oversight

KC-46 Tanker Modernization: Aircraft Delivery Has Begun, but Deficiencies Could Affect Operations and Will Take Time to Correct

Published by the Government Accountability Office on 2019-06-12.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States Government Accountability Office
             Report to the Subcommittee on
             Seapower and Projection Forces,
             Committee on Armed Services, House
             of Representatives


             KC-46 TANKER
June 2019




             MODERNIZATION

             Aircraft Delivery Has
             Begun, but
             Deficiencies Could
             Affect Operations and
             Will Take Time to
             Correct




GAO-19-480
                                             June 2019

                                             KC-46 TANKER MODERNIZATION
                                             Aircraft Delivery Has Begun, but Deficiencies Could
                                             Affect Operations and Will Take Time to Correct
Highlights of GAO-19-480, a report to the
Subcommittee on Seapower and Projection
Forces, Committee on Armed Services, House
of Representatives




Why GAO Did This Study                       What GAO Found
Aerial refueling—the transfer of fuel        Costs for the KC-46 program remain lower than expected, as shown below.
from airborne tankers to combat and
airlift forces—is critical to the U.S.       Initial and Current Acquisition Cost Estimates for the KC-46 Tanker Aircraft (then-year dollars
military’s ability to effectively operate    in millions)
globally. The Air Force initiated the KC-                                                     February 2011          January 2019       Percent Change
46 program in 2011 to replace about a         Development                                           7,149.6               5,857.7                   -18
third of its aging KC-135 aerial              Procurement                                               40,236.0          34,188.7                   -15
refueling fleet. Boeing was awarded a
                                              Military construction                                      4,314.6           2,872.1                 -33.4
fixed-price incentive contract to
develop the first four aircraft, which are    Total                                                     51,700.2          42,918.5                   -17
being used for testing. Boeing was also      Source: GAO presentation of Air Force Data. │ GAO-19-480
required to deliver the first 18 fully
capable aircraft by August 2017. The         The Air Force accepted the first KC-46 in January 2019, but Boeing remains
program plans to eventually field 179        nearly 3 years behind schedule. As shown below, Boeing now plans to deliver
aircraft.                                    the first 18 aircraft with all three aerial refueling subsystems by June 2020.
This report assesses the program’s
progress toward meeting cost,                Original and Current Program Schedule
schedule, and performance goals. The
report also assesses how the
program’s contracting and sustainment
planning approach could inform other
acquisition programs.
GAO analyzed cost, schedule,
performance, test, manufacturing,
contracting, and sustainment planning
documents; and interviewed officials
from the KC-46 program office, other
defense offices, such as the Defense         Program officials expect the KC-46 to meet key performance goals over the next
Contract Management Agency, the              few years as it accumulates 50,000 fleet hours. However, the Air Force is
Federal Aviation Administration, and         accepting aircraft that do not fully meet contract specifications and have critical
Boeing.                                      deficiencies, including ones that affect (1) the operators’ ability to guide the fuel
What GAO Recommends                          delivery boom into position, and (2) the boom itself. The deficiencies could affect
                                             operations and cause damage to stealth aircraft being refueled, making them
GAO recommends that the Department           visible to radar. Program officials estimate it will take 3 to 4 years to develop
of Defense disseminate insights in this      fixes for the deficiencies and a few more years to retrofit up to 106 aircraft. The
report about the KC-46’s contracting         Air Force and Boeing will incur costs to fix the deficiencies, with the Air Force’s
and sustainment planning experiences         portion estimated to be more than $300 million. The Air Force is withholding 20
for consideration by acquisition             percent payment on each aircraft until Boeing fixes the deficiencies and non-
programs, particularly those that plan       compliances. Meanwhile, the Air Force has limited some refueling operations.
to use a fixed-price-type development
contract or a commercial derivative           GAO identified a number of insights that could benefit other programs, including
aircraft. The Department of Defense           the use of a fixed-price-type development contract and a correction of
concurred with the recommendation.            deficiencies clause in the contract that protected the government from some cost
                                             increases. The Department of Defense agreed to provide lessons learned about
                                             the KC-46 program for future acquisition programs based on a recommendation
View GAO-19-480. For more information,       GAO made in March 2012, but does not plan to do so until development is
contact Jon Ludwigson at (202) 512-4841 or
Ludwigsonj@gao.gov.                          complete in 2021. GAO believes other programs could benefit from insights
                                             identified in this report if they were disseminated sooner.
                                                                                                          United States Government Accountability Office
Contents


Letter                                                                                           1
                       Background                                                                3
                       Current Cost Estimate Is Less than Original Estimate, but
                         Program Remains Years behind Schedule and Will Need to
                         Address Deficiencies                                                    9
                       Program Expects All Performance Goals Will Be Met, but
                         Correcting Critical Deficiencies Will Take Several Years at a
                         Cost to Boeing and the Government and Could Affect
                         Operations                                                            14
                       Additional Test and Analysis Required to Validate That KC-46
                         Aircraft Fully Meet Key Contract and Mission Requirements             18
                       KC-46 Program Offers Insights for Future Acquisition Programs on
                         the Benefits and Challenges of a Fixed-Price-Type
                         Development Contract and a New Sustainment Approach                   23
                       Conclusions                                                             32
                       Recommendation for Executive Action                                     33
                       Agency Comments                                                         33

Appendix I             KC-46 Performance Capabilities                                          35



Appendix II            Comments from the Department of Defense                                 37



Appendix III           GAO Contact and Staff Acknowledgments                                   39



Related GAO Products                                                                           40


Tables
                       Table 1: Initial and Current KC-46 Tanker Aircraft Program
                               Quantities and Acquisition Cost Estimates                       10
                       Table 2: KC-46 Key Performance Parameters and Key System
                               Attributes                                                      35
                       Table 3: KC-46 Technical Performance Capabilities and Statuses          36




                       Page i                                 GAO-19-480 KC-46 Tanker Modernization
Figures
          Figure 1: KC-46 Refueling Subsystems                                                       4
          Figure 2: Certifications Needed for Conversion of Boeing 767 into
                   KC-46 Aerial Refueling Tanker                                                     6
          Figure 3: Planned KC-46 Procurement of 175 Production Aircraft                             9
          Figure 4: Aircraft in the Boeing KC-46 Production Process (As of
                   April 2019)                                                                      12
          Figure 5: Comparison of Original and Current Program Schedules
                   for Delivery of the First 18 Aircraft and All Refueling
                   Systems                                                                          13
          Figure 6: Completion Time Frames for KC-46 Test Activities as of
                   March 2019                                                                       19
          Figure 7: Status of the KC-46 Receiver Aircraft Testing and
                   Certifications for Operational Testing as of March 2019                          21




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          Page ii                                            GAO-19-480 KC-46 Tanker Modernization
                       Letter




441 G St. N.W.
Washington, DC 20548




                       June 12, 2019

                       The Honorable Joe Courtney
                       Chairman
                       The Honorable Robert Wittman
                       Ranking Member
                       Subcommittee on Seapower and Projection Forces
                       Committee on Armed Services
                       House of Representatives

                       The KC-46 aerial refueling tanker modernization program, currently
                       valued at about $43 billion, is one of the Air Force’s highest acquisition
                       priorities and will provide aerial refueling to Air Force, Navy, Marine
                       Corps, and allied aircraft. The Air Force contracted with Boeing in 2011 to
                       develop, test, and provide initial delivery of 18 KC-46 tankers by August
                       2017. The program recently completed its eighth year of a 9-year
                       development program to modify the design of an aircraft originally
                       designed for commercial use into an aerial refueling tanker. Aerial
                       refueling—the transfer of fuel from airborne tankers to combat and airlift
                       forces—is critical to the U.S. military’s ability to effectively operate
                       globally. The program eventually plans to field 179 KC-46 aircraft. These
                       aircraft are intended to replace roughly one-third of the Air Force’s aging
                       aerial refueling tanker fleet, comprised mostly of KC-135 Stratotankers.
                       As we have previously reported, Boeing has experienced problems wiring
                       the aircraft and other issues that have caused program delays. 1

                       You requested that we monitor the KC-46 program because of problems
                       Boeing is experiencing in developing the aircraft. This report assesses the
                       program’s progress toward (1) meeting cost estimates and schedule
                       goals; (2) achieving performance goals; and (3) completing testing. We
                       also assessed how the program’s contracting and sustainment planning
                       approach could inform other acquisition programs that are considering a
                       fixed-price-type development contract or using commercial derivative
                       aircraft. This is our eighth report on the KC-46 program. See the related
                       GAO Products page for a list of our previous KC-46 reports.




                       1
                        GAO, KC-46 Tanker Modernization: Program Cost is Stable, but Schedule May Be
                       Further Delayed, GAO-18-353 (Washington, D.C.: Apr. 18, 2018).




