In one of his first actions at the Pentagon, Defense Secretary retired Gen. James Mattis has ordered a review of two costly programs that President Trump has pointed out as examples of wasteful government spending.
Navy Capt. Jeff Davis, a Pentagon spokesman, said the reviews were a “prudent step” designed to assist the budget process and allocate military resources.
“This action is also consistent with the president’s guidance to provide the strongest and most efficient military possible for our nation’s defense, and it aligns with the secretary’s priority to increase military readiness while gaining full value from every taxpayer dollar spent on defense,” Davis said in a statement.
The reviews follow Trump’s criticism, before his inauguration, of the expected cost of replacing aging Air Force One planes, which are due to be supplied by U.S. aircraft manufacturer Boeing. While the final price of the new aircraft is not yet set, Boeing has a contract to design a pair of replacement aircraft for a cost of over $2.5 billion.
Following Trump’s call to “cancel the contract,” Boeing’s leadership has promised it would build the planes for less than the $4 billion Trump estimated they would ultimately cost.
Mattis’s order instructs Work to identify “means to substantially reduce the program’s costs while delivering needed capabilities.”
The new Pentagon boss, who was sworn in a week ago, likewise asked Work in the second memorandum to work to determine ways to lower the cost of Lockheed Martin’s $400 billion program to build the F-35 Joint Strike Fighter.
The plane, the U.S. military’s most expensive weapons program, has been under development for years but has been criticized for design flaws and high costs. It has not yet flown in combat.
Last month, Trump complained of the F-35’s cost in a tweet and suggested he would explore replacing the plane with the F-18 Super Hornet, an older jet that is made by Boeing.
Mattis’s order calls for a comparison of the two planes and an analysis of whether improvements to the Super Hornet can “provide a competitive, cost effective fighter aircraft alternative.”
The Thursday memos also offered new information about which portions of the F-35 program could be the subject of cost-cutting measures.
Mattis’s Thursday memo specified that the review would compare the F-35C with the F-18, whereas the president’s past tweets and statements referred to the program on the whole. The F-35A makes up 85 percent of the program and is somewhat cheaper than the F-35C because of its higher volume of production.
The revelation that Boeing’s F-18 is being considered as an alternative to just the F-35C model — which makes up a very small portion of the F-35 program as a whole — negates much of the concern over Trump’s tweet that asked Boeing to “price out a comparable F-18.”
“Unintentionally or intentionally, [Trump’s] tweet created more confusion in the military and aircraft universe than necessary, because it was vague,” said Richard Aboulafia, vice president for analysis with Teal Group, a defense market research firm. “People who knew the program knew that was nonsense.”
Trump’s comments about high-profile defense products and companies were a break from presidential custom, injecting an element of uncertainty and anxiety into the military hardware industry. They are in keeping with his public negotiations with other companies whose actions he says threaten to harm U.S. workers and consumers.
The president’s public jabs at defense companies have rattled markets and sparked confusion across the industry. Defense stocks have soared as the prospect of a military buildup nudges closer to reality, but the specific companies and programs mentioned in Trump’s tweets have seen sharp fluctuations at each mention. News of the Pentagon review caused stock prices at both Lockheed Martin and Boeing to drop by about 1 percent.
Defense companies have sought to play down the president’s desire to slash programs and have instead repeatedly suggested changes to procurement regulations as a way to cut costs.
“We welcome the opportunity to continue our discussions with the Trump administration. We are focused on providing the armed forces with needed capabilities at the best possible value,” Boeing spokesman Todd Blecher said in an email.
“Lockheed Martin stands ready to support Secretary Mattis’ review of the F-35 program and welcomes the appropriate focus on affordability and capability,” Lockheed Martin spokeswoman Maureen Schumann said in an email. “We also believe there are opportunities to continue to drive down program costs by using sound buying practices.”
Any modification to the F-35 program has the potential to affect not just the company that assembles the plane, but also an extensive network of suppliers spanning at least 45 states. The chairman of BAE Systems, which services the F-35 program, hinted at the president’s plans in an interview with Bloomberg Television at the World Economic Forum in Davos, Switzerland.
“We’ve been told through Lockheed that the president has an ambition to reduce the cost of that aircraft by a material amount of money, many percent, into double digits over a period,” said BAE Chairman Roger Carr. “We respect that and we’ll work towards a contribution towards that.”