After 10 years of back-and-forth bidding and political wrangling, Boeing won the Defense Department contract to build 179 new Air Force aerial tankers.
The key to Boeing’s success against rival Airbus was its low-ball bid, a bid so low that it eliminated all argument about the relative merits of the two proposed tankers.
Now it appears that Boeing may have bid too low, at least on its developmental contract.
Bloomberg News notes that Boeing’s contract for the initial research and development on the 767-based tankers is capped at $4.8 billion. But Boeing’s latest estimates of the cost of that development is $5.1 billion, and the DOD’s estimate is $5.3 billion. The government’s estimate includes an extra $200 million in contingency funding to cover costs not yet identified.
Boeing could still make money on the total project. The initial contract only includes research and development and four test aircraft. The full project includes 175 more planes. The Air Force could end up ordering more than those 179 planes, and foreign governments could add orders to the production run. The plane will be built in Everett, where the 767 passenger plane is now built.
John Gillie
john.gillie@thenewstribune.com
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