Archive for November, 2011

KC-46A Selected Acquisition Report (SAR) Indicates Higher Costs

The Department of Defense is required to submit Selected Acquisition Reports (SAR) annually for Major Defense Acquisition Programs. A SAR is also submitted at the beginning of the program and if a change to the baseline is approved. The KC-46A new aerial tanker program submitted a SAR dated 30 September to Congress and it shows that the current Estimate for Completions (EAC) for the current contract are above the ceiling.

This would mean that Boeing (BA) would make no profit on the initial contract for 17 aircraft as it is responsible for all costs above it.

The Washington Post reports that Boeing’s EAC is a $5.1 billion and the Government’s $5.3 billion. The ceiling is $4.8 billion.

Estimated costs for this initial development of the program have been up-and-down over the last six months but last reports had Boeing still under the ceiling.

The SAR also shows that the Air Force plans to spend $40 billion on procurement for the 179 tankers with the last order placed in 2027.

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