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KC-46 Came Within 24 Hours of Contract Breach During Shutdown

Nov. 6, 2013 - 08:48PM   |  
Boeing's KC-46 Tanker is considered a key Air Force priority, but the service came close to defaulting on its contract during the government shutdown.
Boeing's KC-46 Tanker is considered a key Air Force priority, but the service came close to defaulting on its contract during the government shutdown. (Boeing)
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WASHINGTON — October’s government shutdown was ended before it had major impacts on Pentagon procurement programs — but for one of the Air Force’s key modernization programs, disaster was close.

During the shutdown, the Pentagon came within 24 hours of breaching its contract on the KC-46 tanker replacement, an Air Force official said Wednesday.

The issue was first raised by William LaPlante, principal deputy Air Force secretary for acquisitions, during an Oct. 23 hearing in front of the Tactical Air and Land Forces Subcommittee of the House Armed Services Committee.

“Just two weeks ago we had one of our fixed-price contracts come within about 24 hours of having a major problem, until the president signed a continuing resolution,” LaPlante testified. “Had he signed 24 hours later, we would have broken one of our fixed-price contracts, because that’s how it works.

“So instability or program stability is so important to us,” he continued. “We recognize the fact that things change, but we have to do better than where we are right now.”

Speaking after his testimony, LaPlante declined to say which program he was referring to. But a spokesman for the Air Force now says the program in question is the Air Force’s tanker replacement.

“The program in question was KC-46,” Air Force spokesman Ed Gulick wrote in a response to questions. “We were facing unique challenges trying to meet contractual obligations with no appropriations budget or continuing resolution. The resulting CR allowed us to meet these obligations.”

The F-35 Joint Strike Fighter, the new long-range bomber and the KC-46 make up the Air Force’s three top modernization programs that Air Force officials have stridently protected during budget cuts. The tanker program aims to produce 179 new planes to replace the aging KC-135 tanker fleet, with 18 tankers delivered by 2017 and completion of production in 2027.

During last year’s sequestration fight, Pentagon officials raised the specter that budget cuts could force delays, or potentially a renegotiation, of the tanker program contract with Boeing. That contract, which caps the government’s liability at $4.9 billion and requires Boeing to cover any overruns, is widely considered to be government-friendly, and service officials were public with concerns that a renegotiation could end up costing taxpayers extra.

That didn’t happen, and program officials have said the tanker is on-track and on-budget. When asked whether a renegotiation could have resulted from the shutdown, LaPlante said it was unclear.

“It’s hard to say,” LaPlante said. “We don’t know. It just put us in a situation we did not want to be in. We didn’t even want to go there.”

LaPlante, who has since been nominated by President Barack Obama to move from deputy to assistant secretary for acquisition, also testified that sequestration could cut the number of F-35s purchased in 2014. ■

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