Trump’s Air Force One Deal Pains the Pentagon, Not Just Boeing

The fixed-price contract for the new Air Force One that Donald Trump talked Boeing Co. into signing hasn’t just caused the $1.5 billion in cumulative losses so far that the company’s CEO has lamented. It has also created headaches for the Air Force.

Under a fixed-price agreement, a company’s incentive is to “finish and minimize costs” while the Pentagon wants “to get every single thing that we said in the contract you have to do and get it done, and we are not going to pay you more for it,” Andrew Hunter, the Air Force’s chief weapons buyer, said in an interview. “It creates this inherent conflict between the two sides.”