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Report: Boeing projects $300M overrun on tankers

In case you missed it Friday, Bloomberg's Tony Capaccio reports that Boeing believes it could encounter as much as a $300 million cost overrun on its KC-46A tankers, but everyone involved -- the company and the Air Force -- understand the company will bear that and any other extra costs.

Wrote Capaccio:

After the contract was awarded, Boeing revealed "that it proposed a ceiling price that is less than its actual projected cost to execute the contract," according to an Air Force statement from spokesman Lt. Col. Jack Miller. "There is no legal barrier that prohibits pursuing a below-cost proposal strategy, and Boeing's met all rules."

"Boeing is responsible for all costs over the $4.9 billion ceiling price," according to the Air Force statement.

Boeing spokesman Bill Barksdale confirmed the company projects it will exceed the $4.9 billion ceiling and is prepared to absorb the extra costs.

"We are not there yet. It's a projection," he said in a telephone interview. Barksdale declined to comment on the $300 million figure or outline when the company concluded it would exceed the ceiling.

Boeing's rival, EADS, and its allies wasted no time saying I Told You So. As George Talbot reports in the Mobile Press-Register -- down in the heart of what would've been EADS Tanker Country -- the locals have been saying all along that Big B couldn't deliver:
U.S. Rep. Jo Bonner, R-Mobile, told the Press-Register that lawmakers are keeping close watch on the tanker contract.

“I remain convinced that Boeing bought the tanker contract and I am certainly not surprised that costs are already growing,” Bonner said. “I and others in Congress remain committed to holding Boeing accountable to the terms of their fixed price contract agreement.”

There's not much anyone can do at this point, although as you'll recall from last week, this sort of thing is why Boeing officials say their number one job now is to focus on "executing" the tanker deal, so stories like this don't derail the program after all the energy it took to get it. Show Full Article

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