                       Page 1                                        GAO-19-480 KC-46 Tanker Modernization
As part of our overall review, we reviewed key cost, schedule,
performance, test, manufacturing, and sustainment documents to
determine the status of the KC-46 program in 2018 compared to the initial
plans. We interviewed officials from the Air Force’s KC-46 program office,
the Air Mobility Command, other defense offices, the Federal Aviation
Administration, and Boeing to obtain more details and discuss our
observations on the progress made in 2018. We also attended monthly
meetings between the program office and Boeing, and visited two Boeing
production facilities in Everett, Washington.

To assess progress toward achieving cost estimates, we compared
current cost estimates to those established at the start of development
and to estimates contained in our April 2018 report. To assess progress
toward achieving schedule goals, we compared current schedule
estimates to those established at the start of development and to
estimates from our April 2018 report. For cost and schedule data, we
reviewed program documents such as defense acquisition executive
summary reports, selected acquisition reports, integrated master
schedules, and program briefings.

To assess progress toward achieving performance goals, we compared
key performance parameters for the KC-46 to their current status
contained in program documents. We tracked the program’s top critical
deficiencies as reported in program briefing slides, and compared the
deficiencies to what was required in the KC-46 development contract. To
assess Boeing’s progress toward completing testing, we compared
planned and actual developmental flight test data and identified remaining
program test activities, such as receiver aircraft certification testing and
operational testing. We assessed the reliability of the cost, schedule, and
test data by corroborating it using multiple sources including official
reports or publications where possible, and by interviewing agency
officials knowledgeable about the data. We determined that the data were
sufficiently reliable for the purposes of reporting on the current status of
the KC-46 program.

To report on how the program’s contracting and sustainment approach
could inform other acquisition programs considering a fixed-price-type
development contract or commercial derivative aircraft, we analyzed the
original KC-46 contract, contract modifications, and key sustainment
documents. We compared the KC-46 program’s contracting approach to
the Federal Acquisition Regulation, Department of Defense guidance, and
best practices we identified for capturing design and manufacturing
knowledge on weapon acquisition programs. We reviewed a study that


Page 2                                    GAO-19-480 KC-46 Tanker Modernization
             identified the benefits of maintaining Federal Aviation Administration
             certification for the KC-46 for sustainment purposes, and discussed key
             assumptions that have changed since the study was completed with
             program officials. We interviewed officials from the Air Force tanker
             directorate; KC-46 program office; Office of the Deputy Assistant
             Secretary of Defense for Systems Engineering; Under Secretary of
             Defense for Acquisition and Sustainment Defense Pricing and
             Contracting Office; Office of the Secretary of Defense Director,
             Operational Test and Evaluation; Deputy Assistant Secretary of Defense
             for Developmental Test and Evaluation; Defense Contract Management
             Agency; and the Federal Aviation Administration. We also interviewed
             representatives from Boeing.

             We conducted this performance audit from July 2018 to June 2019 in
             accordance with generally accepted government auditing standards.
             Those standards require that we plan and perform the audit to obtain
             sufficient, appropriate evidence to provide a reasonable basis for our
             findings and conclusions based on our audit objectives. We believe that
             the evidence obtained provides a reasonable basis for our findings and
             conclusions based on our audit objectives.


             In February 2011, Boeing won the competition to develop the Air Force’s
Background   next generation aerial refueling tanker aircraft, the KC-46. The KC-46 is to
             be equipped with subsystems that allow for two types of refueling—(1) a
             refueling boom that is integrated with a computer-assisted control system,
             and (2) a permanent hose and drogue refueling system. This dual
             refueling capability is an enhancement over prior tanker aircraft because
             it enables the KC-46 to use boom refueling for Air Force aircraft and
             drogue refueling for Navy or allied aircraft on a single flight. The majority
             of legacy tankers, such as the KC-135s, were configured for only one of
             these types of refueling and had to land and be reconfigured to use the
             other refueling system.

             During boom refueling, an operator on the KC-46 tanker aircraft extends
             the boom—a rigid, telescoping tube—and inserts it into a receptacle on
             the aircraft being refueled. The KC-46 also has a remote vision system,
             which consists of a display, cameras, and computer processors, in lieu of
             a window that legacy tankers use. The system allows operators to
             observe the position of the boom and the receiving aircraft, and to
             reposition the fuel delivery system to facilitate refueling. In contrast,
             during drogue refueling, an operator uses the hose and drogue system—
             comprised of a long, flexible refueling hose and a parachute-like metal


             Page 3                                     GAO-19-480 KC-46 Tanker Modernization
                                       basket that provides stability—to provide fuel to receiver aircraft. Drogue
                                       refueling is available via the centerline drogue system in the middle of the
                                       tanker aircraft or via wing aerial refueling pods located on each wing.
                                       While refueling with the drogue or wing aerial refueling pods, the operator
                                       uses the remote vision system to identify when to extend or reel in the
                                       hoses. The wing aerial refueling pods can be used for simultaneous
                                       refueling of two Navy or allied aircraft—an enhanced capability that only
                                       20 of the 414 KC-135 tankers currently have the capability to do. Figure 1
                                       shows the boom and drogue refueling subsystems on the KC-46.

Figure 1: KC-46 Refueling Subsystems




                                       Note: The figure depicts a KC-46 with a configuration for cargo, passengers, and aeromedical
                                       evacuation, but the aircraft can also be configured in a variety of different ways.


                                       The KC-46 tanker is a commercial derivative aircraft that is based on
                                       Boeing’s commercial 767 aircraft. To convert a 767 to a KC-46 tanker,
                                       Boeing modified the aircraft design in two phases. In the first phase,
                                       Boeing changed the design of the 767 to include a cargo door, new fuel
                                       tanks, and an advanced flight deck display borrowed from the 787



                                       Page 4                                                  GAO-19-480 KC-46 Tanker Modernization
aircraft. This baseline non-military aircraft is called the 767-2C and is
being built on Boeing’s existing 767 production line. In the second phase,
Boeing added military systems to the 767-2C and brought it to a KC-46
configuration in a separate Boeing modification facility. The completed
KC-46 aircraft are then taken to a test and delivery center for Air Force
acceptance.

By using a commercial derivative aircraft, the Air Force intended to avoid
the long process and costs associated with designing, testing, and
evaluating a new aircraft. It also wanted to reap the benefits of decades of
reliability upgrades Boeing made to the aircraft for commercial customers,
an established commercial infrastructure for spare parts, and
maintenance and training data needed for sustainment that have been
validated and verified by the commercial industry, among other things.

According to an Air Force Policy Directive in place at the time of contract
award, programs that are based on commercial derivative aircraft are
required to achieve Federal Aviation Administration certification to the
maximum extent practical. 2 The Air Force went further and required the
contractor to exhaust all possible solutions to obtain Federal Aviation
Administration certification on both commercial and military-unique
parts—including the boom, centerline drogue system, and wing aerial
refueling pods—before seeking military certification.

The Federal Aviation Administration previously certified the airworthiness
of Boeing’s 767 commercial passenger airplane (referred to as a type
certification), and in December 2017, awarded the amended type
certificate for the 767-2C aircraft to Boeing. The amended type certificate
allowed Boeing to use the 767-2C aircraft as the baseline non-military
aircraft for the KC-46. Then, in September 2018, the Federal Aviation
Administration certified the design of the KC-46 with a supplemental type
certificate. The supplemental type certificate signifies the Federal Aviation
Administration’s approval of the KC-46’s airworthiness, including mission
systems such as its aerial refueling components. According to program
officials, the Air Force granted a limited duration airworthiness certification
for the KC-46 in November 2018 to support the initial fielding, which they
said is common for new aircraft. The Air Force is continuing testing to
obtain a military type certification from the Air Force Engineering

2
 Air Force Policy Directive 62-6, USAF Airworthiness (June 11, 2010), superseded by Air
Force Policy Directive 62-6, USAF Airworthiness (Jan. 16, 2019).




Page 5                                           GAO-19-480 KC-46 Tanker Modernization
                                         Directorate, expected in several years. See figure 2 for a depiction of the
                                         conversion of the 767 aircraft into the KC-46 tanker with the boom
                                         deployed and the Federal Aviation Administration’s airworthiness
                                         certificate needed at each stage.

Figure 2: Certifications Needed for Conversion of Boeing 767 into KC-46 Aerial Refueling Tanker




                                         During development, Boeing is expected to prove the aircraft’s design
                                         and demonstrate that the aircraft performs as expected. This type of
                                         testing is referred to as developmental testing. This testing was originally
                                         planned to occur within a 15-month window starting in early 2015 and
                                         ending in 2016.

                                         Initial operational test and evaluation—expected to occur after
                                         developmental testing and referred to in our report as operational
                                         testing—is conducted on production aircraft, or production representative
                                         articles. During this testing, the Air Force determines whether systems
                                         are operationally effective and suitable to support a full-rate production
                                         decision. The Air Force obtained a military flight release in November
                                         2018, which allows it to start operational testing. To support operational
                                         testing, the Air Force is undertaking testing to certify the KC-46 to refuel
                                         various receiver aircraft, such as the F-15 fighter and B-52 bomber. After
                                         the first four KC-46 aircraft are delivered and two receiver aircraft are
                                         certified for refueling, the Air Force will begin operational testing.




