KC-46 tanker in air

PENTAGON: One of the most screwed up programs in Pentagon history, the airborne tanker, may have turned a corner, with the KC-46 program cutting more than half-a-billion dollars from its projected costs, with $386.9 million of those savings coming in fiscal 2015. Some of these details will doubtless be discussed at the Wednesday afternoon House Armed Services subcommittee hearing about the tanker and other Air Force projection assets such as the C-5 and C-17.

The cost declined as the Air Force added five tanker aircraft to its 2015 budget plan, albeit in the out years. 

KC-46 FY15 President’s Budget (TY$M)

FY15 FY16 FY17 FY18 FY19 Total FYDP
FY15 PB $2,546.9 $3,075.2 $4,271.4 $4,026.4 $3,663.7 $17,583.6
FY14 PB $2,933.8 $3,697.0 $3,809.9 $3,718.0 $3,973.8 $18,132.5
Delta ($386.9) ($621.8) $461.5 $308.4 ($310.1) ($548.9)

 

We asked the program office how this apparent goodness happened, given the program’s long history of cock-ups.

Their answer: “The Program was able to reduce the funding over the FYDP (Future Years Defense Plan) due to: 1) a competitively awarded Aircrew Training Systems (ATS) contract in May 2013 ($250M savings), and 2) overall program risk reductions ($656M) given the program’s assessment, continued stability in execution, and the fact that no engineering change orders have been executed on the Boeing aircraft development contract.

Other refinements include: 1) Lowered MILCON costs ($651M) based on site surveys and knowledge gained since contract award, and 2) DoD budgetary adjustment for deflation ($132M).”

The program tries to make the case look even better by noting that the cost savings came even with three planes being added to fiscal 2017 and two to fiscal 2018 as part of the Future Years Defense Plan. which added $1.14 billion.

A congressional aide was careful to grant the program and the Air Force some credit: ”I look at the ATS savings as tangible; the ‘risk reduction’ savings I consider a guess of what we may not need, but not actually realized yet (so proceed with caution) since it’s in the FYDP….and anything is possible in the FYDP…”

The aide was less charitable about the $651 million reduction in military construction spending. That, the aide writes, “is likely the program just having to live with current infrastructure with no ability to build new and they’ll have to live with what’s already built.”

As to those added aircraft? That, our Hill source says, “is funny money and part of the $115B above sequestration caps, so low likelihood that will ever come to fruition.”

So is the KC-46 really doing better and saving taxpayers some money after more than a decade of disastrous decisions by senior Air Force leaders?

“Bottomline, the program is executing well,” the congressional aide says, “but with only 50% of it complete and they still haven’t flown yet, still a long ways to go to say that they won’t not need the risk funding put back in the future; there’s always discovery during flight test.” The Air Force gets credit for having “exhibited discipline in no requirements creep and holding the contractor accountable for projected cost growth above the government’s liability of $4.8M ceiling.”

The KC-46 program may not have ‘turned the corner just yet, but they definitely do have their blinker on indicating they plan to make a turn.”

I’m betting the Air Force will be pretty happy with that characterization

Comments

  • Mike

    Want to save billion on this flying gas station? Buy a Commercial 777 or 787 sans seats and interior. Then turn it over to the neighborhood fiberglass/composite shop to build a fuel tank and hire the machine shop guy next door to build the boom and the control….. Billions saved and you would not need the fancy and costly advertisement to sell the other swollen, costly beast!… :(

  • Gary Church

    It is actually a good plane Mike; it is all the attempts to steal as much money as possible with it that have made this such a mess.

    I live in Seattle and know a little about Boeing and the aluminum kite factory as they call it; the longest continuous floor factory on planet Earth by the way. Because of the extremely poor relationship between labor and management the cost of Boeing products is often higher than that of it’s European airbus competitors. The unions can take some of the blame but IMO not much because the airliner industry regularly lays off huge numbers of workers for years at a time when contracts end and then hires them back. You can imagine what that results in when you are dealing with a union for a highly skilled work force. It is not common knowledge for obvious legal reasons but unions are constantly targeted by corporations and infiltrated and all kinds of games are played to make them look bad. It gets so bizarre that it really does make truth stranger than fiction. I know this because I was a private investigator for several years……

    • Mike

      Thanks old friend… I would have never made it through college without a number of Union jobs as I had to help support my brothers and sisters… The G.I. Bill was not enough… Will always have a soft spot for organized labor… Since 1982 (The Republican Revolution) they have gotten trashed…. Now that we have had a repeat of 1929 for the same reasons , thanks to the sell outs to the Conservative Ultra Wealthy (CUWs), we have been repeating the move back much like what happened from 1932 forward… Sure hope Boeing gets it’s act together… It boggles my mind that a fully equipped 777/787 costs less than this gutted out tanker, that has “Military” engraved on it!… :(

      • PolicyWonk

        Well, the irony isn’t lost on me that the “new” tanker is based on the 767, which was coming to the end of its production life for the commercial side of the industry. Boeing wanted to keep the production line open as long as possible, which makes sense from a business perspective.

