More KC-46A woes....
Join Date: Aug 2014
Location: New Braunfels, TX
Age: 70
Posts: 1,954
Likes: 0
Received 0 Likes
on
0 Posts
$2B overrun - so far - on a $5B contract. Not bad going. Perhaps Congress should ask who assessed the risk and the estimated costs when awarding the contract?
Join Date: Apr 2010
Location: London
Posts: 7,072
Likes: 0
Received 0 Likes
on
0 Posts
"Hardly a "simple conversion", it's an entirely new plane---200 fuse, -300IGW wing, -400 avionics plus all the AAR equptment. The configuration is like no civil B767,"
I seem to remember it was partly sold (at least in public) on the basis it would be a fairly simple job on a well known and proven air-frame........
I seem to remember it was partly sold (at least in public) on the basis it would be a fairly simple job on a well known and proven air-frame........
Ecce Homo! Loquitur...
KenV - they are supposed to do a rigorous check to ensure a big company doesn't bid below cost to drive competitors out of the market to ensure a future monopoly.
And who would expect Airbus to compete against Boeing in the future XC-Y and Z competitions, and Boeing not to price their bids accordingly?
And who would expect Airbus to compete against Boeing in the future XC-Y and Z competitions, and Boeing not to price their bids accordingly?
Join Date: Aug 2014
Location: New Braunfels, TX
Age: 70
Posts: 1,954
Likes: 0
Received 0 Likes
on
0 Posts
Boeing refueling jet gets much-needed momentum with $2.1 billion deal
Washington Business Journal Online 01/30/2017
Author: James Bach
2017 American City Business Journals, Inc. All rights reserved
The new year is proving to be good thus far for The Boeing Co.'s (NYSE: BA) once-beleaguered tanker replacement, with the program gathering momentum in the wake of a $2.1 billion contract win Friday to build 15 more KC-46As.It represents the third contract for deliveries of the refueling aircraft and follows a $2.8 billion deal inked in August for a total of 19 planes. This means Boeing is currently on contract for 34 of the planned 179 KC-46As.
Boeing, a Chicago-based company, has about 2,700 employees in the Greater Washington area. Its defense business, which accounted for $29.5 billion of the company’s $94.6 billion in revenue in 2016, moved its headquarters to Arlington from Hazelwood, Missouri, earlier this month.
Since the contract was first awarded in 2011, the tanker has been an unexpectedly frustrating program for Boeing. Once considered a relatively low-risk program of converting a commercial 767 jet to a military refueling tanker that would replace the KC-135, KC-46 development has been marred by cost overruns and delays.
Because of the perceived low risk of the undertaking, the contract for development was fixed price. Unlike a cost-plus contract, Boeing would bear all the risk and have to swallow any cost overruns. In July 2014, Boeing took a $272 million after-tax charge on the program, and those only added up in the two years to follow. In July 2015, Boeing took another $536 million charge, with two more in 2016 totaling $549 million.
The final charge that came in July — and totaled $393 million — was expected to be the last as the program was moving into production. But last week the company reported it took a pre-tax charge of $312 million. The company’s commercial business absorbed $243 million of that total, while the defense business was saddled with the remaining $69 million.
Over the course of the program’s history, the KC-46’s problems could be traced to issues with the aircraft’s wiring and aerial refueling systems and a fuel contamination incident, sparking a 14-month delay, the U.S. Government Accountability Office reported in November.
Despite these struggles, analysts I spoke with expected 2017 would be the year the program “hit stride”— with this recent contract reinforcing that notion.
“I think that that ought to be a program positioned to do much the same, pick up a lot of momentum this year,” Ben Harper, a partner and head of Boston-based Fairmont Consulting Group LLC’s aerospace practice, told me earlier this month.
Washington Business Journal Online 01/30/2017
Author: James Bach
2017 American City Business Journals, Inc. All rights reserved
The new year is proving to be good thus far for The Boeing Co.'s (NYSE: BA) once-beleaguered tanker replacement, with the program gathering momentum in the wake of a $2.1 billion contract win Friday to build 15 more KC-46As.It represents the third contract for deliveries of the refueling aircraft and follows a $2.8 billion deal inked in August for a total of 19 planes. This means Boeing is currently on contract for 34 of the planned 179 KC-46As.
Boeing, a Chicago-based company, has about 2,700 employees in the Greater Washington area. Its defense business, which accounted for $29.5 billion of the company’s $94.6 billion in revenue in 2016, moved its headquarters to Arlington from Hazelwood, Missouri, earlier this month.
