Sequestration could force USAF to reopen KC-46 tanker contract

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A Congressional budgetary sequestration manoeuvre set to go into effect on 1 March may force the US Air Force to reopen its KC-46 fixed-price developmental contract with Boeing, a top service official says. Sequestration will automatically cut US defence outlays by 10% every year for 10 years unless the Congress and executive branch can reach a deal to avoid it.

"As currently structured, there is no danger in that contract," says Gen Paul Selva, commander of the USAF's Air Mobility Command. Selva emphasizes that any cost overruns are borne by Boeing. But if the USAF were forced to reopen the contract, that could change.

"If there is no flexibility in the sequester, it is possible we will have to reopen the contract," Selva says. "Although we will do everything we can not to because of the firm fixed-price nature of the contract."

At present, however, there is no immediate need to reopen the contract either under the so-called continuing resolution the US government is operating under right now or under the sequestration, Selva says. "How long that's sustainable, I don't know," he cautions.

If there is no flexibility in the sequester, the USAF would "literally have to run out of money in the procurement lines," Selva says. As currently structured, under the sequester the service is not allowed to shift around money to cover expenses where it needs to without Congressional authorisation.

But it might already be too late. Because sequestration is taking place so late in the fiscal year, the US Department of Defense might run out of funds regardless, deputy secretary of defense Ashton Carter told the Congress last week.

Selva says it is possible that reopening the KC-46 contract would not only place the USAF at risk of having to bear the price of any cost overruns, but it could delay the delivery of the first four test aircraft. "Which could threaten the developmental test an evaluation part of the contract," he says.

Even though the KC-46 programme is facing budgetary turbulence, the aircraft's development is proceeding smoothly with very few technical hiccups. Selva says there are few delays and the USAF expects a critical design review to be completed later this year.