Boeing announces second major KC-46 overrun

Boeing has announced a second major overrun in the KC-46 program, a year after announcing a $272M post-tax overrun. This time it's $536M in post-tax overruns. The charge is blamed on “higher estimated engineering and manufacturing costs to complete development, certification and initial production of the tanker aircraft”.

The contract award was $4.4B with a $500M escalation clause to cover costs over the award amount. The GAO analyzed the program and estimated that total overruns would exceed $1B, or $786M over the $500M escalation clause. Boeing went through the $500M in three years, and has reported two pre-tax overruns totaling $1.02B. Overall costs are approaching $1.5B over the contract award.

Boeing will absorb another after-tax charge related to the KC-46 programme, as overall costs approach $1.5 billion over the US Air Force’s original contract award.

The after-tax charge of $536 million will be reported in the second quarter results to be announced on 22 July. That charge comes only a year after Boeing reported a $272 million after-tax charge on the KC-46 programme.

Boeing blames the latest charge on “higher estimated engineering and manufacturing costs to complete development, certification and initial production of the tanker aircraft”.

www.flightglobal.com...

a reply to: Zaphod58

Ouch. They need to get that under control. I have no doubt they will find a way to recoup much of it.

a reply to: OccamsRazor04

They've estimated profits after LRIP 2 at like $15B before the overruns, so they're still OK, but that's still a big chunk of change.

The beauty of fixed price contracts...let the industry pay for their mistakes for once. ..




Oh yeah...I'm back! Miss me?

a reply to: boomer135

Isn't it nice to see huge overruns and realize we're not paying for them for once?

on a typical boeing project, they spend all their time getting their office set up just how they want with nice tables and yep....go get the cabinets out of storage, have the subcontractors men bring them in and out several times to see if they look good. have the floor epoxy coated and put in different walls and doors...
then, sidewalks outside are all wrong...fix them.
make sure we take care of the gay comm. with huge signage on the fence ....and in the lunch room....a drink and bowl of cantaloupe is 12 dollars....leave hydraulic hoses with heavy fittings all over the ramp and taxiways....then make sure malasia's new 777 can take off with the huge apu door open....without anyone checking, then when informed...tower let's em roll anyway. the equivalent of a sheet of plywood size almost.
God keeps boeing going....

Lord you would think after millenia of human achievements we still cant get beancounters who can count in project planning..Wonder if the Egyptians had the same dramas with Pyramid building.Its not rocket science people...

a reply to: [post=19586744]Blackfinger....but then again...even after my above post....we get boeing top line...can't break a wing...it just bends....airplanes to fly in....cook the wings.....bolt and rivot like a mad man....paint shop it and BHAMMMM....every three days they roll one out.....I guess God has deemed it proper....they actually are reliable.

a reply to: Blackfinger

They screwed up when they offered the 767-2C, because they didn't account for the extra redundancy required for military aircraft. The aircraft as offered had the typical commercial double redundancy, not the triple required by the military.

a reply to: Blackfinger

Two comments to this based on too long doing project and resource planning:

1) it's really not rocket science, a lot of problems arise from people trying to make it an exact science at all. There's an art to good project planning that bean counters tend to lack.

2) math is hard.

originally posted by: Zaphod58
Boeing has announced a second major overrun in the KC-46 program, a year after announcing a $272M post-tax overrun. This time it's $536M in post-tax overruns. The charge is blamed on “higher estimated engineering and manufacturing costs to complete development, certification and initial production of the tanker aircraft”.

The contract award was $4.4B with a $500M escalation clause to cover costs over the award amount. The GAO analyzed the program and estimated that total overruns would exceed $1B, or $786M over the $500M escalation clause. Boeing went through the $500M in three years, and has reported two pre-tax overruns totaling $1.02B. Overall costs are approaching $1.5B over the contract award.

Boeing will absorb another after-tax charge related to the KC-46 programme, as overall costs approach $1.5 billion over the US Air Force’s original contract award.

The after-tax charge of $536 million will be reported in the second quarter results to be announced on 22 July. That charge comes only a year after Boeing reported a $272 million after-tax charge on the KC-46 programme.

Boeing blames the latest charge on “higher estimated engineering and manufacturing costs to complete development, certification and initial production of the tanker aircraft”.

www.flightglobal.com...

This is BEYOND pathetic. Im sure there is a list a mile long with excuses, but for the love of God, Boeing is essentially taking a 767 and adding gas tanks and they STILL cant even do this on-time. Im sorry, this infuriates me as I am an engineer and this reminds me of the typical corp/gov way of doing business.Ive sen it first hand, been involved in projects where we were 40-50M dollars UNDER budget, but hired 50-60 contractors to come in on 70-80 hrs a week OT to "fluff" the numbers before fiscal year end to eat budget as the old mantra goes "spend it or they take it".

Boeing is about as bad as it gets as far as corp cronyism with the DOD and this smacks of pure garbage. Dont think for 1 second they are going to eat these charges, this is all part of the game, they will threaten the DOD with delays, after deayts after delays if they cant get more money.

GUYS.....ITS A 767!!!!!

Id take the bomber contract right out of their hands right now, make the call Ashley, tell em its DONE.

Im sorry, i could rant for hours on this, im done.

a reply to: BigTrain

It's a bit more than just adding fuel tanks to a 767. They're incorporating the digital architecture of the 787 into it, plus adding what is essentially another 767 worth of wiring redundancy into what's already tight quarters for wiring.

a reply to: BigTrain
It's more or less a Frankenstein aircraft than just a 767. It's got the fuselage and wings of the 767-200, the -300F cargo door and floor, the -400ER cockpit, a third set of wiring like zaph mentioned, and new boom that's based off of the kc-10s design but still new, a new boom station up front with 3d displays, the list goes on and on. Hell it's even got some light electronic attack stuff and not to mention the 787s cockpit displays and controlls. It may be based off of the 767, but it's still a new jet that still has to be FAA certified in its non-military form.

Hell it's got twice as much code that needs to be written than the F-35 does. At least Boeing is writing it and not LM. Lol

originally posted by: boomer135
a reply to: BigTrain
It's more or less a Frankenstein aircraft than just a 767. It's got the fuselage and wings of the 767-200, the -300F cargo door and floor, the -400ER cockpit, a third set of wiring like zaph mentioned, and new boom that's based off of the kc-10s design but still new, a new boom station up front with 3d displays, the list goes on and on. Hell it's even got some light electronic attack stuff and not to mention the 787s cockpit displays and controlls. It may be based off of the 767, but it's still a new jet that still has to be FAA certified in its non-military form.

Hell it's got twice as much code that needs to be written than the F-35 does. At least Boeing is writing it and not LM. Lol

Ya, but Boeing has already designed ALL of these systems, all of the stuff you say is 'new' is not new.

Its like buying a new F-150 and doing aftermarket lift kit, dropping a pro charger on the 5.4 and replacing the exhaust, really, its that simple. YET, the guy you just got a quote from, comes back to you and says, well sorry dude, we just realised we cannot do all this work for the $13,500 we promised, we need another 5 grand, and oh by the way, your truck is all torn apart, and we cant even put it together without that 5 grand.

a reply to: BigTrain

Yes they designed all those systems, for other aircraft. It's more like taking a 30 year old F-150, dropping a brand new computer, and guage system in the cab, putting a Ranger bed on it, with a Raptor body, oh, and another truck worth of wiring and sensors and expecting it to go perfectly and on budget the first try.

And while you're at it adding armor plating to specific areas so it can survive being shot at.