Boeing Official Says Costs on Track in Air Force Tanker PlansJuly 21, 2011
 John McCain, the Republican senator from Arizona and the ranking member of the Senate Armed Services Committee, says that the contract between Boeing and the Air Force to build a new generation of tanker aircraft could wind up costing the Air Force a previously undisclosed, extra $600 million for the first few planes delivered under the contract, according to an article in The Hill. McCain and other Boeing critics have accused the company of winning the contract with a lowball bid that includes cost promises that are unlikely to be met, The Hill reported. "Given the fiscal constraints facing the country, I would absolutely expect that taxpayers and Congress will not tolerate a $1 billion overrun on a contract to develop four planes," McCain wrote in a letter to Ashton Carter, the Pentagon's chief weapons buyer. The $35 billion contract was awarded to Boeing to build 179 planes. The Air Force favored Boeing's bid over its European rival EADS. The Hill article noted that Boeing officials have said that their bid was aggressive while Pentagon officials said Boeing's bid was much lower than that of EADS. A Reuters report, however, noted that the cost for the first four aerial refueling tankers would be $4.9 billion — $1 billion higher than contract estimates. McCain's interpretation of the refueling tanker contract shows that if the cost for the first four tankers should fall between $3.9 billion and $4.9 billion, the Air Force would have to pay for $600 million of the $1 billion overrun and Boeing would pay the rest. "I can also assure you that Congress and taxpayers will find a $600 million subsidy of a low-ball bid by Boeing is something they feel they should not have to pay for," McCain wrote in his letter to Carter. "In the current era of fiscal austerity, we need to assure taxpayers that their interests are protected and that every scarce defense dollar is being used wisely." Boeing officials, however, are sticking by their projected costs, saying that they are on track to meet the $3.9 billion threshold. |
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