Pentagon Approves Giving Boeing First KC-46 Production Contracts

  • Air Force to award two contracts for the first 19 tankers
  • Contracts valued at combined $2.8 billion after costly delays

The Air Force won permission from Pentagon officials to sign two production contracts with Boeing Co. for the first 19 KC-46 tankers, deals valued at a combined $2.8 billion.

The approval came after a meeting of the Pentagon’s Defense Acquisition Board headed by Frank Kendall, the Defense Department’s top weapons buyer. The decision was announced by the Air Force in an e-mailed statement.

“I commend the team for diligently working through some difficult technical challenges,” Air Force Secretary Deborah Lee James said in the statement. “The KC-46 program has made significant strides in moving the Air Force toward the modernization needed in our strategic tanker fleet."

The decision on initial, low-rate production had slipped from August 2015 and then from April of this year to resolve technical issues with the tanker’s refueling system. The final hurdle was cleared last month with the successful refueling of an A-10 Warthog that verified Boeing fixed flaws in the boom used for in-air refueling. Boeing is in line to produce as many as 179 tankers under the $52 billion program.

A decision to approve full production -- the most lucrative phase -- has slipped to March 2018 from September 2017, the Air Force disclosed in March, as a result of cumulative delays in aircraft development from technical issues, such as wiring and the refueling system.

The KC-46, built on the air frame of Boeing’s 767 commercial jet, is the first new U.S. tanker since the 1980s. Boeing said in July that it would report a $2.1 billion accounting cost for the second quarter, primarily because of setbacks involving passenger planes but also due to a $393 million loss stemming from delays on the KC-46.

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