WASHINGTON — After years of struggles on the T-7 Red Hawk program, Air Force officials in January 2025 decided to take a different direction, implementing a new strategy called “active management” that offered prime contractor Boeing a series of financial incentives in exchange for meeting certain goals.
A year later, the Air Force and Boeing are discussing a new expansion, one that the service has internally assessed could cost taxpayers over a billion dollars, according to previously unreported Air Force documents viewed by Breaking Defense.
Under an Air Force document known as a second Memorandum of Agreement (MOA 2) — dated December 2025 and signed by Air Force and Boeing officials — the service would provide millions of dollars in new incentives for Boeing. The company would offer concessions of its own, including $50 million to buy spare parts for the Red Hawk and a nascent design for a system that can automatically avert ground collisions.
But one key provision would change how the government buys the training jet’s engines, removing Boeing from the process and contracting directly with engine-maker GE Aerospace. While the plan would help break a logjam between the two companies, a separate internal Air Force presentation viewed by Breaking Defense shows it could come with an “additional” taxpayer cost of up to $1.5 billion.
The new engine plan “could be more fruitful for the Air Force, but does come at a cost, and costs above what the contract was supposed to have,” a government source familiar with the T-7 program, who like others was granted anonymity for this story, told Breaking Defense. “There’s goodness in it, but not as a taxpayer. And only if the Air Force gets it right with its requirements.”
This is part three of an investigation into the T-7 Red Hawk. You can read part one here, and part two here.
Another provision in the MOA 2 document stands out because it has nothing to do with the T-7 at all: a stipulation for Boeing to provide technical information on the aerospace giant’s 747-8i jumbo jet, which the document says would be used for the Air Force’s E-4 Survivable Airborne Operations Center (SAOC), a forthcoming nuclear command and control plane.
A source with direct knowledge of the T-7 program described the engine plan as part of a “big horse trade,” where the US would relieve Boeing of responsibility for engines in exchange for getting the SAOC’s technical data, among other provisions. The move would seemingly prevent issues with data rights — the kind which has plagued the T-7 itself — from spilling over to a national priority.
Rodney Stevens, the Air Force’s program executive officer for training, told Breaking Defense that despite the signed document, the Air Force has not yet formally moved forward the plan laid out in the MOA 2 agreement. “We are only having preliminary conversations with Boeing and T-7A stakeholders as we await additional Air Force-level decisions,” he said.
In response to a detailed list of questions, Boeing said, “While we are working to get this capability to the warfighter as quickly as possible, we will not forgo safety or quality. Safety is paramount to Boeing and the T‑7A program.
“Post contract award, the Boeing T‑7A Red Hawk program has safely accumulated over 344 flight test hours across more than 350 test flights,” the company added. “As we continue to collaborate with the U.S. Air Force, the T‑7 program’s active management approach allows us to provide a production‑ready configuration to the Air Force prior to low‑rate initial production, further reducing future risk and accelerating the path to delivering this critical capability.”
Active Management, And Accountability
The Air Force implemented the active management strategy — which generally refers to sets of incentives for a contractor, as well as negotiated benefits for the government — after years of tensions with Boeing. The aerospace giant has bled $3.2 billion to date owing to the T-7’s fixed-price contract that the firm bid aggressively on to win. Earlier losses even created a “tenuous” relationship with the Air Force, according to a 2023 Government Accountability Office report. (Officials later pushed back on that assessment in interviews with Breaking Defense.)
Boeing was simply losing too much money, and the company’s drive to mitigate further losses prompted the Air Force to implement the active management strategy in January 2025, consisting of new financial incentives totaling $250 million. The plan delayed production by one year, but countered that setback by procuring several production-representative test aircraft that are meant to help accelerate the Red Hawk’s overall fielding.
That first set of financial incentives — which rewarded Boeing for meeting development and production milestones, among other criteria — were largely achieved by the company, Stevens told Breaking Defense in a March 2026 interview. The active management strategy, Stevens said at the time, has offered critical improvements for the program, especially to ensure the aircraft is delivered to new pilots as quickly as it can be.
“We have our challenges. It is difficult,” he said. “But it allows us to really robustly and actively manage the program through a mission-outcome lens.”
Active management is used on other government programs, and has been credited with helping achieve better outcomes for platforms like the B-21 Raider. But the two sources who spoke with Breaking Defense criticized the T-7’s active management arrangement for, in their view, providing financial incentives to Boeing for work the company should already be doing.
The incentives in the existing agreement “moved the needle because nothing else was working. Boeing chased after money, but that’s wrong. Active management is paying Boeing for work it should have already done or is currently under contract to perform,” the source with direct knowledge of the program said.
“I think the Air Force is not being a good steward of taxpayer money,” they added. “The government is on the wrong path of letting contractors walk all over it with no accountability.”
Stevens stressed that the Air Force will hold Boeing accountable.
The Air Force “will do everything in partnership with AETC and hold Boeing to account that they are going to deliver a safe and effective aircraft that AETC requires,” he said in an April 2026 interview. If that is not achieved, “We will take appropriate action to resolve. We will not compromise safety.
