Continuing Resolution Includes Language to Prevent KC-46 Penalty

snagfilms-a.akamaihd.net60a02fee18ad4c838a4384c078fc00c7kc-46-carter-4661a4be97dd011cedd670ed012f37c0cb266a7a.jpg

WASHINGTON — The KC-46 program, one of the Air Force’s top three procurement priorities, will likely remain on track even as Congress presses forward with a continuing resolution that will extend current funding levels until next April.

Congressional Republicans unveiled a short-term budget extension Tuesday evening that will boost KC-46A funding to the levels requested in the fiscal 2017 budget: about $2.9 billion for procurement, up from $2.4 billion in 2016. The program is one of the few military acquisition programs to receive such consideration and will keep the Air Force from having to pay a penalty to manufacturer Boeing.

Air Force Secretary Deborah Lee James warned in August that a long-term continuing resolution would cap KC-46A production at 12 aircraft, which could push back initial operational capability. Because the service had entered into a fixed-price contract with Boeing, it is contractually obligated to buy 15 aircraft in FY17 or risk paying a $331 million penalty, said Defense Department Comptroller Mike McCord in a memo obtained by
CQ Roll Call.

Although the terms of the CR give some relief to the KC-46 program in particular, other Air Force programs could be adversely affected by the measure, which prevents production increases and keeping new-start programs from kicking off.

“Overall, a long-term CR would fund the Air Force at about $1.3 billion less than the amount we requested in FY17 and cause many, many [issues] in our system,” James said in August. For instance, funds for the B-21 bomber would remain stagnant, which could impact its delivery schedule. Upgrades to the MQ-9 Reaper unmanned aerial system, C-130 cargo transport aircraft, and the B-52 and B-2 bombers would also receive less funding than planned, she said.

Lawmakers must pass a continuing resolution by the end of the week, or a government shutdown will be triggered. The proposed CR would extend until April 28.

Shortly after the Pentagon approved the KC-46A for low-rate initial production (LRIP) this summer, it awarded Boeing a $2.8 billion contract for the 19 tankers that make up the first two LRIP lots.

The company now is contractually obligated to deliver the first 18 certified aircraft in January 2019, as technical challenges made it impossible for Boeing to meet its initial August 2017 deadline.