                                         Page 6                                         GAO-19-480 KC-46 Tanker Modernization
The Air Force awarded Boeing a fixed-price incentive (firm target)
contract to develop the KC-46, which includes the design, manufacture,
and delivery of four test aircraft. 3 Barring any changes, the contract
specifies a ceiling price of $4.9 billion for Boeing to develop the first four
aircraft. Once that price was reached, Boeing would assume
responsibility for all additional costs for developing those aircraft. The Air
Force used a fixed-price incentive development contract because KC-46
development was considered to be a relatively low-risk effort to integrate
mostly mature military technologies onto an aircraft designed for
commercial use. The contract limits the government’s financial liability
and provides the contractor incentives to reduce costs to earn more profit.
The contract specifies a 60/40 incentive ratio for sharing savings in the
event of underruns, or sharing costs in the event of overruns in relation to
the target cost. The government’s share is 60 percent, while Boeing’s is
40 percent. Cost sharing ends when the contract price reaches the $4.9
billion ceiling. Thereafter, Boeing is responsible for all additional costs
associated with the overruns. The contract also specifies that Boeing
must correct any deficiencies and bring development and production
aircraft to the final configuration at no additional cost to the government.

In addition, the contract includes options for Boeing to manufacture 175
aircraft with firm-fixed-price contract options for the first two production
lots, and options with not-to-exceed fixed prices for production lots 3
through 13. For purposes of this report, a production lot refers to a set
number of aircraft that must be built and delivered in a given time frame
and procured with a specific year of budget funding. The original contract
required Boeing to deliver 18 operational aircraft, nine sets of wing aerial
refueling pods, and two spare engines by August 2017.

The Under Secretary of Defense for Acquisition, Technology and
Logistics approved the KC-46 program to enter low-rate initial production




3
 This contract type specifies a target cost, a target profit, a price ceiling and a profit
adjustment formula (also known as a share-line or incentive ratio). The price ceiling is the
maximum that may be paid to the contractor, except for any adjustment under other
contract clauses. When the final cost is less than the target cost, application of the
incentive ratio results in a final profit greater than the target profit; when final cost is more
than target cost, the final profit is less than the target profit. If the final costs exceed the
price ceiling, the contractor absorbs the difference.




Page 7                                                 GAO-19-480 KC-46 Tanker Modernization
in August 2016. 4 Originally, the Air Force planned for the first two
production lots to be low-rate production lots. The 19 aircraft associated
with these two lots, or 11 percent of the 175 production aircraft, were to
be built concurrent with developmental flight testing. The Office of the
Under Secretary of Defense for Acquisition, Technology and Logistics
approved additional low-rate production lots—lots three through five—in
2016 and 2017 to avoid interrupting the planned production of additional
aircraft. As we have reported over the past several years, Boeing had
problems developing the aircraft, which resulted in schedule delays and a
decision by Boeing and the program office to separate the delivery of the
first 18 aircraft from the delivery of the first nine sets of wing aerial
refueling pods. 5

As of March 2019, the Air Force has exercised options for the first four
low-rate production lots, for 52 aircraft totaling about $7.8 billion. As a
result, the number of aircraft being produced concurrent with
developmental flight testing has increased to 52 aircraft, or 30 percent of
the total number Air Force expects to purchase. Traditionally, the
Department of Defense tracks concurrency to determine financial risk to
the federal government; however, in this case, due to the terms of the
development contract, the government’s liability was limited to sharing in
cost overruns only up to the contract’s ceiling price. Figure 3 shows the
number of aircraft the Air Force plans to procure in each lot.




4
 The Office of the Undersecretary of Defense for Acquisition, Technology and Logistics
was reorganized effective February 1, 2018. There is now an Undersecretary of Defense
for Acquisition and Sustainment who advises the Secretary on all matters regarding
acquisition and sustainment and will be involved in the oversight of individual programs as
required.
5
 GAO-18-353 and KC-46 Tanker Modernization: Delivery of First Fully Capable Aircraft
Has Been Delayed over One Year and Additional Delays are Possible, GAO-17-370
(Washington, D.C.: Mar. 24, 2017).




Page 8                                             GAO-19-480 KC-46 Tanker Modernization
Figure 3: Planned KC-46 Procurement of 175 Production Aircraft




                                        Note: Procurement lots 7-13 represent targeted buys. The Air Force has the flexibility to adjust the
                                        number of aircraft in each of these lots.


                                        The KC-46 program’s cost estimates have remained lower than initially
Current Cost                            estimated, consistent with our past reports. 6 The KC-46 program’s total
Estimate Is Less than                   acquisition cost estimate is currently about $43 billion, or about $9 billion
                                        lower than the original 2011 estimate. The Air Force was able to decrease
Original Estimate, but                  its cost estimate in large part because funds set aside for potential design
Program Remains                         changes were not needed. After a 3-year delay from the original plan, the
                                        Air Force began conditionally accepting the first seven KC-46 aircraft in
Years behind                            early 2019.
Schedule and Will
Need to Address
Deficiencies

Total Government Cost                   The KC-46 program’s total acquisition cost estimate remains lower than
Estimate Has Declined                   the initial estimate, consistent with our April 2018 report. As of January
                                        2019, the Air Force estimates that the total program acquisition cost for
Since the Initial Estimate
                                        the KC-46, which includes development, procurement, and military
                                        construction costs, will be about $43 billion. This is about $9 billion, or 17
                                        percent, less than the original estimate of $51.7 billion made in 2011.
                                        Correspondingly, the average acquisition cost of each aircraft has also
                                        decreased by 17 percent because aircraft quantities have remained the
                                        same. Table 1 provides a comparison of the initial and current quantity
                                        and cost estimates. The estimates include, among other things, the
                                        expected costs of the development and procurement contracts awarded
                                        to Boeing, government test and evaluation costs, program office
                                        6
                                         GAO-18-353 and GAO-17-370.




                                        Page 9                                                    GAO-19-480 KC-46 Tanker Modernization
                                                      expenses for advisory and assistance services from support contractors,
                                                      as well as contingency funding that might be needed to address the
                                                      potential risk of requirements changes or other unexpected issues.

Table 1: Initial and Current KC-46 Tanker Aircraft Program Quantities and Acquisition Cost Estimates

                                                           Initial Estimate            Current Estimate                Change             Difference
                                                          (February 2011)                (January 2019)               (percent)
Expected quantities
Development quantities                                                     4                               4                   —                 0.0
Procurement quantities                                                  175                             175                    —                 0.0
Total quantities                                                        179                             179                    —                 0.0
Acquisition cost estimates (then-year
dollars in millions)
Development                                                         7,149.6                        5,857.7                  -18.0            1,291.9
Procurement                                                       40,236.0                        34,188.7                  -15.0            6,047.3
Military Construction                                               4,314.6                        2,872.1                  -33.4            1,442.5
Total program acquisition                                         51,700.2                        42,918.5                  -17.0            8,781.7
Per Aircraft cost estimates (then- year
dollars in millions)
Average acquisition cost                                              288.8                           239.8                 -17.0                 49
Source: GAO analysis of KC-46 program. | GAO-19-480

                                                      Note: Then-year dollars include the effects of inflation and price changes.


                                                      Overall, the Air Force decreased its development and procurement cost
                                                      estimates by about $1.3 billion and $6 billion, respectively. As we have
                                                      previously reported, the main reason for the decrease is it has not needed
                                                      the large amount of contingency money the Air Force included in the
                                                      initial estimates for possible requirements changes. 7 Military construction
                                                      cost estimates also decreased by about $1.4 billion as the Air Force
                                                      decided, for example, to reuse existing facilities at its operating bases
                                                      rather than build new ones.

                                                      In contrast, as of February 2019, Boeing representatives estimate that
                                                      costs to complete development have increased to about $6.2 billion, or
                                                      about $1.3 billion over the contract ceiling price of $4.9 billion, due to
                                                      development problems. Specifically, Boeing experienced problems
                                                      related to wiring the aircraft, design issues with the fuel system

                                                      7
                                                       GAO-18-353.




                                                      Page 10                                                   GAO-19-480 KC-46 Tanker Modernization
                            components, a fuel contamination event that corroded the fuel tanks of
                            one of the development aircraft, and test delays. According to the fixed-
                            price incentive contract, the government is generally not responsible for
                            these additional costs to the extent they exceeded the ceiling price of the
                            development contract.


Air Force Began Accepting   The Air Force conditionally accepted the first seven KC-46 production
Aircraft in January 2019    aircraft between January and March 2019, about 3 years later than
                            originally planned, with three critical deficiencies related to the refueling
with Several Critical
                            subsystems. Although the federal government generally has no obligation
Deficiencies That Will      to accept work that does not meet contract requirements, program
Need to Be Addressed        officials told us that the Air Force negotiated minimum specifications
                            under which it would begin conditionally accepting aircraft. Officials told
                            us that among other benefits, conditionally accepting these aircraft
                            provides the Air Force additional military capability and the aircraft can be
                            used to start operational testing. These aircraft are among the 18 aircraft
                            required by the original contract.

