Air Force One savings, explained; Upgraded C-5s sit idle; Mitre’s supply-chain report; and more.

Six months after the White House said President Trump saved taxpayers $1.4 billion for two new Air Force One aircraft, service officials have offered an explanation for that figure. But first, let’s recap how we got here.

Here’s a timeline of contract awards to Boeing and other significant Air Force One-related events:

• January 2015: Air Force says the new Air Force One will be a 747-8 aircraft.
• Jan. 29, 2016: Boeing receives a $25.8 million contract to start designing the new Air Force One.
• July 15, 2016: Boeing receives a $127 million for more design work.
• Sept. 29, 2016: Boeing receives a $16 million contract for work on “classified requirements” of the new planes.
• Dec. 6, 2016: President-elect Trump tweets: “Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!”
• Jan. 27, 2017: Boeing receives another $3 million contract for design work.
• Aug. 4, 2017: The Air Force awards Boeing a contract for two 747-8 aircraft that were built for a now-defunct Russian airline. Terms of the deal are not disclosed.
• Feb. 27, 2018: Trump and Boeing CEO Dennis Muilenburg reach a handshake agreement to convert the two 747-8 aircraft into Air Force One configuration. At the time, a White House spokesman claimed $1.4 billion in savings.
• July 17, 2018: Air Force awards Boeing a $3.9 billion deal to convert the jets.
• July 18, 2018: The White House repeats that the $3.9 billion deal saves taxpayers $1.4 billion.

The big question since February has been, how is that $1.4 billion being calculated? Here, at last, is the Air Force’s answer: “Boeing discussed an uninflated $4.4B price with the President in January 2017. After adjusting for inflation consistent with how we budget for and expend money, and after adding in the risk reduction effort, the $4.4B equates to $5.0B, or $1.1B in savings. More recent Boeing estimates and Boeing's initial offer push the savings to over $1.4B,” said Capt. Hope Cronin, a service spokeswoman, in an email.

What we still don’t know:

• How much did the government pay for the two 747-8s? And as far as we have been told, that amount is not included in the “total program value” of $3.9 billion.
• How much will the Air Force pay Boeing to maintain the two new planes for the first five years they’re flying around the president? Service officials say: “The cost for the five-year logistics contract is not available at this time. The Government and Boeing will finalize the logistics cost once the VC-25B design is complete, which will allow the Government to properly scope the logistics support required to support two Presidential, mission-ready aircraft beginning in 2024.”

Welcome

You’ve reached the Defense One Global Business Brief by Marcus Weisgerber. Thanks for reading and keep the feedback coming to: mweisgerber@defenseone.com or @MarcusReports. Check out the Global Business Brief archive here, and tell your friends to subscribe!

From Defense One

Lockheed Will Design Both of the US Air Force's Hypersonic Missiles // Marcus Weisgerber

The latest contract could give the company lasting advantage over its competitors for some of the Pentagon's top-priority weapons.

Pence Makes Hard Sell For Trump's Space Force by 2020 // Katie Bo Williams

The administration wants a new military service branch, but space mission's future in the Pentagon and Congress is far from certain.

Russian Military Spy Software is on Hundreds of Thousands of Home Routers // Patrick Tucker

In May, the Justice Department told Americans to reboot their routers. But there's more to do — and NSA says it's up to device makers and the public.

Shakeup in Rankings of Top 100 Defense Companies

Our friends at Defense News have released their annual list of the Top 100 defense firms and there’s movement in the Top 5. Raytheon have moved up to No. 2 and Boeing has slipped from No. 2 to No. 5. Defense News’ Aaron Mehta explains: “It’s a notable drop for Boeing, but a drop that comes with an important caveat. In the last year, Boeing reorganized itself and moved both its commercial and defense sustainment offices into the Boeing Global Services business unit. As a result, Boeing no longer tracks the defense-related portion of the Global Services unit and could not report that funding as part of the Boeing Defense, Space and Security unit” Here’s the Top 5: Lockheed Martin, Raytheon, BAE Systems, Northrop Grumman, Boeing.

