Navy signs $5.3B multiyear F/A-18 aircraft purchase deal
In a move the Pentagon estimates will save $600 million, the Navy on Tuesday signed a $5.3 billion multiyear contract with Boeing Co. to buy 124 F/A-18 aircraft between fiscal 2010 and fiscal 2013.
The Defense Department announced the contract one day after President Obama signed a bill authorizing the multiyear deal.
Boeing and its supporters on Capitol Hill have been pushing for more than two years to secure the multiyear purchase agreement, which the Pentagon initially resisted because of concerns that the contract would not yield the 10 percent cost savings considered the typical threshold to justify a long-term commitment.
But after months of deliberation, Pentagon officials in May told Congress they had reached an agreement with Boeing that would generate the necessary cost savings.
The fixed-price contract covers the 124 F/A-18E/F Super Hornet fighter jets and E/A-18G Growler electronic aircraft the Defense Department plans to buy, which is 35 aircraft more than was planned a year ago. The planes are based on the same airframe.
House Armed Services Seapower and Expeditionary Forces Subcommittee ranking member Todd Akin, R-Mo., praised the deal, saying it would provide stability for Boeing employees in St. Louis, where the planes are built. He added that it would help fill the Navy's carrier decks with advanced aircraft as the service grapples with how to deal with an anticipated shortage in its fighter fleet.
"Fast action by the Navy today has saved taxpayers over half a billion dollars," Akin said. "By purchasing more much needed planes now, the Navy has taken a crucial step to addressing its looming fighter shortfall."
Defense Secretary Robert Gates has touted the F/A-18 multiyear as an example of cost-savings efforts within the Pentagon in a five-year campaign to trim more than $100 billion from overhead and other defense costs. Gates wants to redirect those savings to priorities, such as military force structure and modernization accounts.
On Sept. 14, Gates told a Pentagon news conference that the multiyear deal is a "win-win for government and industry that will save $600 million."
Lawmakers last year gave the Defense Department the go-ahead to pursue a multiyear deal to buy the Super Hornets and Growlers. But they set a March 1 deadline to tell Congress whether it would proceed with such a deal and gave officials until May 1 to sign the contract.
The legislation that Obama signed into law Monday amended the original authorization of the multiyear deal to allow for delays in deciding on the deal and awarding the contract.