F-35 Partner Disputes Trump's Claim of Securing Big Savings (excerpt)
(Source: Bloomberg News; published Feb 24, 2017)
By Benjamin D Katz
President Donald Trump’s assertion that he is saving the Pentagon a fortune on its next generation fighter jet, the F-35, is being disputed again -- this time, by one of the partners in the program.

The lower price on the $8.2 billion contract is due to cost reductions achieved through a long-planned increase in production, BAE Systems Plc Chief Executive Officer Ian King told analysts after releasing the company’s full-year earnings Thursday.

King’s assessment came about three weeks after the ranking Democrat on the Senate Armed Services Committee said the $728 million in savings would have happened anyway, even as Trump said his personal intervention cut the burden on taxpayers. Savings on the order for 90 of the Lockheed Martin Corp. combat jets exceeded the $600 million that Trump initially said he had achieved.

“In terms of the projected prices, they were all to do with the ramp-up in rates and were well-advertised,” King said on the conference call. “But if somebody wants to take credit for that finalization, negotiation, then they can take credit for that negotiation if they wish.”

In an e-mailed statement Friday, BAE said King’s comments were taken out of context.

Targeting Savings

“In response to a question, Mr. King confirmed that the F-35 partners continue to target cost reductions as production ramps up,” the company said in the statement. “In subsequent public comments, Mr. King also confirmed that President Trump’s intervention had acted as a catalyst to accelerate negotiations and agree significant price reductions over the previous contract and that remains our view.”

Trump took on Lockheed in December, tweeting that costs on the military program, the Pentagon’s most expensive, were “out of control.” He then had a meeting with CEO Marillyn Hewson at his Florida estate and said publicly that he’d asked Boeing Co. for a competitor to the plane.

Lockheed told Trump last month it was working on a deal with the Pentagon to lower costs “significantly” for the next production lot of fighters. When the pact was announced this month, White House Press Secretary Sean Spicer called it “another big win the president has delivered on for U.S. taxpayers.” (end of excerpt)

Click here for the full story, on the Bloomberg website.


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