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McCain Criticizes Tanker Program for Cost Overrun, Delays

Sen. John McCain said the cost overrun on the KC-46A refueling tanker made by Boeing Co. is "deeply unfortunate" and that he's concerned about delays to the program.

The Republican from Arizona and chairman of the Senate Armed Services Committee on Monday said he detailed the concerns in a letter last week to Defense Secretary Ashton Carter. He and Sen. Jack Reed, a Democrat from Rhode Island, sent a similar letter over issues with the Air Force's new bomber program.

"While the recently announced cost overrun on the Air Force's KC-46A tanker is deeply unfortunate, it is encouraging that the contractor, and not the taxpayer, will bear this expense," McCain said.

"That said, the resulting delays to the program's internal deadlines for completing key qualification and planned ground and flight testing activities are indicative of a program at risk of not meeting its planned delivery milestones," he said.

"As a result, I am concerned that the recent problems with the tanker modernization program could prevent the Department of Defense from delivering this critical capability to our warfighters as promised and on schedule," he added.

Boeing, the world's largest aerospace company, last month said the first test flight of the new refueling tanker, known as Pegasus and based on the 767 twin-engine commercial airliner, will be delayed until later this month or early October. The exercise was already pushed back from the spring.

The Chicago-based company is fixing the plane's fuel system after workers mistakenly loaded a mislabeled chemical into it, among other problems -- work that's expected to cost more than $800 million, according to The Oklahoman. (Boeing booked a $536 million charge in the second quarter alone because of the issue, according to the website Trading Alpha.) Wiring and software issues have also contributed to cost overruns totaling more than $400 million.

Nevertheless, Boeing plans to deliver the first 18 KC-46As to the Air Force by August 2017. The service estimates it will spend $49 billion to develop and build 149 of the planes to replace its aging fleet of KC-135s, according to Pentagon budget documents. Boeing forecasts an $80 billion global market for the new tankers, according to Trading Alpha.

McCain said the contractor has decided to begin early production activities at its own initiative and cost in order to fulfill its contractual obligation.

"While we appreciate that decision, a concurrent test and production strategy increases the risk of redesign and retrofit to address potential issues found in testing, and has potential implications for schedule and cost to both the KC-46A program and beyond," he said. "I fully expect that, should such issues arise, the government and taxpayer would not be responsible for these additional costs and would seek appropriate consideration."

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