If you weren’t paying attention on August 14, you could easily have missed it. It looked like all the other bland Pentagon contracts announced about 5 p.m. every workday. But this one awarded the nation’s largest defense contractor a deal to sell F-16 jet fighters worth up to a breathtaking $62 billion to foreign countries over the coming decade. And even if you were paying attention, the fine print released by the Defense Department left a lot of questions unanswered about the huge Lockheed contract.
It didn’t say who would be buying the planes, for example, or how many eventually would be bought. But that’s not as important as what it did say: The deal will involve “new production … primarily” done at Lockheed’s plants in South Carolina and Texas. That’s the jet engine driving this deal: It’s much more about jobs-for-America than security-for-America. It puts a floor under Lockheed’s new plant in South Carolina, where F-16 production is shifting from its longtime Texas production line. That gives the company, along with its investors and lenders, confidence that they’ll be churning out Vipers (pilots’ nickname for the F-16) and Flying Falcons (the official Air Force nickname) for years to come.
There’s good and bad news associated with the deal. It likely will lead to more sales, more quickly, of the venerable jet. It might even lower its price. That’s the good news, at least for those foreign customers kicking the tires. “The international market for fighters is highly competitive,” says Todd Harrison, defense budget expert at the Center for Strategic and International Studies. “This is an effort by the U.S. government to help U.S. companies compete in that international market by facilitating foreign military sales.”
A massive F-16 deal is the latest move by the Trump administration to turbocharge American arms sales around the world.
But not everybody sees it that way. “This is a way to flout budget rules and lock the government in for years, giving the contractor a long-term project and a financial lifeline,” says Scott Amey, veteran federal contracting guru at the Project On Government Oversight (POGO).
Of course, if you don’t think the U.S. should be peddling nuclear-capable arms willy-nilly around the globe, it’s also the bad news.
Just as significantly, the contract is an “indefinite-delivery/indefinite-quantity” (IDIQ) contract that eliminates haggling over the price of the planes. The Pentagon has used such contracts for years to buy spare parts and support services, but defense-industry experts say they believe this is the first time the Pentagon is using the peculiar contracting vehicle for a such a massive arms deal. “I know of no contract of this size applied to a weapons system, as opposed to routine goods and services that are needed on a recurring basis,” says William Hartung, arms-trade expert at the Center for International Policy. “In theory, sales against this contract will receive the usual vetting, but there is a danger that the sales will go on auto-pilot and be rushed through without proper scrutiny.”
Traditionally, each foreign weapons sale involves a new contract, with months, if not years, of paperwork before the hardware heads overseas. It’s like a custom-tailored suit, which takes time and money. But an IDIQ contract is like going into a department store with hundreds of suits already on the racks. Beyond the price set in the IDIQ contract for the base-model F-16s, purchasers only have to pay for options they want (although sophisticated avionics tend to cost more than raised cuffs). Air Force officials say such deals can cut delivery times by a third.
The massive F-16 IDIQ deal is the latest move by the Trump administration to turbocharge American arms sales around the world. President Donald Trump raised eyebrows in 2018 when he displayed charts detailing $12.5 billion in U.S. weapons sales to Saudi Arabia during an Oval Office session with Crown Prince Mohammed bin Salman. “We’re talking,” Trump said, “about over 40,000 jobs in the United States.” But such boasts tend to be empty. (end of excerpt)
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