Earlier this week, the Department of Defense awarded Lockheed Martin (NYSE:LMT) $253 million to supply training equipment to help Royal Saudi Air Force pilots learn to fly dozens on new Boeing (NYSE:BA) F-15SA fighter jets that the country is buying as part of one of the biggest arms sales in world history. But if that deal sounded a bit insulting -- hiring Lockheed to train pilots to fly its biggest rival's airplanes -- then Thursday's news has just added injury to insult.

On Thursday, the Pentagon announced that it's subtracting more than $456 million off of Boeing's original contract to build new, and upgrade old, F-15 fighter jets for the Saudis. Originally, Boeing had been awarded $4 billion to sell the Saudis 84 new F-15SA fighters, and to upgrade a further 70 planes to the F-15SA configuration. Thursday's "award," however, reduced the value of this contract to a "not-to-exceed amount" of $3.5 billion.

No explanation was given.


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