GAO: KC-46 Tanker Program Faces Further Delays

A KC-46A Pegasus takes flight.

Defense Department

The Air Force’s KC-46 tanker program is likely to face major delays unless risks are mitigated, the Government Accountability Office warned in a report released April 18.

The program, one of the Air Force's top three modernization priorities, is worth an estimated $44 billion. A total of 179 aircraft are expected to be fielded to replace a third of the service's legacy AC-135 aerial refueling fleet.

Delivery of the first 18 fully-capable aircraft — along with booms and centerline drogue systems — will likely be delayed from October 2018 to May 2019, GAO said in the report titled, “KC-46 Tanker Modernization: Program Cost Is Stable, but Schedule May Be Further Delayed.” The program already missed its original delivery date of August 2017.

Boeing won the fixed-price incentive contract in February 2011 after successfully protesting a previous award to Airbus.

“Because of the terms of the contract, Boeing, not the government, is responsible for nearly $1 billion in additional development costs already incurred,” the report noted. “Boeing is also providing additional training for KC-46 pilots, among other things, to compensate the Air Force for delivery delays.”

The government watchdog also pointed out a critical deficiency related to the performance of the tanker’s aerial refueling boom.

“Analysis of boom aerial refueling testing to date showed a significant number of instances where the boom nozzle contacted the receiver aircraft outside the refueling receptacle,” the report said. “In many of those instances, the aerial refueling operators were unaware that those contacts had occurred. Boom nozzle contact outside the receptacle can damage antennae or other nearby structures," it added.

The GAO noted that Boeing is working to resolve these issues by: updating test aircraft to the correct configuration to complete remaining tests; completing flight tests at a pace that is almost double its monthly average; updating test plans to reflect a more realistic schedule for certifying aircraft to be refueled by a KC-46; retrofitting production aircraft to their final configuration for delivery; and fixing a critical deficiency to keep the boom from contacting receiver aircraft outside the refueling receptacle.

The report's findings weren't all doom and gloom for the new tanker. It also noted positive trends in the program. The total acquisition cost estimate for the aircraft has remained stable at $4.44 billion, which is a 14 percent decrease below the initial estimate. The company is also on target to meet all performance capability requirements, said the report, which was signed by Michael J. Sullivan, the GAO's director of contracting and national security acquisitions, and delivered to the House Armed Services subcommittee on seapower and projection forces.

However, regarding the acquisition timeline, Secretary of the Air Force Heather Wilson recently said Boeing has been "overly optimistic in all of their schedule reports.”

Testifying before the House Armed Services Committee in March, Wilson said Undersecretary of the Air Force Matthew P. Donovan had recently met with company executives to discuss the program.

“[He] went to Seattle last week for a deep dive with Boeing and we have asked them to put their A-Team on this to get the problems fixed and get the aircraft to the Air Force,” she said.

In a statement, Boeing said "there is no greater priority" for the company right now than delivering the KC-46.

“Boeing has continued to demonstrate its commitment to deliver the tankers as soon as possible and is working in concert with the Air Force to complete testing, initiate deliveries and start [initial operational test and evaluation] so they can deploy this critical refueling capability,” the company said.

Richard Aboulafia, vice president of analysis at the Teal Group, a Fairfax, Virginia-based defense and aerospace market analysis firm, said it was unsurprising that the program faces schedule slippage.

“Given the track record of endless delays, no one would bet against additional endless delays,” he told National Defense.

It is possible that the schedule slippage is due in part to the nature of the fixed-price contract that the Air Force used for the program, he said.

“All additional costs go to Boeing, and yet, there’s really no huge penalty that is clearly identifiable for being late,” he said.

While Boeing may have to pay $1 billion in additional development costs, “it’s neither a big deal … for them as a company nor in the contract in the context of keeping this franchise,” he said. “You’re talking about a billion [dollars] or two phased over a few years for a company of Boeing’s size. That’s not meaningful. And, in the context of keeping Airbus away from their long running franchise, [it is] also a reasonable price to pay.”

Delivery delays could be problematic for Boeing as it pursues other high-profile Defense Department programs such as the T-X next-generation jet trainer and the MQ-25 Stingray unmanned aerial tanker, Aboulafia said.

“T-X of course is supposed to take risk into account,” he said. “That will be a real litmus test to that question, as will MQ-25. But T-X of course is looming very large. [An award decision is] just a few months away, and we’ll see whether risk is a material factor.”

Topics: Air Force News, Air Power, Defense Department