Armed Services Committee in early February that the Navy and Marine Corps were working hard to prevent the fighter shortfall. Mullen said that the Navy and Marine Corps reduced the gap from 245 to a “very low number.” Other Navy officials have argued that the force can manage with the holes the service will face as part of the F-35 restructuring.
One of Boeing’s strongest supporters for the multiyear contract, Rep. Todd Akin (R-Mo.), rejected Gates’s savings calculations. In a letter to Gates last month, Akin argued that Gates’s estimate was based on the 89 aircraft originally planned for fiscal years 2010 through 2013.
Congress added nine aircraft to the 2010 budget, and the Navy’s 2011 budget request includes plans to buy 124 more Super Hornets as well as the electronic attack version of the planes over the next several fiscal years.
The increased purchases will represent savings that “far exceed” the 6.5 percent if the planes were bought as part of a multiyear contract, according to Akin, the ranking member of the Armed Services Seapower subcommittee.
“Adding 35 aircraft [to the 89] and an additional year of production could easily push the savings close to $500 million,” Akin wrote to Gates.
Akin, whose district represents the St. Louis plant where Boeing builds the planes, also argued that authorization language allows the Navy to enter into a multiyear contract even if the savings are below 10 percent because “definitive” actions need to be taken to mitigate the fighter shortfall.
Secretary of the Navy Ray Mabus told the House Armed Services Committee in late February the Navy was working to meet the March 1 deadline for notifying Congress of its intent to enter into a multiyear contract for the Super Hornets.
“While I am encouraged that it seems the Navy sees the fiscal wisdom of entering into a multiyear contract for F/A-18s, I am concerned that this may also represent foot-dragging by the senior civilian leadership of the [Department of Defense],” Akin said in a statement Monday. “The Navy confirmed that they had a firm offer from Boeing that would save them 10 percent over the course of a multiyear contract.”
The request for the extension suggests the Navy needs more time to convince the Pentagon brass, which may still try to block the service’s efforts to enter a longer-term contract, according to a congressional source.