Sequestration Could Lead to More Expensive KC-46A Tankers

If the Air Force must break its fixed-price contract with Boeing for the KC-46A tanker due to budget sequestration, it might end up paying more for the new tankers and perhaps acquiring less of them over time, said Gen. Larry Spencer, Air Force vice chief of staff, last week. “I’d say upfront that we wouldn’t at this point plan to cancel the contract,” he told the House Armed Services Committee on Sept. 20 during a hearing on sequestration’s impact. He continued, “But depending on the amount of the cut” to the KC-46 program, “we would have to open up that contract” to revise the payment schedule. Should that happen, “I would guess the contractor would then talk to us about, ‘OK, well, we can’t give you as many airplanes on the schedule that you asked for.’ Or, ‘We may have to stretch out the airplanes.’ Or, ‘By the way, we may have to charge you more because now the contract’s back open,'” explained Spencer. He said there’ve been no “specific conversations with the contractor” yet on this issue. (Spencer’s joint prepared remarks) (See also Not a Pretty Picture.)