Since the contract was first awarded in 2011, the tanker has been an unexpectedly frustrating program for Boeing. Once considered a relatively low-risk program of converting a commercial 767 jet to a military refueling tanker that would replace the KC-135, KC-46 development has been marred by cost overruns and delays.
Because of the perceived low risk of the undertaking, the contract for development was fixed price. Unlike a cost-plus contract, Boeing would bear all the risk and have to swallow any cost overruns. In July 2014, Boeing took a $272 million after-tax charge on the program, and those only added up in the two years to follow. In July 2015, Boeing took another $536 million charge, with two more in 2016 totaling $549 million.
The final charge that came in July — and totaled $393 million — was expected to be the last as the program was moving into production. But last week the company reported it took a pre-tax charge of $312 million. The company’s commercial business absorbed $243 million of that total, while the defense business was saddled with the remaining $69 million.
Over the course of the program’s history, the KC-46’s problems could be traced to issues with the aircraft’s wiring and aerial refueling systems and a fuel contamination incident, sparking a 14-month delay, the U.S. Government Accountability Office reported in November.
Despite these struggles, analysts I spoke with expected 2017 would be the year the program “hit stride”— with this recent contract reinforcing that notion.
“I think that that ought to be a program positioned to do much the same, pick up a lot of momentum this year,” Ben Harper, a partner and head of Boston-based Fairmont Consulting Group LLC’s aerospace practice, told me earlier this month.
Join Date: Aug 2014
Location: New Braunfels, TX
Age: 70
Posts: 1,954
Likes: 0
Received 0 Likes
on
0 Posts
KenV - they are supposed to do a rigorous check to ensure a big company doesn't bid below cost to drive competitors out of the market...
Ecce Homo! Loquitur...
"'Yes, yes, Mrs Lincoln, but, apart from that, how did you enjoy the play".....
None of the items you list were inevitable - they were due to the screw ups of the management team appointed - and IIRC you have commented on such repeatedly yourself - and that is one of the cardinal points considered during selection - the quality of the team.
Boeing screwed up putting in the team it did by misunderstanding the magnitude of the task - the DoD totally failed by failing to question Boeing's contract assumptions. Hindsight is wonderful - but who will pay the final expense - Boeing or the taxpayer?
As a personal observation, as major manufacturers have consolidated Boeing is half international as is Airbus - engines, avionics etc. The USA screwed up by having an industrial policy which closed MD and squeezed LM out of large aircraft manufacture - at the same time as effectively shutting down Boeing FJ manufacture. Airbus with the intent to open US plants gave the opportunity of reversing the emerging monopoly - they blew it.
Shareholder will ensure Airbus won't compete against Boeing for any future US military large jet contests as they know it is merely a way of the DoD trying to force Boeing to lower its price in a contest they can't win. Buy American does have its costs; and the F-35 programme and its costs may have done the same for the prospect of future US sales in the FJ market - China will do to LM what VW and Toyota/Mazda have done to the car market.
None of the items you list were inevitable - they were due to the screw ups of the management team appointed - and IIRC you have commented on such repeatedly yourself - and that is one of the cardinal points considered during selection - the quality of the team.
Boeing screwed up putting in the team it did by misunderstanding the magnitude of the task - the DoD totally failed by failing to question Boeing's contract assumptions. Hindsight is wonderful - but who will pay the final expense - Boeing or the taxpayer?
As a personal observation, as major manufacturers have consolidated Boeing is half international as is Airbus - engines, avionics etc. The USA screwed up by having an industrial policy which closed MD and squeezed LM out of large aircraft manufacture - at the same time as effectively shutting down Boeing FJ manufacture. Airbus with the intent to open US plants gave the opportunity of reversing the emerging monopoly - they blew it.
Shareholder will ensure Airbus won't compete against Boeing for any future US military large jet contests as they know it is merely a way of the DoD trying to force Boeing to lower its price in a contest they can't win. Buy American does have its costs; and the F-35 programme and its costs may have done the same for the prospect of future US sales in the FJ market - China will do to LM what VW and Toyota/Mazda have done to the car market.
Last edited by ORAC; 31st Jan 2017 at 19:37.
