Back to news

April 6, 2020 | International, Aerospace

Boeing to get $882M in withheld KC-46 funds back for COVID-19

By: Valerie Insinna

WASHINGTON — The U.S. Air Force will release $882 million to Boeing that it had retained due to ongoing technical problems involving the KC-46 tanker, the service announced Thursday. The move is meant to help the company make ends meet during the novel coronavirus pandemic.

“This agreement provides Boeing $882M of withheld payments for previous non-compliance in 33 KC-46 deliveries,” the service said in a statement. “This withhold release is in line with Department of the Air Force and Department of Defense policies to maximize cash flow, where prudent, to combat coronavirus impacts on the industry base."

When the U.S. Air Force agreed to take delivery of the first KC-46 tanker in January 2019, it made clear to Boeing that it still maintained a significant piece of financial leverage. The service could withhold a maximum of $28 million every time a new KC-46 was delivered — about 20 percent of the total sum due to Boeing.

Air Force officials said they would hold back those funds until they saw measurable progress in fixing technical deficiencies, particularly the tanker's troubled Remote Vision System. By January, when Boeing had delivered 30 planes, the service had withheld about $800 million, according to Defense One.

The Air Force and Boeing on Thursday announced a final agreement to fix the RVS, the imaging system used by boom operators to see the position of the receiver aircraft and the movements of the boom itself. According to the deal, Boeing will pay for both incremental fixes to current RVS software and hardware, as well as a complete redesign of the system with new cameras, processors and computers.

Speaking with reporters about the decision on Thursday, Air Force acquisition executive Will Roper stressed that the service will be able to re-enact the cost penalties if Boeing's performance begins to slip. However, the service wanted to ensure that Boeing has the funding it needs to begin the RVS redesign, which it is calling RVS 2.0.

“Have we given up our leverage? No, I think we've used it well," he said. “Part of what we committed to Boeing is to do an expedited review over the next 120 days for the 159 outstanding noncompliances. Boeing asserts that they have addressed those noncompliances, and we are going to review those quickly. We will not instate withholds over the 120 period, but if we put that some of the corrections that have been put in place don't make our requirement, then we will start withholds again.”

As the largest maker of commercial planes in the United States, Boeing has been hit particularly hard by the COVID-19 pandemic, which has spurred travel restrictions and called into question commercial airlines' ability to pay for Boeing aircraft already on order.

Meanwhile, Boeing announced last week that it would shutter operations for two weeks at its facilities in the Seattle, Washington, area due to the high number of COVID-19 cases in the state. Those production operations include the manufacturing of the KC-46 at Everett and the P-8 submarine-hunting plane in Renton.

The Air Force intends to buy 179 tankers over the KC-46 program of record.

https://www.defensenews.com/air/2020/04/02/boeing-to-get-882m-in-withheld-kc-46-funds-back-for-covid-19

On the same subject

  • Saab delivers first Global Eye early-warning plane to UAE

    April 30, 2020 | International, Aerospace

    Saab delivers first Global Eye early-warning plane to UAE

    By: Sebastian Sprenger COLOGNE, Germany — Saab has delivered its first GlobalEye early-warning plane to the United Arab Emirates, the company announced Wednesday. The aircraft arrived in Dubai during the late morning of April 29 following a brief stopover in Bulgaria on its way from Sweden, Saab CEO Micael Johansson said during a call with reporters. The delivery caps four and a half years of work since the UAE and Saab signed a contract for three of the planes — modified Bombardier 6000 business jets equipped with Saab's Erieye long-range radar and other surveillance sensors. Saab is advertising GlobalEye as able to provide ground, air and maritime surveillance in a single package. “The delivery of the first GlobalEye is a major milestone for Saab, but also an important step in the history of airborne early warning and control,” Johansson said. “We have set a new standard for the market, and I am proud to say that we have delivered the most advanced airborne surveillance solution in the world to the United Arab Emirates.” The company, which has been spared from work stoppages in Sweden caused elsewhere by the coronavirus pandemic, had to take “a number of mitigating actions” to prevent the virus from spreading during the actual handover and during the weeks leading up to it, Johansson said. The measures included testing workers for the virus, quarantining them if warranted and retesting them afterward, according to Johansson. Saab is still working to produce the additional two aircraft owed under the 2015 contract. Those would be delivered “rather shortly,” the executive told reporters, declining to be more specific. The company is eyeing the potential sale of yet two more GlobalEye aircraft to the UAE. Such an option is included in the original deal, though details have yet to be finalized. Johansson cited Finland and South Korea as countries also interested in the GlobalEye technology. If Saab manages to drum up additional customers, future offerings are slated to include the Global 6500 jet as carriers, he said. https://www.defensenews.com/global/europe/2020/04/29/saab-delivers-first-global-eye-early-warning-plane-to-uae

  • US Army awards $179M missile warning contract to BAE Systems

    July 16, 2020 | International, Land

    US Army awards $179M missile warning contract to BAE Systems

    By: Aaron Mehta WASHINGTON — The U.S. Army has awarded BAE Systems a contract for the first two production lots of its Limited Interim Missile Warning System, or LIMWS. The contract, which is worth $179 million, also includes funding to field the next-generation Missile Warning System, an upgrade on the Army's Common Missile Warning System. “Threats are evolving and proliferating at a rapid pace and our aircrews who fly into harm's way need the most advanced protection systems available,” Chris Austin, director of threat detection solutions at BAE Systems, said in a statement. “These orders follow an intensive two-year development and qualification program, made possible by a strong industry-government partnership focused on achieving an aggressive schedule.” The company won an initial $98 million contract to produce the systems in April 2018, with the goal of putting the capability onto 400 Black Hawk helicopters. A BAE spokeswoman this week declined to comment on what systems the LIMWS might deploy on. The Army competitively awarded that initial contract to BAE through a quick reaction capability mechanism, which bypasses the traditional lengthy acquisition process. The core of the upgrade is BAE's 2-Color Advanced Warning System, or 2CAWS, which the company says includes “an open system processor, two-color infrared sensors for increased range, and a fiber optic A-kit for faster data transmission.” Put simply, the 2CAWS should allow pilots to receive signals of incoming threats more quickly than before, and should be compatible with existing Army missile warning systems. Work will occur at the company's Merrimack, New Hampshire, and Huntsville, Alabama, facilities, the latter of which is undergoing upgrades for the project. https://www.defensenews.com/land/2020/07/15/us-army-awards-179m-missile-warning-contract-to-bae-systems/

  • Aging IT burdens Pentagon leaders seeking change, Google’s Dahut says

    October 18, 2023 | International, C4ISR

    Aging IT burdens Pentagon leaders seeking change, Google’s Dahut says

    Karen Dahut was named CEO of Google Public Sector in September 2022. She previously led defense ventures at Booz Allen Hamilton.

All news