Boeing’s Tanker Overage up to $808 Million

It looks like the government was more accurate than Boeing last year when it estimated the KC-46 tanker program would cost a billion dollars more to develop than Boeing’s fixed-price contract bid. Boeing’s announcement of a second-quarter charge of $536 million, along with a charge last year of $272 million, means Boeing is $808 million in the red on the tanker, because the $4.9-?billion contract is fixed price, and any overage is Boeing’s responsibility to bear. The government’s estimate at completion last year was $5.9 billion, but company officials at the time said Boeing probably wouldn’t have to spend more than about $200 million of its own money to make good on the project. Last year’s charge reflected costs to redesign and re-string wiring bundles, which were either inadequately shielded or strung too close together to meet required damage survivability and redundancy. Company officials Friday declined to comment on whether they expect further charges on the KC-46. The wiring problem, and now the fuel system problem, have put the jet about eight months behind, after earlier being months ahead. First flight of the all-up KC-46 was expected early this year, but Boeing and USAF officials now suggest it will happen next month. (Boeing release.)