Tuesday, April 15, 2014

Will The KC-46 Be The Smallest Snowball Coming Down Capital Hill?

The Pentagon and Capital Hill create military spending projects and the "Hill" funds those same projects. A continuous flow of cost expands as a project keeps rolling down Capital Hill's slopes to a catechismic stop at the completion of a project. Think of past endeavors for the Air force. The F-22 which halted at 187 in number for its type. Far short of the initial desired want. The snowball stopped because of money and the cost of support per copy. Then the F-35 came along, a multi-role fighter where is was to be built relatively affordable for all services off the same design points. That is not working so well. It was intended to field thousands of this type and also sell thousands to its allies over a long period of time. The Navy, Marines and Air force are waiting in the wings for its proven batch of aircraft. The cost is rolling down the hill collecting more snow during the process. It will make one large snowball by the time it stops. The Military is not certain for its reliability yet as it goes through the paces.

Reference Link:

Why Boeing's tanker is Pentagon's least contentious multibillion-dollar program

The Navy bought a concept called Littoral Combat Ships. In fact they hedged the bet by building two types from different boat builders. The concept is for a combat ship that plies the coastal waters, like those found on the Pacific rim around Asia. Currently the beef is, they are in testing and they appear slower than was wanted during the the initial proposal period of requirements. So goes the money down Capital Hills Slope in Snow Ball Fashion. It just keeps getting bigger.

The KC-46 tanker project demonstrates not just new technology bolted onto an 20 year old proven airframe design, it uses an all new purchasing process addressing the snowball problem for military projects of its types. Procurement of new weapons or equipment that will stop expanding the cost problem that it currently experienced in former projects. The KC-46 procurement is contained by these types of constraints.

  • The provider of aircraft (Boeing) is to use an existing and functional airframe meeting all mission requirements. 
  • Boeing submitted a bid price that is fixed, any overrun is absorb by manufacture. 
  • A buffer amount is provided as a result of Air Force change management during build. 
  • Financial and timely delivery risks are born by Boeing.

The list for Boeing's do's and don't's is far Longer, as one can see it gets very complicated for the KC-46 project to succeed for Boeing. The GAO has recently completed a milestone review of progress and cost expended on the project. The main concern from the first review completed in 2013 indicated Boeing had gone through a significant amount of the "buffer money", mentioned earlier. Boeing responds with a report of where the  money was applied. Early on at the out-set of the project; there where multiple changes required, and start-up contingencies for a new project of this nature. By the end of the next year those issues would retire as the project matured. The GAO has a concern that the money has become scarce for purposes of including additional engineering into the final design process, and establishing the build process. There is very little contingency money remaining as the KC-46 project moves forward into its pre-production phase.

However, Boeing has a couple cards up its sleeve. One being any changes to the original design required by the Air Force are added on cost. Boeing can absorb cost of the project by using components from its supply chain or within the Company's R & D
catalogue. Boeing has the  ability for cost reduction when the build begins. All current cost are a result of all its new implementations for building this multi-role tanker. This last GAO report is seen more of a "We're watching you Boeing"  because some project money is dangerously low. After all the negatives, the GAO could muster, it seems that Boeing is in good shape for moving forward on the KC-46.

The 767 frame flies well and is strong. The biggest risks are any new technology bolted on the aircraft. Like fuel filling appliances. Defensive counter measures and a host of other features never used before for this type of aircraft. Boeing is banking that it has those items covered and its just a matter of installing and testing. Its not like an all new F-35.  This is a seriously tricked out 767 for military purposes.