NATIONAL HARBOR Md. — If the Pentagon is forced to operate for a long time under a continuing resolution, it could lead the US Air Force to break its contract with Boeing about on the KC-46 tanker.
Brig. Gen. Duke Richardson, the program executive on the Air Force’s next-gen tanker program, told an audience at the Air Force Association annual convention that a continuing resolution (CR) would create a "very large problem" for the program.
But how big a problem wasn’t clear until after his speech, when he told a reporter that the CR could potentially break the existing contract with Boeing, one which is notable for the financial protection it affords the service.
Under the current contract, the Air Force's liability for the engineering and manufacturing development phase of the tanker program is capped at $4.9 billion; with anything over is paid for directly by Boeing. So far, technical issues have cost Boeing $1.2 billion in pre-tax overages on the program.
That protection has been cited by Richardson and others whenever concerns about the tanker program, which has suffered several technical issues in the last 18 months, have occurred.
But that could go away under the CR, Richardson noted, if the Air Force is unable to reach a requirement to award two low-rate initial production (LRIP) contracts to Boeing once the program reaches Milestone C in April of 2016.
According to Richardson, the contract requires the Air Force to award eight8 aircraft at minimum in the first two LRIP contracts. However, only the first LRIP contract, covering seven aircraft, has funding under fiscal 2016’s budget plan.
The second LRIP contract, covering planes eight through 12twelve, would then be unable to be awarded under a CR, breaking the contract with Boeing unless the service can get a waiver from Congress.
In better news, Richardson announced the first flight of a full KC-46 tanker is on track for Sept. 25.
The general largely defended the program, noting that despite media reports on the tanker, "we are definitely struggling with schedule but we are not struggling with performance."
The EMD aircraft, a modified 767 without a functioning boom, has been flying since the end of last year, but the first flight of a "full-up" KC-46 has been delayed several times.
Boeing is required to have 18 aircraft ready to go by August 2017.
Speaking to Defense News earlier this month, Gen. Mark Welsh, Air Force chief of staff, raised concerns about the progress of the KC-46 program.
When asked to rate his concern about a potential delay in production, Welsh said: "much more than I would have been a year ago, and a little more than I would have been six months ago.
"We've taken the slack out of the program now, and now we have to perform and deliver on a timeline that's predictable," he continued.