KC-46 Tanker Program Contract in Jeopardy

The Pentagon has a fixed-price contract with Boeing for the KC-46, and the government’s financial liability is capped at $4.9 billion. It calls for Boeing to ultimately provide 179 new tankers.

The aircraft successfully conducted its first test flight at the end of September, and the program is on pace for a Milestone C production decision in April, said Brig. Gen. Duke Richardson, program executive officer for tankers at the Air Force Life Cycle Management Center.

Two low-rate initial production awards would follow, probably in May and June. The quantities for those lots would be seven and 12, respectively, Richardson said at a recent Air Force Association conference.

However, the plan would be derailed if Congress funds the government through continuing resolutions in fiscal year 2016, he noted.

“LRIP Lot 2 is fiscal year ‘16 funding. So if we get into a CR situation this will create a very large problem for this program because you know we can’t go above fiscal year ‘15 quantities, and I don’t have a contract that says I can award seven aircraft,” he said.

Officials raised the possibility that the Defense Department would have to break the KC-46 contract and others.

“If we get a year-long continuing resolution it will impact F-35 production; it will impact KC-46 production. And there is a chance that we may have to go in and open up some contracts,” Lt. Gen. Arnold Bunch, military deputy in the office of the assistant secretary of the Air Force for acquisition, said at an Air Force Association breakfast. “I don’t think any of us believe we want to go in and do [that] right now.”

To keep the KC-46 on track, the Air Force might ask Congress to exempt the program from funding restrictions that would be imposed by an extended continuing resolution, he said.

Boeing is expected to deliver 18 tankers by August 2017. The program has already experienced delays, partly due to technical problems. Richardson said he is “cautiously confident” that they will be delivered on time.

 “There’s no doubt that the schedule margin is gone in the program,” he said, “but we do believe that with the resource pool that [Boeing has] they can get there.”

Topics: Aviation, Defense Department, DOD Budget