How the Pentagon Can Secure Its Supply Chain

A few months ago, we told you the Pentagon was warning contractors that they could expect to lose contracts if their weapons are not cyber-hardened. We mentioned a Mitre study that was helping Pentagon officials navigate policy decisions on the subject. Now we can read the study. Called “Deliver Uncompromised,” the report “examines options that span legislation and regulation, policy and administration, acquisition and oversight, programs and technology,” according to Mitre.

GAO Weighs in on Military Plane Crashes

The Pentagon has gaps in its “approach for collecting, reporting, and analyzing aviation mishap data,” the Government Accountability Office says in a new report. “According to military service and OSD officials, there is no consensus between the safety centers and OSD on OSD's role for conducting causal analysis of aviation mishaps, which has contributed to limitations in the analysis of aviation mishaps that OSD performs. This lack of consensus has led the safety centers to not report all of the agreed-upon data elements to OSD, including the causal factors related to aviation mishaps.” Read the report here.

Northrop Tests Radar on Marine Hornet

Northrop Grumman disclosed it conducted a successful fit check of its Scalable Agile Beam Radar on a U.S. Marine Corps F/A-18C Hornet at Marine Corps Air Station Miramar, California, earlier this month. Rival Raytheon performed a similar fit test of its Raytheon Advanced Combat Radar several years ago.

Blue Angels to Get Super Hornets

The Navy’s Blue Angels flight demonstration team are upgrading from their A and B models, the first airframe change since 1986.

Air Force Can’t Afford to Fly Its Re-Engined C-5s

Lockheed Martin this week announced that it has finished installing new engines and a slew of other upgrades to the Air Force’s C-5 Galaxy, the largest aircraft in the U.S. military. The formal name for the improvement project was “Reliability Enhancement and Re-engining Program.” The project was supposed to drastically improve the reliability of the massive planes so much, the Air Force changed the planes name to the Super Galaxy.

Now after spending $7 billion to update the C-5, it turns out the Air Force doesn’t have the money to fly all of those planes. Last year, service officials said they had parked 12 C-5s in what the military calls back-up status. The planes are essentially in purgatory, somewhere between active and retired aircraft.

So despite the improvements, the overall fleet’s reliability has been steadily declining, apparently thanks to the parked planes and a 2017 landing gear problem. Mission capable rates fell nearly 9 percent between 2015 and 2017, according to Air Force data. Last year, the service’s 48 C-5Ms had a mission capable rate — that is, the portion of the fleet fully available for a mission — of just 60 percent. (We’ve asked Air Mobility Command for comment about this, but haven’t heard back yet. We’ll update you if and when we get a response.)

A few months ago, an Air Force spokeswoman told me that mission-capable rates “are just a snapshot in time. Aircraft can be coded as ‘non-mission capable’ for a variety of reasons to include scheduled routine maintenance and system modifications.”

But there is no question that the new engines make the plane more powerful. Lockheed: “The C-5M holds 89 FAI-certified world aviation records, the most by any aircraft type. These records include time-to-climb with payload, altitude with payload, and greatest payload carried.”

A C-5 history lesson: How bad was its reliability? Read this 2004 Air Force Magazine feature by John Tirpak, which recounts in painful detail a C-5’s attempts to fly from Delaware’s Dover Air Force Base to Europe. It took the plane seven tries to get in the air. Back in 2007, an Air Force general told me that when a mission called for a C-5, two planes were loaded in hopes that one would be able to take off.

Making Moves

• The White House announced Aug. 10 that it would nominate William Bookless to be the principal deputy administrator of the National Nuclear Security Administration.
• On Aug. 15, President Trump nominated Robert McMahon, to be an assistant secretary of defense for sustainment. He is the assistant defense secretary for logistics and materiel readiness.
• Brendan Curran was named president of Boeing AvionX, an organization formed last year to pursue the development and production of avionics and electronics systems, on Aug. 13.