Concerned about a possible "fighter gap" -- caused by ending production of the F/A-18 while waiting on the F-35 -- the Navy had proposed extending the multi-year contract with Boeing (BA) to build the F/A-18. The Defense Department, however, decided to shut down production of the F/A-18 last year.
But that was last year. Now there are starting to be reports from the Navy and Defense Department that a new multi-year contract for the F/A-18 will be signed as a hedge against more delays in the JSF program.
If it goes ahead, this will be an expensive decision. The military will buy and maintain aircraft not originally planned for. The procurement cost alone is $500 million and the annual sustainment costs for the extra aircraft will be several million more a year.
The move will be good for Boeing, though, and would come at a good time. Purchases of the F-22 fighter ended in 2009, and the C-17 transport is supposed to end this year.
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