                            As of April 2019, Boeing was producing the remaining 45 additional
                            aircraft associated with the first four low-rate initial production lots. Some
                            of the aircraft just started production on Boeing’s 767 production line.
                            Others are further along and being modified to become KC-46 aircraft in a
                            separate facility, or are being tested and taken to the delivery center for
                            Air Force acceptance. Still others are in storage, either waiting to be
                            transferred to the KC-46 modification center to be retrofitted with the
                            latest wiring configuration or transferred to the delivery center to prepare
                            for Air Force acceptance. Figure 4 shows where these 45 aircraft are in
                            Boeing’s production and delivery process, along with the seven aircraft
                            already delivered.




                            Page 11                                    GAO-19-480 KC-46 Tanker Modernization
Figure 4: Aircraft in the Boeing KC-46 Production Process (As of April 2019)




                                          Boeing is not expected to meet its most significant delivery requirement
                                          so far until mid-2020, 34 months after originally planned and almost 20
                                          months later than we found in April 2018. Specifically, program officials
                                          anticipate that the Air Force will accept the first 18 aircraft by August
                                          2019, and nine sets of wing aerial refueling pods by June 2020—which
                                          together with two spare engines constitute the contractual delivery
                                          requirement contained in the development contract. According to program
                                          officials, Boeing continued to have difficulty providing design
                                          documentation needed to start Federal Aviation Administration testing for



                                          Page 12                                  GAO-19-480 KC-46 Tanker Modernization
                                          the wing aerial refueling pods over the past year, which caused the
                                          additional delays beyond what we reported last year. Figure 5 shows the
                                          original and current delivery schedules for completing the development
                                          contract requirement.

Figure 5: Comparison of Original and Current Program Schedules for Delivery of the First 18 Aircraft and All Refueling
Systems




                                          In February 2019, the Air Force stopped accepting KC-46 aircraft from
                                          Boeing because it had identified foreign object debris, including tools, in
                                          aircraft it had already accepted, as well as in the aircraft that were in the
                                          final stages of acceptance. Boeing issued a corrective action plan
                                          outlining steps the company needed to take to improve its foreign object
                                          debris identification and prevention activities before the Air Force would
                                          accept additional aircraft. Some of the steps included conducting daily
                                          inspections of each aircraft for foreign object debris, having Boeing
                                          production personnel submit lost tool reports to their superiors, and
                                          developing strategies for containing the debris issue, such as only taking
                                          the exact amount of small parts needed for an individual job in the aircraft
                                          build. The Air Force began accepting aircraft again after Boeing took
                                          steps to address the problem.

                                          However, in March 2019, Boeing found additional foreign object debris as
                                          it was conducting its newly implemented daily inspections and the Air
                                          Force suspended deliveries again. Boeing implemented additional
                                          corrective actions to the Air Force’s satisfaction and, as of April 2019, the
                                          Air Force has authorized the resumption of KC-46 deliveries. Program
                                          officials stated that Boeing is responsible for the costs to inspect and
                                          remove foreign object debris from aircraft that have already been
                                          accepted and that are in various stages of the Boeing manufacturing
                                          process.



                                          Page 13                                        GAO-19-480 KC-46 Tanker Modernization
                         Because of the delivery delays to date and other factors in the existing
                         tanker fleet, an Air Mobility Command official said leadership is currently
                         planning to fly and maintain some legacy KC-135 tankers longer than
                         planned until the KC-46 is available to conduct missions. According to the
                         official, the Air Force plans to reallocate $57 million in fiscal year 2020
                         funds from the KC-46 program to the KC-135 program to support this
                         decision. The funding would cover the cost to fly and sustain some KC-
                         135 aircraft above what the Command had planned, including the
                         associated personnel costs. Air Mobility Command officials said that
                         decisions about retaining some legacy KC-135 aircraft will be reviewed
                         annually thereafter. If these aircraft are retained, funding would be
                         reallocated from the KC-46 program to support the decision.


                         The program continues to expect that the KC-46 aircraft will ultimately
Program Expects All      meet its high-level system performance goals, such as those related to
Performance Goals        aerial refueling and operational availability. However, the Air Force and
                         Boeing expect that the critical deficiencies that could affect the aircraft’s
Will Be Met, but         aerial refueling operations will take several years to address at a cost to
Correcting Critical      both the government and Boeing.
Deficiencies Will Take
Several Years at a
Cost to Boeing and
the Government and
Could Affect
Operations
Program Expects KC-46    Program officials reported that, similar to what we reported last year, they
Aircraft Will Meet Key   expect the KC-46 will ultimately meet all of its 21 performance goals.
                         These goals include nine key performance parameters and five key
Performance Goals
                         system attributes set by the Air Force, as well as seven technical
                         performance measures Boeing established to track its own progress
                         toward meeting contract specifications. 8 Appendix I provides a description
                         of each of the performance goals.


                         8
                          A key system attribute is an attribute that is considered important but not critical to
                         meeting a system goal. A key performance parameter is considered critical to the
                         development of an effective military capability.




                         Page 14                                              GAO-19-480 KC-46 Tanker Modernization
According to Air Force test officials, the program plans to ascertain if the
aircraft meets its 14 key performance parameters and key system
attributes during the operational test period, which began in May 2019.
For example, the Air Force will test the tanker’s ability to effectively refuel
receiver aircraft with boom and drogue refueling on the same mission.
The Air Force will also collect data to assess the operational availability of
the aircraft. Operational availability is defined as the percentage of time
the aircraft is available to complete its mission, which includes refueling
aircraft or transporting cargo or people, when needed. The KC-46 needs
to be available at least 80 percent of the time. Air Mobility Command
officials will continue to monitor operational availability of the aircraft after
it has been fielded to inform maintenance and future upgrade decisions.

An important key system attribute is reliability and maintainability, which
has implications on aircraft availability and life cycle costs. In general,
aircraft that are reliable and easy to maintain are typically available more
often to perform missions and can experience lower life cycle costs. To
help assess this key system attribute, the Air Force set a reliability growth
goal that is based on the mean time between unscheduled maintenance
events due to equipment failure. This is defined as the total flight hours
divided by the total number of incidents requiring unscheduled
maintenance. The goal is 2.83 flight hours between unscheduled
maintenance events due to equipment failure by the time the aircraft
reaches 50,000 flight hours. As of February 2019, the program had
completed 3,928 flight hours, achieving 2.51 hours at that time. Program
officials believe that the reliability will improve as additional flight hours
are completed and as unreliable parts are identified and replaced.

According to Boeing representatives, the company met or is projected to
meet the seven technical performance measures it tracked during KC-46
development. For example, the aircraft is now below the target weight of
204,000 pounds. In addition, program officials said that the aircraft is
within the range of gallons of fuel used per flight hour that is specified in
the contract. Boeing also projects that the aircraft will meet other
measures, such as Air Force maintainers being able to fix mechanical
problems on the aircraft within 12 hours 71 percent of the time once the
aircraft has accumulated 50,000 fleet hours of service.




Page 15                                      GAO-19-480 KC-46 Tanker Modernization
Program Estimates It Will   Boeing and the Air Force are working to resolve three critical deficiencies
Take Several Years to Fix   related to the performance of the aerial refueling systems that the Air
                            Force discovered during developmental testing. These deficiencies are
Critical Aerial Refueling
                            related to contract specifications, which are at a greater level of specificity
Deficiencies at a Cost to   than the performance goals. The Air Force determined that the
Boeing and the Air Force    deficiencies in these systems could result in damage to some of the
                            aircraft that are being refueled by the KC-46 and identified them as
                            Category 1 urgent deficiencies that need to be addressed. 9 The Air Force
                            expects that it will take 3 to 4 years for Boeing to develop design solutions
                            for these issues and a few more years to retrofit existing aircraft. A
                            description of the deficiencies and how they are being addressed are
                            discussed below.

                            •   Remote Vision System Did Not Provide Visual Clarity in All Lighting
                                Conditions: During developmental flight testing, there were instances
                                when the aerial refueling operator was not able to make contact with
                                the receiver aircraft for refueling as intended. This was because the
                                remote vision system camera and processor had difficulty making
                                timely adjustments to some environmental conditions. According to
                                Boeing and program officials, these conditions include certain sun
                                angles, where the glare from the sun can cause the receiver aircraft to
                                washout or blackout on the display screen, making it difficult for the
                                aerial refueling operator to sufficiently see the receptacle of the
                                receiver aircraft to start refueling. The remote vision system also does
                                not provide sufficient depth perception to safely refuel in all lighting
                                conditions.
                                Boeing has already made changes to the remote vision system
                                software to improve visibility for refueling operators. According to
                                program officials, the changes included adjusting the contrast on the
                                display screen and increasing the speed at which operators can
                                switch between different screen viewing options. However, these
                                changes did not address the Air Force’s concerns regarding whether
                                the system could support refueling in all conditions as called for under
                                the contract, which requires sufficient visual clarity in all lighting
                                conditions.
                                Boeing has agreed to redesign the remote vision system to meet the
                                requirement. According to program officials, Boeing has not yet
                                developed a solution, but has reported the redesign will include

                            9
                             Category 1 deficiencies do not have workarounds. Category 2 urgent deficiencies have
                            workarounds, such as procedural restrictions.