        However, when the tankers are done being built and production line being shut down, we’re going to eventually have a problem getting spare parts, just as we do with the current (aging) tanker fleet.

        • Gary Church

          They may just keep building it like the 737. This is starting to happen in the aviation world with the Chinook and C-130 as the prime example of airframes that have become the standard “ship hulls” of aviation for their arena. Like ship hulls in water the air is a fluid and the ways you build something to work in it with the materials available are not unlimited. If you look at the ME-262 configuration from 1944 and the 787 configuration of 2014 there is no difference except in scale. That’s 70 years. Innovation can be a double edged sword; sometimes you cannot make something better and should not try. This is especially true in military matters because while not innovating has caused many military disasters there is an equal number of so called “revolutions” that were a tremendous waste of resources and did just as much damage by taking away from what worked.

          • Gary Church

            Sorry, wonk, it is my nature to see the other side of every argument; I know it is irritating. I am not a contrarian though- I don’t disagree just to disagree (I hate that!). I am not disagreeing with you.

          • Gary Church

            My favorite example of the damage caused by wasting resources on what does not work is of course the V-22. One Osprey, with “development costs” runs about twice as much as the
            CH-47F which is around 40 million. The Osprey seats 24 while the Chinook can
            carry twice as many troops and sling load twice as much cargo on less powerful engines. But while
            the Chinook is an excellent aircraft for sling loading the Osprey is
            probably the worst. The Osprey can fly twice as fast and for this
            over-hyped advantage it sacrifices just about everything else a
            helicopter is able to do on the battlefield. For the cost of one Osprey carrying 24 troops you can have two
            Chinooks carrying nearly one hundred- four times as many. If you want to
            argue the Osprey can fly twice as fast and thus carry twice as many it
            still falls short by half in the number of troops it can transport per
            dollar. That is the very simplified dollar argument. But while a Chinook
            runs 2000 dollars an hour to operate the Osprey costs 10,000. This
            makes the Osprey a total loser. The number of conventional helicopters that can be bought and operated for what the Osprey costs make the V-22 a disaster in terms of wasting resources.

    • Mike

      P.S., Congratulations of landing in the Seattle area. I’ve always considered that area “God’s Country”… Spent a bunch of time fishing off of the Bar up there North of Everett and a place called Mukeltio (sp?)… Then up North of the Campbell River on Vancouver Island… :) Remember, I’m English, so I’m really comfortable with the constant rain!… :)

      • Gary Church

        I like the climate but I am tired of the city. Tired of people and their bad behavior. I am ready to go back up to Southeast Alaska- not too far north though. If I can paddle a kayak around and hunt deer I will be happy. And rabbits. And ptarmigan. Those work in a crock pot and I am not interested in shooting anything else. I was never much of a fisherman but the great thing about living in Alaska is people give their salmon from last year away to make room in their freezers:)

        • Mike

          South east Alaska is nice…. I think people are better when they are living in the outback…. Living is easy, lots of game and kayaking… Good for the soul… Salmon on a grill or open fire is something… Good for your heart also…. :)

          • Gary Church

            Roger that.

  • DDT

    1) Reducing funding over the FYDP is not the same thing as saving money. You can kick the can down the road, but it’s still a can, and it’s still in the road.
    2) There’s no such thing as “cost savings” when you’re talking about the future, especially when you’re talking about savings from removing contingency funds you originally included but have now decided you don’t need, even though nothing has changed. Every program goes through this phase at about this time, where they project that they will be ahead of schedule and under cost on the basis that no disasters have happened yet. And every program eventually ends up needing all of that contingency and then some…

    You get to call them savings when they actually happen. Everything else is snake oil.

  • Gary Church

    Put a hatch in the floor and a dispenser and these planes can launch cruise missiles and other munitions just as well as any other platform. These aircraft and drones may be almost the entire future air force fixed wing inventory necessary. But…that would not be very good defense business.