Join Date: Apr 2010
Location: London
Posts: 7,072
Likes: 0
Received 0 Likes
on
0 Posts
FYI
In the United States, a 401(k) plan is the tax-qualified, defined-contribution pension account defined in subsection 401(k) of the Internal Revenue Code.[1] Under the plan, retirement savings contributions are provided (and sometimes proportionately matched) by an employer, deducted from the employee's paycheck before taxation (therefore tax-deferred until withdrawn after retirement or as otherwise permitted by applicable law), and limited to a maximum pre-tax annual contribution of $18,000 (as of 2015)
In the United States, a 401(k) plan is the tax-qualified, defined-contribution pension account defined in subsection 401(k) of the Internal Revenue Code.[1] Under the plan, retirement savings contributions are provided (and sometimes proportionately matched) by an employer, deducted from the employee's paycheck before taxation (therefore tax-deferred until withdrawn after retirement or as otherwise permitted by applicable law), and limited to a maximum pre-tax annual contribution of $18,000 (as of 2015)
Join Date: Aug 2014
Location: New Braunfels, TX
Age: 70
Posts: 1,954
Likes: 0
Received 0 Likes
on
0 Posts
None of the items you list were inevitable - they were due to the screw ups of the management team appointed - and IIRC you have commented on such repeatedly yourself - and that is one of the cardinal points considered during selection - the quality of the team.
Last edited by KenV; 1st Feb 2017 at 15:01.
Join Date: Aug 2014
Location: New Braunfels, TX
Age: 70
Posts: 1,954
Likes: 0
Received 0 Likes
on
0 Posts
Those minor little issues apart....
Join Date: Aug 2014
Location: New Braunfels, TX
Age: 70
Posts: 1,954
Likes: 0
Received 0 Likes
on
0 Posts
A brace of 401(k)s will take the final hit.
1. Last year Boeing employees took a significant hit in their Performance Incentive Award (annual bonuses for good performance) because of the write downs on the KC-46 program despite huge gains elsewhere. This year, despite the KC-46 write downs, Boeing employees are expected to get near 100% of their Performance Incentive Awards.
2. 401(k)s belong 100% to the employee. Unlike traditional company pension plans (defined benefit plans) that can get wiped out when a company falters, 401(k) plans (defined contribution plans) cannot get wiped out even if the company goes completely bankrupt.
KenV - they are supposed to do a rigorous check to ensure a big company doesn't bid below cost to drive competitors out of the market to ensure a future monopoly.
The Boeing proposal was a bit 'sporty' - we were basically told to put together our work statements 'assuming success' - but it was doable.
Most of the problems came from horrible management - in the Boeing commercial world only the 787 program had comparably poor management (and I doubt it's a coincidence that most of the management processes and management personnel for the 767-2C/KC-46 came from the 787 program
). It was amazing how they managed to micro-manage areas where we knew what we were doing, yet totally ignored areas where they were clueless as to what was needed. As a result they ended up with refueling manifolds that leaked like a sieve, pipes that were too small to meet the required fuel transfer rates, and critical systems without the required wire separation. I was personally working propulsion system wire separation with the wire design people within months of contract award (wire separation is particularly tricky for the engines due to the limited number of places where wire bundles can pass through the pressure vessel). How those system separation requirements failed to be communicated to some of the other systems is a management mystery. Boeing knew the requirements, the stories in the press that we were caught off guard are bull
- it was poor communication of the requirements.The tanker program managers who knew what they were doing got so beat up and beat down that they transferred out of the program (I know two managers that simply retired when their efforts to transfer off the KC-46 program were refused).
All those poor design problems became magnified when the first five aircraft were pretty much built before much of the bad designs came to light, the resultant amount of rework was insane. Add to that the inevitable foul-ups and Murphy working overtime (such as the fuel analog screw up) and pretty soon you're $2 billion over budget.
Thread Starter
Ummmmmmmmmm - thanks, tdracer, it's hardly surprising that the KC-46A programme is so seriously late and over budget following such a saga of mismanagement.
Has the ranting Trump stuck his nose into the Boeing KC-46A story yet? Or does he just trust in good Ol' Bubba Boeing to provide the 'warfighter'
with an American aircraft which does what it's supposed to?
Has the ranting Trump stuck his nose into the Boeing KC-46A story yet? Or does he just trust in good Ol' Bubba Boeing to provide the 'warfighter'
with an American aircraft which does what it's supposed to?
Join Date: Aug 2014
Location: New Braunfels, TX
Age: 70
Posts: 1,954
Likes: 0
Received 0 Likes
on
0 Posts
Has the ranting Trump stuck his nose into the Boeing KC-46A story yet? Or does he just trust in good Ol' Bubba Boeing to provide the 'warfighter' 
with an American aircraft which does what it's supposed to?
with an American aircraft which does what it's supposed to?