Trump’s F-35 Calls Came With a Surprise: Rival CEO Was Listening | Bloomberg

Days before taking office, President-elect Donald Trump made two surprise calls to the Air Force general managing the Pentagon’s largest weapons program, the Lockheed Martin Corp. F-35 jet.

Listening in on one of those calls was Dennis Muilenburg — the CEO of Lockheed’s chief rival, Boeing Co.

Photographer: Bryan R. Smith/Pool via Bloomberg

Trump, who has repeatedly criticized the $379 billion F-35 program as “out of control,” made the highly unusual calls to Lieutenant General Chris Bogdan on Jan. 9 and Jan. 17. Muilenburg, whose company makes a fighter jet Trump has suggested might be an alternative to the F-35, was in the president-elect’s New York office for a meeting during the second call. He appeared caught off-guard but was able to listen in on the call, according to two people familiar with the calls, who asked to remain anonymous discussing sensitive information.

“I would consider the calls to be very straightforward. He asked a lot of very, very, very good questions because he was in the learning mode,” Bogdan said of Trump. Speaking to reporters Thursday after a congressional hearing on the F-35, Bogdan said that Muilenburg listening to the call “was not inappropriate. The things I talked about in front of Mr. Muilenburg were clearly publicly releasable information. I understand the rules.”

After speaking with Trump, Bogdan wrote two three-page memos, titled “phone conversations with President-Elect,” dated Jan. 10 and 18th and stamped “For Official Use Only,” to limit distribution, according to the people. The memos outlined Trump’s questions about the capabilities of Boeing’s Super Hornet fighter and how it might compete against Lockheed’s F-35C. About a dozen Pentagon officials were alerted to the calls after they occurred, the people said.

‘It Creates Chaos’

Since winning election, Trump has emphasized his experience in real estate negotiations as evidence he can get taxpayers a better deal on expensive Pentagon programs. Boeing, too, faced Trump’s wrath when he criticized potential spending on a new version of the Air Force One presidential airplane. But Trump’s calls to a uniformed program manager to discuss a contract that was completed 16 years ago were unprecedented and potentially disruptive, said a defense analyst.

“When a president ignores the chain of command by going directly to a program manager, it creates chaos in the system,” said Loren Thompson, an analyst with the Lexington Institute in Arlington, Virginia, who’s followed the F-35 program since Lockheed beat Boeing in the winner-take-all contract in October 2001.

“Behavior that looks decisive in the business world can unhinge a military organization that depends on order and discipline,” said Thompson, who also consults for Lockheed.

Following his Jan. 17 meeting with Trump, Muilenburg said he “made some great progress” in his talks with the president-elect.

“We discussed Air Force One, we discussed fighter aircraft,” Muilenburg told reporters at Trump Tower in New York.

Boeing spokesman Todd Blecher said in an e-mail, “I have nothing to add to what Mr. Muilenburg said to reporters after” his Trump Tower meeting.

Congressional Hearing

Lockheed declined to comment. The White House didn’t respond to a request for comment. Bogdan’s spokesman, Joe DellaVedova, declined to provide Bogdan’s memos, which Bloomberg News has requested under the Freedom of Information Act.

Bogdan first met Trump Dec. 21 at his Palm Beach resort during an official visit by 11 military officers. He said Thursday that he wasn’t surprised by the calls from Trump, who had made it clear after that meeting that he’d be “reaching out” with more questions.

Bogdan defended the F-35 Thursday before a subcommittee of the House Armed Services Committee. In a statement to the committee, he said the jet’s operating costs are decreasing, “making the F-35 more affordable each and every day.”

Trump has shaken the defense industry — and put all large U.S. companies with government contracts on notice — with his frequent Twitter posts about business issues ranging from the F-35 to sales of his daughter Ivanka’s brand at Nordstrom Inc. stores. Trump’s phone calls to the Pentagon came after a December tweet: “Based on the tremendous cost and cost overruns of the Lockheed Martin F-35, I have asked Boeing to price-out a comparable F-18 Super Hornet!”

Different Capabilities

There’s probably not much Boeing could do to make its jet comparable to the F-35. The two aircraft have different capabilities and mission requirements. Moreover, in an effort to drive the fighter’s costs down, the F-35 has been marketed to allies around the world, with production and maintenance contracts spread from the U.K. to Australia.

The U.S. Air Force, which plans to buy 1,763 of the F-35A model jets, wouldn’t fly Boeing’s minimally stealthy “fourth-generation” Super Hornet, which is designed for aircraft carrier operations. As a so-called fifth-generation fighter, the F-35 is stealthier and is equipped with more advanced radar, sensors and communications systems.

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The Navy version of the F-35 is easier to target because it’s not scheduled to be operational until August 2018 at the earliest. The service plans to buy only 260 carrier models of the plane; the Marine Corps will buy 80 of the Navy model and 340 of a version capable of short takeoffs and vertical landings, according to the Congressional Research Service. Lockheed has delivered 26 of the Navy jets to date, with four more on order, according to spokesman Mike Rein.

Pentagon Review

Aerospace analyst Richard Aboulafia said in an e-mail that “Trump seems to really like interfering in the requirements process” but “hopefully, he realizes that the Super Hornet/F-35 battle only impacts a very small part of the F-35 program.”

Nevertheless, Trump is not the first person to suggest that the F/A-18E/F could replace some F-35s. The Pentagon’s first Quadrennial Defense Review in May 1997 said that “should Joint Strike Fighter development be delayed additional F/A-18E/Fs” beyond planned quantities “may be added later as appropriate to sustain planned forces.”

Defense Secretary James Mattis in a memo last month translated Trump’s tweet into action when he asked Deputy Defense Secretary Robert Work to oversee a review that “compares F-35C and F/A-18E/F operational capabilities and assesses the extent that F/A-18E/F improvements (an advanced Super Hornet) can be made in order to provide a competitive, cost effective, fighter aircraft alternative.”

Under current plans, the Pentagon is scheduled to increase overall purchases of the F-35 in the coming fiscal year to 70 from 63 this year. Purchases would grow to 80 aircraft in fiscal 2019, and there’s a pending “block buy” of 450 aircraft after that.

Source: Trump’s F-35 Calls Came With a Surprise: Rival CEO Was Listening – Bloomberg