The return of President Donald Trump as commander-in-chief could significantly affect negotiations with defense contractors. Trump’s emphasis on cost-cutting and a more hardline approach may clash with an industry increasingly cautious about contracts that expose them to greater financial risks, particularly aerospace firms investing in expensive aircraft that depend on innovative, high-risk technologies.
The U.S. Air Force currently faces budget constraints that hinder its ability to modernize critical components of its force. It remains unclear if a second Trump administration would release additional funds for projects like a next-generation fighter.
John Venable, a retired F-16 pilot and senior fellow at the Mitchell Institute for Aerospace Studies, suggests that Trump has the potential to leverage his public platform to hold defense contractors accountable for performance issues. For instance, he cited Lockheed Martin’s delays in delivering necessary upgrades for the F-35, stating that public pressure from Trump could accelerate aircraft production and mitigate production-related excuses.
Trump has often highlighted his business experience in renegotiating contracts, notably during his administration’s 2018 deal with Boeing for two new VC-25B Air Force One aircraft. In an October 31 interview with Tucker Carlson, he lamented “unbelievable waste and fraud” in government contracts and mentioned his efforts to save over $1 billion by renegotiating Boeing’s Air Force One deal.
While Trump claims significant savings from his negotiations, verifying concrete figures has proven challenging. Boeing has reported substantial losses on the VC-25B program, totaling nearly $2.7 billion, leading the company’s former CEO Dave Calhoun to express regret over their acceptance of the terms imposed by the Trump administration.
Fixed-price contracts are one strategy the government employs to control expenditure, wherein a contractor commits to deliver a product at a pre-determined price, absorbing any additional costs that arise. However, should a Trump administration emphasize fixed-price contracts to reduce prices, major defense contractors, particularly Boeing, may resist, given their prior unfavorable experiences.
Although a resurgence in military spending under a new Trump administration could relieve some of the Air Force’s modernization challenges, such outcomes are uncertain. The Air Force is advancing with projects like the B-21 Raider stealth bomber, T-7 Red Hawk trainer, and F-15EX Eagle II, in addition to perpetuating F-35A Joint Strike Fighter acquisitions. They are also exploring the development of collaborative combat aircraft—a form of drone wingmen—and working to manage costs for the LGM-35A Sentinel intercontinental ballistic missile.
The Air Force’s original vision for the Next Generation Air Dominance (NGAD) system has encountered significant cost issues, with estimates indicating potential expenses three times higher than that of an F-35. This situation has triggered a reassessment of air dominance needs and considerations for redesigning NGAD to lower overall costs. Recent comments by Air Force Secretary Frank Kendall on November 1 indicated that the service may not be able to support a next-generation stealth tanker concurrently with its other modernization priorities.
According to Venable, an increase in the defense budget under a subsequent Trump administration could be a crucial asset for NGAD or other significant programs anticipated for deployment within seven years. However, additional funding remains a prerequisite for the development of a tanker counterpart to NGAD.
Stephen Losey serves as the air warfare reporter for Defense News and has a background covering various aspects of defense operations, including leadership and personnel issues at Air Force Times and special operations programs at Military.com. He has reported on U.S. Air Force operations in the Middle East.
