Boeing Tanker Poses ‘Low’ Cost, Technical Risk: Air Force

Boeing Co. (BA)’s aerial tanker program poses “low” cost and technical risk to the Pentagon and only a “moderate” risk that it will fall behind schedule, according to a U.S. Air Force assessment.

Service officials made the assessment after an Aug. 24 meeting to review Boeing’s progress since winning the initial $4.9 billion contract in February, according to service information conveyed this week in closed-door congressional briefings and confirmed by Air Force officials in interviews this afternoon. The contract includes four development aircraft and options to buy 14 production models.

At the review, Boeing and Air Force officials agreed to meet several milestones. The review was a culmination of four months of work involving over 100 Air Force personnel and officials from the Air Mobility Command that will use the tankers.

“I was very impressed with the level of detail they went through,” said AMC commander General Raymond Johns in an interview. “You can do it in a cursory fashion but this review went into great depth,” Johns said. The review took all AMC’s war-fighting requirements and ensured they were translated into specifics, he said.

577 Specifications

The Air Force program manager, Major General Christopher Bogdan, said in the same interview that the review assessed 577 individual specifications, including 372 requirements laid out in the original Air Force bids.

“We took two months to go line by line to make sure we had a meeting of the minds,” he said. It was important that AMC participated to ensure warfighter interests were met, he said.

“I gave Boeing the OK before they could move on,” Bogdan said.

“We looked at the scope of work, we looked at the schedule and the resources Boeing has applied and made sure that they all connect,” he said. “We looked at manpower, we looked at hours, down to the lowest levels of people doing the work.”

The milestones include a January 2015 first flight of the initial fully equipped tanker; a full-rate production decision between July and Sept. 30, 2015, and deliveries of 14 production-model tankers that commence in the same three-month period and complete by August 2017.

August 2017

The Air Force plans to declare an initial operational capability that month. The additional 14 aircraft will be procured under separate contract options.

Bogdan said he was confident, based on the review findings, that Boeing can make this schedule.

Boeing’s plan calls for delivering all the aircraft four to five months early, around May 2017, he said.

“I say to myself, I wish them all the luck,” Bogdan said. “I would love for them to deliver early, but there are a few things in that schedule that are a little more risky. I think August 2017 is more likely.”

“The sooner they deliver those airplanes, the lower their cost would be,” he said.

Boeing agreed to start major assembly of the first tanker between April and July 1 of 2013, according to the Air Force information. It agreed to accomplishing between April and July 1 of 2014 a first flight of the 767-2C on which the tanker will be based.

Boeing beat the European Aeronautic, Defence & Space Co. for the initial contract to replace the Air Force tanker fleet.

Boeing spokesman Jerry Drelling referred calls to the Air Force.

“My conclusion was that Boeing adequately planned this out,” Bogdan said. “Sometimes what you see in the proposal is not what you see in the contract and plan. This was different. What they proposed is what what they originally planned for and what is now the baseline. There were no surprises.”

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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