UPDATED: Boeing statement added
NATIONAL HARBOR: Boeing has been plowing through its KC-46 management reserve for much of the last six months, according to a senior Air Force official.
“The burn rate of their management reserve rate has gone up significantly over the last six months or so,” the official told reporters today. While this technically does not qualify as a cost overrun since this is a fixed price contract, it does raise questions about the program. The Air Force official was not willing to share either the percentage of the reserve nor the dollar amount.
“We have brought forward the allocation of management reserve largely to expedite risk mitigation opportunities in the program, including the system integration laboratories. However, the overall management reserve plan for the program remains unchanged,” Boeing spokesman Jerry Drelling said in an email.
Breaking Defense readers will remember that Boeing had already wracked up roughly $300 million in what we would otherwise call a cost overrun by July last year. Most close observers of Boeing’s successful bid believe the company is more than willing to take a “loss” on the first phase of the deal and make it back once it moves beyond the development phase. Keep reading →
WASHINGTON: The Lockheed Martin Joint Strike Fighter is the biggest conventional weapons program in history and Vice Adm. David Venlet has run it to much acclaim and quite a bit of backbiting, depending on who you talk with.
This afternoon the Pentagon very quietly sent out notice that Defense Secretary Leon Panetta had nominated Venlet’s deputy, Air Force Maj. Gen. Christopher Bogdan for a third star and assignment as director of the F-35 program. Keep reading →
HARTFORD, CT: Aircraft engine maker Pratt & Whitney proudly predicts it will double its revenues this decade from $12 billion in 2010 to $24 billion in 2020 — but the company admits it will have to get through some lean years first. On both the commercial and military sides, key Pratt & Whitney programs are going away, and new engines using new technology for new aircraft are coming online, but there’s a gap before they pick up, a gap that slow economic growth and downsizing defense budgets threaten to lengthen. The single most critical factor: whether the troubled F-35 Joint Strike Fighter materializes more or less on time. Keep reading →
CORRECTED JSF OVERRUN TO $1.5B. WE ADDED A ZERO…
CAPITOL HILL: The budget cuts known as sequestration would “break” the KC-46 and Littoral Combat Ship contracts, forcing the Pentagon to renegotiate those deals, the presumptive head of DoD acquisition told the Senate Armed Services Committee today. Keep reading →
It must be summer because list stories are starting to proliferate. Usually, these stories don’t tough the defense world but one came out this morning that does.
The website DailyFinance calls for the replacement of Boeing CEO James McNerney. They are nicely scathing in presenting why McNerney should be dumped. Keep reading →
If you wanted a clear indicator of just where the Pentagon wants to be in buying weapons for the future, you would do well to pay attention to what Ash Carter, head of Pentagon acquisition, said today about a projected cost overrun faced by the Boeing tanker program.
“It’s not our problem because it’s a fixed contract and it was written with protections for the taxpayer,” Carter told a reporter at the Brookings Institution. Keep reading →
Paris: Boeing’s military aircraft business expects its international sales to grow by some 5 percent over the next five to seven years, president Chris Chadwick told Breaking Defense.
He said Boeing sees “about a five- to seven-year window of opportunity that only comes along once in a while in the international arena.” Keep reading →
Paris: Any time one American defense company buys another it can trigger government review for a host of reasons, from antitrust to security concerns.
When an American company financed by a foreign entity tries to buy another American company it triggers review by the Committee on Foreign Investment in the United States (CFIUS). It is an obscure but powerful body charged with monitoring the national security implications of the purchase by foreigners of any American company. For example, purchase of a phone company might well trigger a review even though they are not directly involved in military matters. Keep reading →