Despite fraud charges, Boeing secures deal with USAF to supply E-7 aircraft

In a move that signals a rebound for Boeing’s defense vertical amidst recent turmoil, the US Air Force has secured a provisional deal with the aerospace giant for the E-7 Wedgetail aircraft. It marks Boeing’s first major victory since its guilty plea in the 737 MAX case earlier this month.

The provisional deal ensures quick production of prototypes as the Air Force replaces its E-3 Sentry aircraft. It follows reports of price disputes over the 737-based Wedgetail planes, Reuters reported.

“We have reached agreement with them. We haven’t quite definitized a contract with them, but we expect to do that in August. What we did was we brought back a former colleague of mine ….to negotiate with Boeing and to drive to closure on the program: Mr. Shay Assad,” Air Force Secretary Frank Kendall told reporters at the Royal International Air Tattoo.

Assad served as the Pentagon’s top weapon-buying negotiator in the 2010s and is credited with saving taxpayers hundreds of millions of dollars in deals he reached with the CEOs of Boeing and Lockheed.

Earlier this year, Air Force officials admitted that they were having a “hard time” reaching an agreement with Boeing on the E-7 program. Officials said there was an unexpected amount of “nonrecurring engineering”—that is, one-off costs to develop a new platform—in the company’s proposal. And this isn’t the first time the Air Force has struggled to negotiate a contract with Boeing, Defense One writes.

E-7 Wedgetail test aircraft for rapid prototyping program

The E-7 deal includes two test aircraft as part of the “rapid prototyping program.” Ordered last year, these aircraft are intended to establish a cost-effective foundation for future production, according to Andrew Hunter, the Air Force’s acquisition chief.

“First of all, I just want to say thanks to Shay for the work that he did. But also, credit here for Boeing and its suppliers, and they did really buckle down and get their pencils out and sharpen them and do their job to bring the cost of the rapid prototyping program down,” Hunter said in a statement.

Boeing’s motivation stemmed from the extensive market for the E-7 among NATO and other partners, Hunter said. Last year, Boeing’s Wedgetail won the NATO competition to replace the alliance’s fleet of E-3 Sentry AWACS radar planes. The aircraft giant is also the Pentagon’s second-largest contractor and is competing with Lockheed Martin to replace the F-22 fighter in a crucial contest.

This is Boeing’s first major contract announcement since the company agreed earlier this month to plead guilty to a criminal fraud conspiracy charge related to the US Justice Department’s investigation into the fatal 737 MAX crashes from five years ago.

Experts have warned that the guilty plea, which crash victims’ families oppose , might jeopardize Boeing’s ability to secure contracts with agencies like the Defense Department and NASA, though waivers could be sought.

However, when asked about the plea deal’s impact on Pentagon negotiations with Boeing, Kendall responded that “they are continuing to do business with Boeing.”

According to US regulations, the Pentagon must evaluate whether “any supplier it engages with is a responsible company.”