Mattis Says Boeing Working to Fix Tanker Woes, Meet Commitments

(Bloomberg) -- Boeing Co. “has been excellent” working with the U.S. Air Force to fix as many as three potential deficiencies with its new $44.5 billion aerial-refueling tanker, Defense Secretary Jim Mattis said.

Mattis in early October asked his staff to get background information on the three potential or demonstrated deficiencies after reading a press account about how the Air Force was addressing the issues. Bloomberg News reported Friday that in a note to his staff, Mattis said he was “unwilling, (totally)” to accept KC-46 tankers that didn't meet all contract specifications.

“I reinforced that the Air Force was not going to accept tankers that weren't completely compliant with the contract,” Mattis told reporters traveling with him to Kuwait on Sunday during a Middle East trip. “Boeing has been excellent” and hasn't given any “push-back” on its commitment, Mattis said.

“They are working to fix things” and Boeing, the Air Force and Pentagon acquisition officials “are all aligned on it,” he said.

The most serious of three recent flaws with the tanker is multiple instances of its retractable boom scraping aircraft receiving fuel in mid-air. The KC-46's schedule already has slipped because of earlier technical problems, including with its wiring. Delivery of the first 18 tankers, which was supposed to be completed by August of this year, is now expected by October 2018.

Delays Unknown

The Air Force has said it doesn't know to what extent, if any, aircraft deliveries will be further delayed by the refueling concerns.

Boeing has absorbed cost overruns exceeding the Air Force's $4.82 billion liability cap in the tanker's development phase, and the plane has drawn praise from Pentagon officials and the Government Accountability Office.

Responding to the note from Mattis, Undersecretary for Acquisition Ellen Lord also praised Air Force management in an Oct. 4 memo.

“Throughout the execution of the contract, the Air Force has held, and will continue to hold, Boeing accountable to all KC-46 contractual requirements,” Lord wrote. “If system performance is non-compliant and merits correction, the Air Force will hold Boeing accountable -- potentially via additional monetary penalties until corrected at their cost.”

‘Tankers Done Right'

Lord, the Defense Department's chief weapons buyer, wrote that two of the three potential “Category 1” deficiencies “have a clear path forward” for a resolution. The problem with the boom scraping planes was “still under investigation,” as the service planned to start testing last month, according to Lord.

“We need the tankers, but I want the tankers done right,” Mattis said on Sunday. “The Air Force needs tankers done right. The American taxpayer expects tankers done right, and Boeing is committed to tankers that are done right.

“This is a team effort, and I'm very, very comfortable that we're on the right track,” he said. “We'll get there, and it'll be the best tanker in the world.”

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net.

To contact the editors responsible for this story: Bill Faries at wfaries@bloomberg.net, Mark Niquette, Bernard Kohn

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