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Tanker program $300M below budget, but delays possible report says

The Air Force’s top acquisition priority could be more than $300 million under budget, but risks months-long testing delays to replace an aging fleet of refueling tankers half a century old, the Government Accountability Office reported.

The GAO estimated the $51.3 billion KC-46 aerial refueling tanker program could see key tests on the tanker slip six to 12 months next year.

The watchdog agency has urged the Pentagon to direct the Air Force to study the likelihood of delays and the impact on development costs.

While the aircraft has seen “good progress,” the GAO said “the next 12 months will challenging as the program must accomplish a significant amount of work and the margin for error is small.”

The Air Force Life Cycle Management Center tanker directorate at Wright-Patterson manages the program to buy 179 of the aircraft from Chicago-based Boeing Co. to replace about 40 percent of the more than 400 aging KC-135 Stratotanker fleet by 2027. The first 18 KC-46As are due in August 2017.

While the GAO estimated total acquisition costs have dropped, the Air Force has projected the KC-46’s initial $4.9 billion engineering and manufacturing development contract, covering the cost of the first four aircraft, could be $950 million over budget, Air Force spokesman Ed Gulick said Tuesday. Boeing must cover the additional costs under the terms of the fixed-price contract that caps development costs, he said. A total Air Force estimate was not available Tuesday.

Gulick said estimates among agencies will vary. The Air Force’s latest figures project overall program costs will drop $548.9 million the next five years.

The pace of the testing program, set to start initial tests in May 2016, could slip six to 12 months, the GAO said. The watchdog agency noted the Pentagon office of the director of operational test and evaluation reported more time may be needed to train aircrew and maintenance personnel and to make sure maintenance procedures work.

Further, more than 600 software problems were reported as of January, GAO said. The report also noted late delivery of parts slowed production of the first aircraft. It also said meeting the flight test schedule was a concern because of the time and coordination needed to line up aircraft from multiple agencies for refueling tests.

Boeing Co. spokesman Jerry A. Drelling said in an email the aerospace giant has worked closely with the Air Force and “we remain confident in our plan” to support operational tests and the company has continued to meet contract requirements.

“Our most recent assessment of the schedule confirms that we have a valid flight test plane in place,” he wrote. “We remain on plan to deliver the initial 18 combat-ready tankers to the U.S. Air Force by 2017.”

The aerospace company has made progress with software development and expects “moderate” risk ahead, according to Boeing. More than 80 percent of the software will be “reused” from other systems, which has helped reduce risks, GAO reported.

The converted Boeing 767, first flown in 1982, has found a new role to become the next mainstay in aerial refueling of U.S. and allied military aircraft. Unlike the KC-135, it can use both a tanker boom and a hose and drogue refueling system on the same flight, the GAO noted. That means, for example, Air Force and Navy aircraft could refuel from the same plane on the same mission. The new tanker also has protections against heat seeking missiles, and biochemical and nuclear attacks the old tanker doesn’t, the GAO said.

The Air Force plans two additional tanker competitions, dubbed KC-Y and KC-Z, a replacement for the KC-10 Extender tankers.

Rickenbacker Air National Guard Base near Columbus was under consideration to become one of the first bases to house the KC-46, but was passed over last May. The Ohio Air National Guard has 12 KC-135s at the base today, but had to retire six others and also lost 180 positions last year because of budget cuts. The Air Force has pressed for another round of base closures to save money, but Congress has not agreed. If it does, a new base realignment and closure commission would weigh which bases should stay open and which should close.

State officials hope the base will be a home to the KC-46 in future years.

“It would mean long-term viability of the base and we believe the base is positioned for this mission,” said Air National Guard spokesman James Sims.

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