                            Page 16                                          GAO-19-480 KC-46 Tanker Modernization
      additional software and hardware changes. Program officials estimate
      that it may take Boeing 3 to 4 years to develop a solution for the
      remote vision system and have it certified by the Federal Aviation
      Administration so that aircraft parts will continue to be certified to the
      greatest extent possible. It will then take a few more years after that to
      retrofit all aircraft that are operating without the new system at that
      time. Boeing did not provide a cost estimate for this solution, but will
      fix and retrofit all aircraft at no cost to the government. In the
      meantime, program officials said the Air Force has placed limitations
      on some boom refueling operations.
•     Lack of Remote Vision System Clarity Also Caused Undetected
      Contacts with Receiver Aircraft: As we reported in April 2018, during
      developmental flight testing, there were instances where the boom
      nozzle contacted a receiver aircraft outside the refueling receptacle. 10
      According to program officials, in many of these instances, the aerial
      refueling operators were unaware that those contacts had occurred.
      Boom nozzle contact outside the receptacle can damage antennae or
      other nearby structures. It is especially problematic for low-observable
      receiver aircraft, such as the F-22 fighter, because boom contact can
      also damage their special coatings and render them visible to radar.
      Boeing and program officials now anticipate that any hardware or
      software changes Boeing makes to the remote vision system, as
      discussed above, will also address the issue of undetected contacts
      with receiver aircraft. Efforts to address this issue are expected to be
      made at no cost to the government.
•     Boom Stiffness Hampered KC-46 Refueling of Lighter Receiver
      Aircraft: During developmental flight testing, pilots of lighter receiver
      aircraft, such as the A-10 and F-16, reported the need to use more
      power to move the boom forward while in contact with the boom to
      maintain refueling position. According to program officials, the KC-46
      boom currently requires more force to compress it sufficiently to
      maintain refueling position than the boom on the KC-135 or the KC-
      10. In addition, program officials said that the additional force exerted
      by the lighter aircraft can also create an issue when the boom is
      disconnected. This is because the additional required power can
      cause the receiver aircraft to lunge forward into the boom and strike it,
      possibly damaging the receiver aircraft and the boom. The severity of
      the damage depends on the location of the refueling receptacle, which
      differs based on the aircraft type. In the case of the A-10, the

10
    GAO-18-353.




Page 17                                      GAO-19-480 KC-46 Tanker Modernization
                           receptacle is located on the nose of the aircraft and the boom stiffness
                           creates a greater risk to the pilot because a boom strike could
                           damage the windshield. For the F-16, the receptacle is located behind
                           the cockpit and a boom strike could damage the vertical surfaces of
                           its tail. The Air Force is currently allowing F-16s to be refueled by the
                           KC-46 in operational test and training environments, but not the A-10
                           until the boom stiffness has been fixed.
                           Modifications to address the boom stiffness will add cost for the
                           government. Program officials said the development contract did not
                           specify the amount of force needed to compress the boom. As part of
                           the KC-46 low-rate initial production decision, the Air Force concurred
                           with Boeing’s proposed specifications, which are built into the current
                           boom. Therefore, program officials said the Air Force will be
                           responsible for costs associated with designing a solution for the
                           boom stiffness and retrofitting aircraft. They said the deficiency will
                           require a hardware change. Program officials believe that it will likely
                           take 3 to 4 years to develop a solution and get it certified by the
                           Federal Aviation Administration. It will then take additional time to
                           retrofit about 106 aircraft in lots 1 to 8. The total estimated cost for
                           designing and retrofitting aircraft is more than $300 million.
                       The Air Force has taken steps to keep Boeing incentivized to address the
                       deficiencies in a timely manner. In particular, at the time the Air Force
                       accepted each aircraft, the government had already made progress
                       payments to Boeing comprising 80 percent of the estimated price for each
                       aircraft. Air Force officials stated that the program is currently withholding
                       the remaining 20 percent payment on each aircraft until Boeing meets all
                       contract specifications and corrects critical deficiencies.


                       Over the next year, Boeing is to conduct developmental testing on the
Additional Test and    wing aerial refueling pods and correct deficiencies, and the Air Force is to
Analysis Required to   finish analyzing test data to validate that performance and contract
                       specifications have been met. In addition, the Air Force is to complete
Validate That KC-46    operational testing (planned for completion in December 2019) to
Aircraft Fully Meet    determine if the KC-46 and its subsystems are fully capable of performing
                       its mission in a realistic operational environment. Since our last report in
Key Contract and       April 2018, Boeing completed developmental testing and obtained
Mission                airworthiness certification from the Federal Aviation Administration for the
                       KC-46 aircraft and two of its three aerial refueling systems—the boom
Requirements           and the centerline drogue system. This has allowed the Air Force to start
                       accepting aircraft. Figure 6 shows the status of the KC-46 test activities.




                       Page 18                                    GAO-19-480 KC-46 Tanker Modernization
Figure 6: Completion Time Frames for KC-46 Test Activities as of March 2019




Developmental Testing: As of March 2019, Boeing had completed about
92 percent of the overall KC-46 developmental test program. The roughly
8 percent remaining, which consists of 2,303 of the 29,181 total
developmental test points, relates to the wing aerial refueling pods.
According to program officials, Boeing, in coordination with its supplier for
this subsystem, submitted test plans to the Federal Aviation
Administration in December 2018 for approval to begin flight testing the
wing aerial refueling pods. These officials also told us that developmental
testing on the pods began in early June 2019. Boeing projects that the Air
Force will verify that the pods meet contract specifications and they will
be airworthy by May 2020.

The Air Force is also currently reviewing developmental test data to
validate that performance and contract specifications have been met and
identify aircraft deficiencies. As of March 2019, the Air Force has
identified the three critical deficiencies that we discussed earlier in this
report. It also identified 160 Category 2 urgent deficiencies that Air Force
policy notes can be addressed through workarounds, which can include
manual updates or procedural restrictions. For example, the flight control
system does not have an indicator that would alert the KC-46 operators
that they are overriding the automatic system that keeps the boom
aligned with the receiver aircraft. If the boom is not aligned with the
receiver aircraft, it can cause damage to the boom and the receiver
aircraft. Program officials said that, as a result, the Air Force has currently
placed limitations on some boom refueling operations. The number of
Category 2 urgent deficiencies went up by about 26 percent between mid-



Page 19                                      GAO-19-480 KC-46 Tanker Modernization
February and the end of March 2019. Program officials attributed this
growth to the progress the Air Force is making in analyzing test data and
validating whether the aircraft meet contract specifications. The Air Force
may identify additional deficiencies as it completes these developmental
testing activities and during operational testing.

Operational Testing: According to program officials, the Air Force
Operational Test and Evaluation Center plans to conduct KC-46
operational testing from mid-May to December 2019. Operational testing
is centered on five overarching test objectives.

•   Three test objectives are focused on the ability of the KC-46 to
    perform operations for refueling, airlift, and aeromedical evacuation,
    including how quickly the KC-46 can offload fuel to a receiver aircraft.
•   The fourth objective is focused on the ability of the KC-46 to meet its
    mission tasking, which includes measures such as the KC-46’s
    availability and ability to complete a mission.
•   The fifth objective addresses whether the KC-46 is logistically
    supportable through measures including aircrew and maintainer
    training, and how well the demand can be met with available parts.
According to Air Force test officials, operational testing consists of about
500 test conditions, each of which may include multiple test points. The
Air Force plans to use four KC-46 aircraft for operational testing.

During operational testing for aerial refueling, the Air Force will test
whether the KC-46 can deliver fuel through the boom or centerline drogue
system to 18 different types of receiver aircraft in operational conditions,
including refueling another KC-46. The Air Force needs to certify receiver
aircraft for refueling before these aircraft can be used for operational
testing with the KC-46. Boeing and the Air Force are in various stages of
testing and certifying 18 receiver aircraft. In its 2018 annual report, the
Department of Defense’s Office of the Director, Operational Test and
Evaluation reported that the duration of the KC-46 operational test period
will depend on how long it takes the Air Force to certify all 18 receiver
aircraft. As of March 2019, two aircraft have been tested and certified by
the Air Force as a receiver to the KC-46. Five have completed testing, but
have not yet been certified, and testing for two others has begun. Figure 7
shows the status of testing and certifications for the KC-46 receiver
aircraft currently planned for operational testing. The Air Force plans to
obtain additional certifications for aircraft that are not being used for
operational testing.



Page 20                                    GAO-19-480 KC-46 Tanker Modernization
Figure 7: Status of the KC-46 Receiver Aircraft Testing and Certifications for
Operational Testing as of March 2019




a
 The A-10 completed testing as a receiver aircraft, but is not cleared to refuel with the KC-46 until the
stiff boom has been fixed.
b
 The KC-46 completed testing as a tanker receiving fuel from another KC-46, but has not yet obtained
certification. The KC-46, however, has completed testing and obtained certification to receive fuel
from a KC-135R/T.
c
    The KC-10A will be tested and certified as a tanker refueling the KC-46 and as a receiver aircraft.


