The latest estimate from the Air Force office that runs the KC-46A
aerial tanker program puts the total development cost at $5.85
billion. The Air Force plans to spend $52 billion to develop and buy
179 of the new refueling planes to start replacing its fleet of
50-year-old KC-135 tankers, which are used to refuel fighter jets
and other warplanes during flight.
Air Force spokesman Ed Gulick said the new estimate was $250 million
over last year's projection for the program's development cost, but
gave no additional details on what drove the increase. He said the
annual mandatory estimates could increase or decrease as the program
"Despite this estimated increase, the government liability remains
capped at the contract ceiling price of $4.9 billion, and Boeing
continues to meet all contractual milestones, including the
development and delivery of the four EMD aircraft," Gulick said.
The Air Force has repeatedly raised its cost estimates of the
development part of the tanker program, but insists that the
fixed-price terms of its contract with Boeing will keep cost
overruns from affecting the federal budget. Last year, it forecast a
cost overrun of around $700 million.
Chicago-based Boeing said it remains on track to meet its initial
$5.1 billion estimate for developing the new military tanker, which
will replace some of the Air Force's aging fleet of KC-135 tankers.
The company also said it expects to make a profit on the overall
program, and that it continues to look for additional orders from
the United States and other countries.
"Boeing's cost estimate to complete engineering, manufacturing and
development on the KC-46 tanker program is consistent with our
estimate at the time we developed our bid," said spokesman Jerry
Drelling. "And the fixed-price nature of the contract ensures that
there are no additional costs that will accrue to the U.S.
Drelling declined to provide any details on the company's expected
profit, saying Boeing did not break down that data by specific
programs. He said Boeing continued to work on reducing the program's
cost on a daily basis.
[to top of second column]
"We expect to make money on the KC-46 tanker program," he said,
adding that the KC-46 contract opens more opportunities, "including
potential U.S. and international tanker sales and related services
for decades to come."
Boeing said it remains on track to deliver the first 18 refueling
planes by August 2017 as scheduled, despite a report from the
Pentagon's chief weapons tester that warned that testing could be
delayed by at least six to 12 months.
Boeing said it is using a number of measures to minimize the risk of
delays, including agreements with outside agencies and use of
Boeing's vast commercial flight test resources.
The program is also using a "Test Once" concept based on Boeing's
commercial practices, under which flight tests satisfy different
requirements mapped out by Boeing, the Federal Aviation
Administration, developmental testers and, where it makes sense,
(Reporting by Andrea Shalal; editing by Richard Chang)
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.