Boeing is applying lessons learned from Air Force One deal, defense CEO says
LONDON – Boeing’s new head of defense has said the company has learned lessons from contracts for programs like the new Air Force One and will take different approaches to contracting going forward.
Speaking to reporters in London on July 17, Boeing Defense, Space and Security chief executive officer Ted Colbert said the company will make decisions about contract vehicles on a case-by-case basis, using what it believes is the best approach.
“We’ve learned a lot of lessons, particularly around procurement,” said Colbert. “And we will use this to inform our future path. If we’ve learned something that didn’t work that way, we’ll do it differently in the future.”
In April, Boeing Co. CEO Dave Calhoun expressed regret at the company’s decision in 2018 to accept the Trump administration’s terms on the VC-25B Air Force One program. Last quarter, Boeing recorded a $660 million charge to the Air Force One program due to flight schedule delays, rising utility costs and higher costs to complete engineering requirements. Calhoun said this deal represented “a very unique set of risks that Boeing probably shouldn’t have taken.”
On Sunday, Colbert said he wanted Boeing to look forward to completing the Air Force One aircraft and said the employees working on this program are “one of the proudest teams in the entire company.”
Boeing has made changes to the Air Force One program and is focused on delivering the planes by 2027, he said. The new timeline, which deviates from the original target of 2024 delivery, takes into account lessons learned on supply chains, talent and facilities, Colbert said.
“With all these long cycle programs, you learn lessons along the way and you adapt as you learn those lessons,” he said.
The unexpected severity of the COVID-19 pandemic prompted Boeing to rethink how it manages supply chains for key components like microelectronics and make greater use of digital data sharing to better plan for future supply needs, company officials said Sunday.
Stephanie Pope, chief CEO of Boeing Global Services, said the company needs to change its upfront planning for demand and stocking of the parts it relies on to build its systems.
“The way we deployed and sourced three years ago is very different than it is today,” she said. “It doesn’t minimize the risk, but it allows us to manage the risk differently.”
In the past, Pope said Boeing used long-term historical trends to plan what parts and other supplies it needed. COVID showed that didn’t work anymore, she said. Instead, the company is using new digital tools to determine what components it needs to stock in the future so it can build what its military and other customers will need for years to come.
“On top of COVID, the macro environment has been so dynamic,” Pope said. “We have built many partnerships with our customers where we are [digitally] We’re sharing data back and forth and looking at how we’re flying, where we’re flying, where we’re seeing the threats, and the missions evolving, and making sure we’re one step ahead of that.”
Boeing has been working with microelectronics suppliers throughout the pandemic to ensure it has enough components to continue functioning, Defense CEO Colbert said. This included maintaining safety stocks of microelectronics or stocks of additional components that would allow it to survive a supply chain shortage.
Colbert said Boeing has also been keeping a close eye on the availability of microelectronics and the status of their production process — trying to manage customer expectations about the potential for supply chain disruptions. The company continues to invest in its suppliers and is speaking to them to ensure they are able to maintain their workforce where it is most needed, he said.
Stephen Losey is an air warfare reporter for Defense News. He previously reported for Military.com, covering the Pentagon, special operations and air warfare. Prior to that, he covered US Air Force leadership, personnel and operations for The Air Force Times.