The Air Force schedule for completing receiver testing continues to shift.
According to Department of Defense developmental and operational test
officials and program officials, it is taking longer than expected to
complete receiver aircraft certification testing in advance of operational
testing due in part to receiver aircraft availability. According to these
officials, Air Force major commands have been reluctant to allow their



Page 21                                                      GAO-19-480 KC-46 Tanker Modernization
receiver aircraft to be tested with the KC-46 over concerns that the lack of
visual clarity in the remote vision system and the boom’s stiffness could
cause the boom to strike and damage the receiver aircraft. Program
officials told us that, as a result, negotiations between the KC-46 program
and Air Force major command officials concerning the use of receiver
aircraft are taking longer than expected. These difficulties have resulted in
delays to certification tests, in some cases for several weeks. The lack of
availability of specific aircraft when they are scheduled to be tested may
require the Air Force to reschedule other receiver aircraft. These
schedule changes can require some resequencing of test planning and
approval activities.

In addition, because the wing aerial refueling pods have not been certified
and delivered, the Air Force will need to conduct operational testing on
refueling operations for them later. To conduct this test, major commands
with receiver aircraft that require drogue refueling would need to provide
receiver aircraft again. According to program test officials, the start of
operational testing for the wing aerial refueling pods will depend on
whether the Air Force Operational Test and Evaluation Center uses pods
that have not been certified for airworthiness by the Federal Aviation
Administration or waits until Boeing delivers a certified subsystem.
Problems requiring changes could be identified during KC-46 operational
testing, developmental and operational testing for the wing aerial refueling
pods, or receiver aircraft certification testing. The development contract
makes Boeing responsible to correct any deficiencies discovered during
these test periods that do not meet contract specifications.




Page 22                                    GAO-19-480 KC-46 Tanker Modernization
                      Based on our own observations, as well as our discussions with
KC-46 Program         Department of Defense officials who have been involved with the KC-46
Offers Insights for   program for many years, we identified aspects of its acquisition approach
                      that could provide insights to future programs. Specifically, the insights
Future Acquisition    could apply to programs considering a fixed-price development contract
Programs on the       and determining what sustainment approach to use for commercial
                      derivative aircraft. For example, the KC-46 development contract
Benefits and          provided some financial protection to the government from increases in
Challenges of a       development and some life cycle costs. However, other aspects of the
                      contract did not require Boeing to demonstrate high levels of aircraft
Fixed-Price-Type      performance prior to being awarded production contracts or receiving
Development           payment for its work. Current and former program officials also provided
                      insights about key aspects of program management that they believe are
Contract and a New    essential for executing fixed-price development contracts based on their
Sustainment           experiences. In addition, the Air Force’s new approach for sustaining the
                      KC-46, relying heavily on the Federal Aviation Administration to certify
Approach              even military-unique aircraft systems, could be useful in considering
                      future acquisition approaches.

                      We previously recommended in March 2012 that the Under Secretary of
                      Defense for Acquisition, Technology and Logistics closely monitor the
                      cost, schedule, and performance outcomes of the KC-46 program to
                      identify positive or negative lessons learned for future acquisition
                      programs. 11 We noted that, as one of only a few major acquisition
                      programs to award a fixed-price incentive (firm target) development
                      contract in recent years, evaluating performance and identifying lessons
                      learned would be illustrative, important for informing decision makers, and
                      help guide and improve future defense acquisition programs.

                      The Department of Defense agreed with the recommendation and
                      compiled lessons learned during the source selection phase of the
                      program. However, the department has not yet identified and reported on
                      lessons learned during program implementation to evaluate cost,
                      schedule, and performance outcomes as we recommended. Program
                      officials said they are collecting lessons learned, but will not report them
                      until after the development contract is complete in 2021. However, by
                      waiting until 2021, other acquisition programs considering using a similar
                      approach will not be able to take advantage of KC-46 lessons learned,

                      11
                       GAO, KC-46 Tanker Aircraft: Acquisition Plans Have Good Features but Contain
                      Schedule Risk, GAO-12-366 (Washington, D.C.: Mar. 26, 2012).




                      Page 23                                        GAO-19-480 KC-46 Tanker Modernization
                             including the ones we identify below that could reduce government risk
                             and save taxpayer money.


Fixed-Price Incentive        The Air Force used a fixed-price incentive (firm target) contract type to
Contract and Several Key     limit the government’s financial risk for KC-46 development. The KC-46
                             development contract was designed to provide a profit incentive for
Clauses Benefitted the Air
                             Boeing to control or even reduce overall costs.
Force by Limiting the
Government’s Financial       The use of a fixed-price contract did not result in a reduction in
Risk                         development costs below target costs, but did help control the
                             government’s costs. Specifically, the Air Force was able to avoid $1.3
                             billion in costs exceeding the contract ceiling that Boeing has incurred
                             while developing the aircraft, according to program officials, as of
                             February 2019.

                             Boeing initially declared cost overruns related to wiring while
                             manufacturing the first development aircraft in the spring of 2014. At that
                             time, it discovered wire separation issues, which were caused by an
                             inaccurate wiring design. 12 It took Boeing about 6 months to correct the
                             wiring design and resume wiring work on the developmental aircraft.
                             Boeing declared other cost overruns later in development as it faced
                             challenges in obtaining Federal Aviation Administration certification for
                             the aircraft, which caused significant testing delays. Together, the wiring
                             problems, certification and testing delays, and other setbacks have
                             resulted in a projected 3-year schedule delay. To the extent these costs
                             exceeded the contract ceiling price, Boeing has borne the costs to
                             address these issues, which included retaining more personnel such as
                             design engineers and testers than it originally planned.

                             The KC-46 contract also contains three specific clauses that further
                             benefited the government by limiting its financial risk:

                             •   Correction of deficiencies clause: This clause requires Boeing to pay
                                 for aircraft retrofits when the government determines that the
                                 company is not meeting contract specifications. According to the
                                 development contract, Boeing is responsible for correcting
                                 deficiencies discovered during engineering and manufacturing

                             12
                               Wires improperly separated can compromise system redundancies and cause
                             electromagnetic interference. For example, if wires of a redundant system are not properly
                             separated, a single fault could disable multiple systems.




                             Page 24                                           GAO-19-480 KC-46 Tanker Modernization
     development, and in production and deployment. 13 Based on the
     initial schedule, operational testing would have ended in 2017. Up to
     19 low-rate initial production aircraft would have been covered by this
     clause and deficiencies would have been almost exclusively identified
     through testing activities.

     Because of delays in the development phase, more aircraft will now
     be covered by the correction of deficiencies clause. According to the
     integrated master schedule, Boeing will still be completing
     development activities in 2020. As a result, the correction of
     deficiencies clause is expected to now cover the 52 low-rate
     production aircraft already ordered as well as any other aircraft
     ordered while development activities are ongoing. Boeing will now be
     responsible for correcting deficiencies identified during testing as well
     as in day-to-day operations on all of these aircraft.

•    Fuel usage rate clause: This clause requires Boeing to meet a
     specified fuel usage rate for each individual aircraft, which will help
     the Air Force control some of the KC-46’s life cycle costs. According
     to the contract clause, if an individual aircraft does not meet the fuel
     usage rate, Boeing would have to propose a corrective action at no
     cost to the Air Force. The Air Force could also make an equitable
     price adjustment based on a formula that projects the additional costs
     the Air Force would incur over the expected 40-year life of the aircraft.

•    Long-term pricing: The KC-46 contract includes long-term pricing
     terms for 175 production aircraft. In agreeing to these terms, Boeing
     had to estimate its costs through 2027. The pricing in the contract
     protects the government from cost increases including inflation and
     higher supplier costs that were not already embedded in the prices.
     The contract includes a variety of purchasing options so that the Air
     Force is not locked into acquiring a set amount of aircraft each year. It
     identifies the most cost effective approach for procuring the 175
     production aircraft, which is typically between 12 and 15 aircraft for
     each production lot. It also identifies the additional costs the Air Force

13
  This responsibility includes the periods of integrated test through initial operational test
and evaluation or after collection of receiver certification data for 19 receiver aircraft
pairings, whichever occurs last. Boeing is also responsible for updating all delivered KC-
46 weapon system components and associated documentation, and yet-to-be delivered
KC-46 weapon system components exercised under the contract to reflect the production
configuration of the aircraft established at the final physical configuration audit.




Page 25                                              GAO-19-480 KC-46 Tanker Modernization
                                would incur if it procured fewer or more aircraft in each production lot
                                that would deviate from the most cost effective approach. Program
                                officials stated that including the long-term pricing in the contract has
                                helped it secure adequate funding from Congress to procure the most
                                cost effective number of aircraft in each of the four low-rate production
                                lots it has awarded so far.



Several Provisions of the   Several aspects of the fixed-price incentive development contract,
Fixed-Price Incentive       however, did not reduce risk to the government and further complicated
                            existing program challenges. First, production lot awards were not linked
Contract Magnified
                            to Boeing’s performance. Second, progress payments to Boeing were
Program Challenges          based on costs the contractor incurred rather than on its demonstrated
                            performance. Third, the contract did not identify the timing of when
                            production aircraft would be delivered to the Air Force for acceptance.


