Following months of contentious negotiations marked by disagreements over pricing, the U.S. Air Force has reached a deal with Boeing for the development of two rapid prototype E-7 Wedgetail airborne early warning and control (AEW&C) aircraft. The contract, valued at $2.56 billion, represents a significant milestone for both parties, who have been working to finalize terms since an initial agreement was signed in 2023.
Image: Boeing
The path to contract finalization was fraught with challenges. The Air Force initially faced difficulties in aligning its requirements with those of the United Kingdom, which has also acquired E-7s. Moreover, Boeing was under pressure to avoid the financial pitfalls that have plagued its defense division. These factors, coupled with disagreements over pricing, led to protracted negotiations and a temporary halt to procurement funding for the program.
To break the impasse, the Air Force brought in Shay Assad, a former Pentagon pricing expert, to mediate the dispute. Ultimately, Boeing agreed to reduce the program’s cost through efficiencies and a focus on expanding the E-7 market, including potential sales to NATO and other allies.
The contract covers the development of two rapid prototype E-7A aircraft, with the Air Force aiming to field a fleet of 26 aircraft in the future. Boeing has already initiated production of the first 737 Next Generation jetliner that will be converted into a Wedgetail prototype, with flight tests scheduled for 2025. The company anticipates annual production of six Wedgetails by the end of the decade to meet growing demand.
The E-7A is designed to replace the aging E-3 Sentry and serve as a cornerstone of the Air Force’s future battle management operations. Equipped with a Northrop Grumman-manufactured “top hat” radar, the aircraft can track targets and provide critical information to operators. Boeing envisions the E-7A as a central component of the Air Force’s future operations, including the control of unmanned aerial vehicles.
This contract resolution allows the Air Force to proceed with its modernization efforts while providing Boeing with a crucial foothold in the evolving airborne early warning and control market. As both parties move forward, the focus shifts to the rapid prototyping phase and the E-7A’s potential to reshape airborne battle management capabilities.
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