WASHINGTON: Boeing blew one of the most important milestones for the KC-46 airborne tanker program last week. The question is, will Boeing be penalized and, if so, how big will the penalty be?
The answer, at this point, is it ain’t clear.
“The KC-46 contract does not contain pre-defined penalties for missing schedule deadlines,” Air Force spokesman Maj. Robert Leese says in an email. So, if there aren’t set penalties, what might happen? “As with any contract schedule breach, the Air Force will seek consideration commensurate with the impact of the breach. The Air Force will secure consideration from Boeing as part of the schedule re-baseline that is about to commence following the RAA delay announcement.”
Boeing has this to say: “The underlying production system remains on track, and Boeing will have more than 18 aircraft through the factory line and in various stages of final change incorporation and certification by August 2017.”
Given the enormous amount of misery this program has entailed for the Air Force over the last decade, one can only hope that Boeing pays some reasonable price for this latest delay. Although Boeing has had to absorb $1.3 billion in cost overruns, that applies only to the first tranche of 18 aircraft. The company has been banking all along that it could handle cost overruns to stay in the tanking game because of the simple truth that roughly three-quarters of the spending on a program comes after production ends. Since Boeing plans to sell at least 179 tankers to the Air Force that $1.3 billion becomes easily absorbable, over the long term.
The attitude of Air Force Brig. Gen. Duke Richardson, the program executive officer for tankers, offered little solace to those looking for Boeing to be held accountable. In his statement on the Friday before Memorial Day, he said: “However, we understand that no major procurement program is without challenges and the Air Force remains committed to ensuring all aircraft are delivered as technically required.”
We’ll keep following this one.
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