                            •   Production lot awards are not tied to demonstrated performance: The
                                development contract linked the award of production lots to schedule
                                milestones rather than to contractor performance. The contract
                                specified that the first and second low-rate production lots had to be
                                awarded within 30 days and 14 months of the low-rate initial
                                production decision, respectively. According to the initial plan, Boeing
                                would have completed 13 months of developmental testing and 66
                                percent of the flight test program with the KC-46 by the low-rate initial
                                production decision.

                                As we have previously reported, however, the program experienced
                                delays. At the time of the low-rate initial production decision, the
                                program had only completed about one-third of the planned flight test
                                program. The Air Force decided to award both low-rate production lots
                                within a week of the decision despite the lower amount of testing
                                knowledge. Program officials stated that they awarded the contract
                                because Boeing met the low-rate decision criteria, including
                                demonstrating successful refueling operations. Further, based on the
                                correction of deficiencies clause, they believed at that time that
                                Boeing would be responsible for paying to correct all deficiencies it
                                discovered during subsequent testing on aircraft it produced. Our prior
                                work on best practices, however, emphasizes that awarding




                            Page 26                                    GAO-19-480 KC-46 Tanker Modernization
     production lots before performance is demonstrated introduces risk of
     cost increases, schedule delays, and performance problems. 14
•    Progress payments are not based on demonstrated performance: The
     KC-46 contract included a financing approach that requires the Air
     Force to make progress payments to Boeing up to 80 percent of its
     incurred costs. These progress payments incentivized Boeing to make
     progress on building the aircraft, and the program’s withholding of
     some payment incentivizes the company to resolve deficiencies more
     quickly. In general, Department of Defense guidance recognizes that
     performance-based payments incentivize a contractor to optimize its
     activities to meet the goals that are important to the government, such
     as completing a certain amount of engineering or developmental
     testing by specific milestones. 15 It also notes that they are not
     practical on all contracts, and contracting officers should consider
     whether the benefits outweigh the time and effort to establish and
     administer them. The guidance also notes that progress payments
     based on costs incurred by a contractor may not reflect the
     contractor’s progress towards meeting program goals or incentivize a
     contractor to meet those goals. On the KC-46 for example, the
     program office had made 80 percent of the allowed progress
     payments for the four development aircraft by November 2015─9
     months before the low-rate initial production decision, despite only
     completing 15 percent of the flight test points at that time.
     KC-46 program officials said that once the low-rate production
     contracts were awarded in August 2016, Boeing prioritized completing
     the manufacturing of those aircraft because it had previously started
     manufacturing them with its own funds. It also focused on completing
     aspects of developmental testing related to the boom and centerline
     drogue so that it could begin delivering aircraft to the Air Force. In
     general, once the Air Force accepts an aircraft, Boeing is eligible to
     receive additional payment for its work on that aircraft. Program
     officials, however, would have preferred that Boeing placed more
     emphasis on completing receiver aircraft certifications so that when
     aircraft were accepted, the Air Force could begin operational testing,
     which is led and paid for by the government.


14
 GAO, Best Practices: Capturing Design and Manufacturing Knowledge Early Improves
Acquisition Knowledge, GAO-02-701 (Washington, D.C.: July 15, 2002).
15
  Defense Procurement and Acquisition Policy (Cost, Pricing, and Finance), Department
of Defense Performance Based Payments Guide (2014).




Page 27                                         GAO-19-480 KC-46 Tanker Modernization
                           •     Contract originally did not identify aircraft delivery time frames: The
                                 original development contract did not identify a specific delivery period
                                 for production aircraft. Instead, it specified that Boeing was supposed
                                 to deliver the first 18 aircraft by August 2017. According to program
                                 officials, not identifying a delivery period was an oversight. Program
                                 officials stated that the Air Force needed more specific aircraft
                                 delivery information to develop detailed plans for establishing
                                 operating bases and performing depot maintenance, including training
                                 pilots and maintainers. For example, if training is done too early, the
                                 Air Force may have to provide refresher training to pilots and
                                 maintainers. If it is done too late, then the Air Force may not be able
                                 to use the aircraft as soon as it could or to the extent it had planned.
                                 The Air Force was eventually able to get specific delivery dates for the
                                 aircraft as part of negotiations it had with Boeing to modify the
                                 development contract after Boeing did not meet the original August
                                 2017 contract delivery date.

KC-46 Program Officials    According to current and former KC-46 program officials, stable
Identified Other Key       requirements and a skilled acquisition workforce are essential for
                           executing a fixed-price incentive contract.
Insights for Successful
Implementation of Fixed-   •     Stable Requirements: The current KC-46 program manager said that
Price Incentive                  there were no major requirements changes on the program between
Development Contracts            2011 and 2018. The only requirements change occurred in 2019 to
                                 address the critical deficiency identified on the boom which, as we
                                 discussed earlier, the Air Force is paying to fix. As we previously
                                 found in 2012, controls were put in place to limit requirements
                                 changes. 16 These controls were in response to a 2011 memorandum
                                 issued by the Office of Cost Assessment and Program Evaluation in
                                 the Office of the Secretary of Defense. The memorandum maintained
                                 that, on the whole, the Department of Defense had demonstrated
                                 limited ability to maintain stable requirements and limit changes to
                                 program baselines on previous complex weapon system programs,
                                 and that minimizing such change would be essential to the success of
                                 the KC-46. For the KC-46 program, any engineering or contract
                                 changes affecting system requirements or that have the potential to
                                 impact program cost, schedule, and performance baselines must be
                                 approved by the Air Force Service Acquisition Executive in
                                 consultation with the Secretary and the Chief of Staff of the Air Force.

                           16
                               GAO-12-366.




                           Page 28                                      GAO-19-480 KC-46 Tanker Modernization
•   Skilled Acquisition Workforce: Some current and former program
    managers also noted that having personnel with strong negotiating
    and cost estimating skills, as well as data rights expertise, is essential
    for programs with fixed-price incentive development contracts. One
    former program official explained that in general, contractors such as
    Boeing on the KC-46 do not know exactly how they are going to build
    a weapon system until they have completed detailed systems
    engineering and design drawings, which occurs in the development
    phase. We previously found in November 2016 that as top-level
    capability requirements are defined and decomposed into lower-level
    design requirements, they become more specific and the number of
    requirements grows. 17 This growth can be exponential, with tens of
    thousands of detailed design requirements derived from a relatively
    small number of capability requirements.
    While the government generally does not specify how a contractor
    designs a weapon system for fixed-price incentive contracts, officials
    we spoke with said KC-46 program managers and engineers have
    been involved in almost daily discussions with Boeing to make design
    tradeoffs. As such, one former program executive officer said program
    offices that are using fixed-price incentive development contracts
    should ensure that program management staff, including contracting
    officers and engineers, has strong negotiating skills to protect the
    government’s interest during these daily negotiations where design
    tradeoffs are made. Further, these program offices need financial
    management staff with strong cost estimating skills to support the
    negotiations when necessary. This official indicated that the KC-46
    program office had people with these skills.
    However, several former program officials stated that the KC-46
    program office needed personnel with data rights expertise. They said
    that they had to rely on a data rights expert from outside the KC-46
    program to assist in drafting a section of the request for proposal that
    would allow the Air Force to obtain data it would need to maintain KC-
    46 aircraft. The officials indicated that the Air Force has few data
    rights experts and that it would be beneficial to have contracting
    officers and attorneys in the program offices with data rights expertise.
    For example, program officials anticipate that there will be ongoing
    discussions and negotiations with Boeing about the type of data it will


17
  GAO, Weapon System Requirements: Detailed Systems Engineering Prior to Product
Development Positions Programs for Success, GAO-17-77 (Washington, D.C.: Nov. 17,
2016).




Page 29                                       GAO-19-480 KC-46 Tanker Modernization
                                 need for the Air Force to perform depot maintenance activities over
                                 the life of the program.

Air Force Is Gaining a      The Air Force plans to use a sustainment approach on the KC-46 that it
Better Understanding of     has not yet used on other aircraft, that presents added complexity, and
                            which Boeing is having difficulty supporting. Under the new approach, the
the Benefits and
                            Federal Aviation Administration will certify nearly all parts of the aircraft,
Challenges of               including most of the military-unique parts such as the centerline drogue,
Implementing a New          boom, and wing aerial refueling pods. 18 By certifying through the Federal
Sustainment Approach        Aviation Administration, the Air Force expects to take advantage of
That Could be               commercial aircraft updates that occur regularly and to obtain new or
                            refurbished parts for the aircraft through a global parts pool that
Considerations for Future   commercial users of the 767 aircraft rely on to maintain their aircraft.
Acquisition Programs        Further, the Air Force, instead of a contractor, will provide product support
                            for the aircraft. Previous commercial derivative aircraft programs,
                            including the KC-10, did not have the Federal Aviation Administration
                            certify military-unique functions such as aerial refueling, and the Air Force
                            has relied on the KC-10 contractor for product support over the lifetime of
                            that program. According to the KC-46 acquisition strategy, Boeing will
                            initially provide product support for the KC-46 for a period of up to 5
                            years. During that time, the Air Force will gradually take over the
                            responsibility and then maintain the aircraft for the lifetime of the program,
                            which is expected to be 40 years. The KC-46 program’s experience in
                            obtaining and maintaining Federal Aviation Administration certification,
                            including participation in the parts pool, can offer insights for future
                            acquisition programs to consider.