“Even though we operate under an active management construct, it doesn’t preclude us from still giving contractual direction for the betterment of the program or what’s needed,” he continued. “Our contracting officers, if required, will issue contracting notices to Boeing to hold them to account if we feel that they’re deviating from that.”
A Deal For Data
The Air Force is exploring other ways to improve the program too, which comes back to what the source described as the engine “horse trade,” and the role of the SAOC in the T-7 contract.
A key reason for the engine consideration appears to stem from Boeing’s broader inability to obtain the T-7’s technical data. Although the current T-7 contract “requires Boeing to furnish” the technical data for the F404 engine, the company “advised [it was] unable to provide” that information, according to an undated internal Air Force presentation viewed by Breaking Defense.
So the Air Force came up with a new plan: Contract directly with GE, and get the data that way instead. According to the internal Air Force presentation, apparently drawn up in response to congressional direction, officials estimated the “additional” costs of transitioning to government furnished engines for the T-7 would range from $1 billion to $1.5 billion. Its implementation would mean “[d]epot standup activities can be initiated” and that a “direct relationship with GE” would be established.
The Air Force “will provide Boeing all T-7A Engines as Government Furnished Property, associated with production, commencing at Lot 5,” says the December 2025 MOA 2 document. “Boeing’s obligation to provide any associated Engine sustainment support, including spare Engines and any data deliverables associated with Engines will no longer be required.”
Richard Aboulafia, managing director at AeroDynamic Advisory, told Breaking Defense it’s “not surprising” data rights have become an issue on the Red Hawk program, adding that the new engine plan under consideration could be an approach “the Air Force just deems useful to help solve the problem by eating the costs, but it certainly would seem to put additional cost burdens on the Air Force.”
Aircraft competitions from the outset often treat engines as government furnished equipment. According to Andrew Hunter, the Air Force’s former acquisition chief, the service “didn’t want the engine to drive the outcome of the [T-7] aircraft competition.” Instead, Hunter told Breaking Defense in a recent interview, vendors were instructed to “get the engine you want and roll it into your bid.”
Hunter did not oversee the original contract itself, which was signed in 2018. Discussions of a switch to government furnished engines began when Hunter was still in the job, before leaving at the end of the Biden administration.
“There were some pretty good advantages for the government in doing that, because the engine in question is used on multiple US government aircraft other than T-7. Notionally, I think it makes sense for the government to have that direct relationship with the supplier, especially when it’s a sophisticated, known vendor like GE,” he said.
The advantages, according to Hunter, include “the government being able to leverage its broader buying power on that engine series with GE and and get things that Boeing is unlikely to be able to obtain from GE, because Boeing doesn’t have much leverage over GE in that kind of a negotiation.”
In a statement to Breaking Defense, GE said the company “has been proud to power the U.S. Air Force’s trainer jets for decades, and we are prepared to deliver the F404 engine to train the fighter pilots of tomorrow.”
GE works with customers to provide necessary data required by contracts, while also protecting its intellectual property, the company said.
Boeing previously planned to offer the T-7 for the Navy’s own next-gen trainer program. But the company bowed out of the competition June 12, citing engine qualification work needed to meet the Navy’s requirements.
Regarding Boeing’s side of the equation for the MOA 2, the December 2025 document says the company would provide technical data on the SAOC aircraft. The jet will replace the E-4B Nightwatch, itself based on an earlier 747 airframe, to take over the “Doomsday” mission of serving as a secondary platform to launch land-based nuclear missiles.
“Boeing shall provide USAF a non-exclusive license for My Boeing Fleet access to 747-8i physical configuration technical data and detailed drawings on a non-deliverable basis (Licensed Intellectual Property) supporting USAF needs for operation, maintenance, repair and overhaul of five Boeing 747-8i aircraft… as well as any additional 747-8i aircraft added” over the duration of the SAOC program, the December 2025 document reads. (MyBoeingFleet is the company’s digital shop for aircraft technical data, among other maintenance needs, which can only be accessed with permission from Boeing.)
Any contractors working on the SAOC program would have access to the 747’s underlying technical data, provided they agree to standard confidentiality agreements with Boeing. Notably, SAOC prime contractor SNC was reportedly left as the last vendor standing after Boeing was eliminated from contention over a failure to reach an agreement with the Air Force to provide data rights on the aircraft.
One federal contracting expert, who requested anonymity since they still practice law, said a trade like one for SAOC data through the T-7 program is not all that unusual in the realm of large government negotiations.
“I don’t want to sit here and pretend that it happens frequently, but it happens,” the person said. “This is a fast way of taking care of a whole bunch of problems.”
It’s unclear exactly how much the Air Force’s new expansion of the active management strategy would ultimately cost the government, which would have to be weighed against certain concessions from Boeing.
Nevertheless, sources said the Air Force’s overall attitude toward contractual disputes, and the pivot toward active management that allotted hundreds of millions of dollars for performance improvements, seemed discordant with a Trump administration that has championed rhetoric of contractor accountability.
“I agree with the administration 1,000 percent. The government should be working better as team members and not just as a purse,” the government source said. “Until they hold somebody accountable, and hold their feet to the fire — until they’re cutting off payments, until there’s discipline, it’s going to be status quo.”
This is part three of an investigation into the T-7 Red Hawk. You can read part one here, and part two here.
