KC-46 Tanker Problems Call For A Rethink Of Fixed-Price Development Programs

Frank Kendall writes about the drawbacks of fixed-price development programs in the U.S. Department of Defense.

For years I have been of the opinion that the KC-46 Tanker is a textbook case for fixed price development. Now, I’m not so sure.

The Air Force reported Monday that yet another problem, a Category 1 deficiency involving fuel leaks has emerged. For about a decade, Boeing has been absorbing losses on the KC-46. Those losses now exceed $3 billion. Under a fixed-price development contract, Boeing has been responsible for any cost overruns associated with delivering airplanes that meet all the contractual performance requirements established when the contract was first awarded – in 2010.

The above excerpt was originally published in Forbes. Click here to view the full article.

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