                            The Air Force also required Federal Aviation Administration certification to
                            a greater extent than the Air Force policy in place at the time the
                            development contract was awarded. Specifically, the contract states that
                            the contractor shall obtain Federal Aviation Administration certification for
                            all the aircraft’s mission equipment. In cases where this is not workable,
                            the contract says that the contractor must exhaust all possible solutions
                            prior to not obtaining full certification.

                            As we mentioned earlier in the report, Boeing is having difficulty getting
                            certification for the military-unique portions of the aircraft related to the

                            18
                              On the KC-46 program, the Federal Aviation Administration is certifying the aerial
                            refueling systems and most military systems except for 11 defensive systems such as
                            military radios.




                            Page 30                                          GAO-19-480 KC-46 Tanker Modernization
aerial refueling systems, which has contributed to significant program
delays. Boeing’s commercial business unit already obtained Federal
Aviation Administration certification for the commercial parts of the
aircraft. However, according to program officials, Boeing’s defense
business unit, which is responsible for obtaining certifications for the
military-unique parts, was not as well versed on the certification process.
We previously reported that, according to Boeing officials, the company
and the supplier had underestimated the extent of design drawing details
required by the Federal Aviation Administration to certify that the parts
conformed to the approved design. 19 The supplier of the wing aerial
refueling pods spent several years negotiating agreements with several of
its key sub-tier suppliers to obtain the necessary documentation. To
reduce the risk of further delays, in 2015, Boeing co-located some of its
employees with the supplier to provide technical support to complete the
documentation for certification over the past several years.

Based on a study completed by Morgan Borszcz Consulting in 2014, the
Air Force expected to benefit from saving up to $420 million by
maintaining the Federal Aviation Administration certification for the KC-46
over the life of the program. Savings were primarily estimated in three
areas:

1. $200 million could be saved by having Boeing maintain responsibility
   for all design changes on the aircraft, including working with the
   Federal Aviation Administration to certify design changes and
   updating instruction manuals based on the changes.
2. $70 million could be saved by having Boeing address any safety
   issues identified by the Federal Aviation Administration in
   Airworthiness Directives.
3. Between $57 million and $150 million in costs could be avoided if the
   Air Force maintains Federal Aviation Administration certifications and
   does not recertify parts to military standards.
The study also stated that the Air Force could save money by
participating in the 767 aircraft parts pool, mentioned above, though it did
not specify the amount of savings. The parts pool limits the risk of
diminishing manufacturing sources over time and the costs the Air Force
typically incurs when qualifying new suppliers. Program officials told us
that they decided to use a worldwide 767 parts pool because more than

19
 GAO-18-353 and GAO-17-370.




Page 31                                    GAO-19-480 KC-46 Tanker Modernization
              75 percent of KC-46 parts are expected to be available through that parts
              pool, which reduces the need for the Air Force to procure these parts in
              advance and place them in its distribution system. Programs that do not
              have Federal Aviation Administration certified parts have to find and
              qualify suppliers for needed parts on their own and they must find and
              qualify new suppliers if one goes out of business over the operational
              lifetime of the aircraft. In using the 767 parts pool, the Air Force
              anticipated readily obtaining parts as needed for maintaining the KC-46
              aircraft as well as repairing parts and putting them back into the pool.

              Since the time the study was completed, however, program officials have
              learned that the Air Force cannot put parts back into the parts pool
              because commercial members of the pool do not want to use repaired or
              reconditioned parts that were used on Air Force aircraft. As a result, the
              Air Force will not achieve all of the savings it anticipated. Program
              officials explained that commercial companies do not fly their aircraft
              under the same conditions as the Air Force, and these companies believe
              it is too risky for them to use parts that were once used on a KC-46.
              Program officials said the Air Force can still purchase parts from the parts
              pool though. The Air Force can also refurbish and use its own parts as
              long as the parts and the processes it uses to refurbish the parts meet
              Federal Aviation Administration certification standards and mechanics are
              properly certified. However, it remains to be seen if the Air Force can
              maintain the certifications because it has not yet had to do this on other
              aircraft and requires adherence to Federal Aviation Administration
              procedures.


              The Air Force’s approach to building the KC-46 has been somewhat
Conclusions   unique—deriving a military aircraft from a commercial model using a
              fixed-price incentive contract, among other things. After experiencing
              delays of nearly 3 years, the Air Force started accepting aircraft that can
              now be used for operational testing and support of worldwide missions.
              While work remains to ensure that critical deficiencies are corrected, the
              KC-46 program offers lessons that could be shared with other
              Department of Defense acquisition programs that are considering using a
              fixed-price-type development contract or a commercial derivative aircraft
              regarding contracting for and sustaining weapon systems. In particular,
              the contract provided substantial protections to the government against
              cost increases that Boeing experienced while developing the aircraft, but
              it also used a financing approach that did not tie Boeing’s performance to
              completing important program goals. In addition, the Air Force’s effort to
              leverage commercially available parts to reduce sustainment costs


              Page 32                                   GAO-19-480 KC-46 Tanker Modernization
                     created challenges. We previously recommended that the Department of
                     Defense develop and share KC-46 lessons learned for future acquisition
                     programs; however, it does not plan to do so until 2021. By sharing
                     identified lessons now with other program leaders considering fixed-price-
                     type contracts or developing commercial derivative aircraft, programs
                     may be able to increase the effectiveness of any new similar development
                     programs.


                     We are making the following recommendation to the Department of
Recommendation for   Defense:
Executive Action
                     The Secretary of Defense should ensure that the KC-46 program office
                     disseminates insights we identified in this report about the KC-46’s
                     contracting and sustainment planning experiences for consideration by
                     acquisition programs, in particular those considering a fixed-price-type
                     development contract or a commercial derivative aircraft.


                     We provided a draft of this product to the Department of Defense for
Agency Comments      comment. In its comments, reproduced in appendix II, the department
                     concurred with our recommendation, but did not identify the specific
                     actions it would take to implement the recommendation. It also provided,
                     in technical comments, language clarifying that the Air Mobility Command
                     cost estimates for flying and maintaining KC-135s longer, as a result of
                     KC-46 delivery delays, did not also account for any savings that would be
                     achieved from not flying KC-46 aircraft. We provided additional detail in
                     the report to address this comment. We also incorporated other technical
                     comments as appropriate.


                     We are sending copies of this report to the Acting Secretary of Defense,
                     the Acting Secretary of the Air Force, and appropriate congressional
                     committees. The report is also available at no charge on the GAO website
                     at http://www.gao.gov.

                     If you or your staff have any questions concerning this report, please
                     contact me at (202) 512-4841 or ludwigsonj@gao.gov. Contact points for
                     our Offices of Congressional Relations and Public Affairs may be found




                     Page 33                                   GAO-19-480 KC-46 Tanker Modernization
on the last page of this report. GAO staff who made major contributions to
this report are listed in appendix III.




Jon Ludwigson
Acting Director, Contracting and National Security Acquisitions




Page 34                                  GAO-19-480 KC-46 Tanker Modernization
Appendix I: KC-46 Performance Capabilities
                                                                  Appendix I: KC-46 Performance Capabilities




                                                                  The program office has 21 performance goals that are critical to the KC-
                                                                  46 aircraft’s military capability and track progress to meeting contract
                                                                  specifications. These performance goals include nine key performance
                                                                  parameters, five key system attributes, and seven technical performance
                                                                  measures. Table 2 provides a description of each key performance
                                                                  parameter and key system attribute.

Table 2: KC-46 Key Performance Parameters and Key System Attributes

 Key performance parameter                               Description
 Tanker Air Refueling Capability                         Aircraft shall be able to effectively conduct (non-simultaneously) both boom and drogue air
                                                         refueling on the same mission.
 Fuel Offload versus Radius                              Aircraft shall be capable of carrying certain amounts of fuel (to use in air refueling) certain
                                                         distances.
 Operate in Civil and Military Airspace                  Aircraft shall be capable of worldwide flight operations in all civil and military airspace.
 Airlift Capability                                      Aircraft shall be capable of transporting certain amounts of both equipment and personnel.
 Receiver Air Refueling Capability                       Aircraft shall be capable of receiving air refueling from any compatible tanker aircraft.
 Force Protection                                        Aircraft shall be able to operate in chemical and biological environments.
 Net-Ready                                               Aircraft must be able to have effective information exchanges with many other Department of
                                                         Defense systems to fully support execution of all necessary missions and activities.
 Survivability                                           Aircraft shall be capable of operating in hostile threat environments.
 Simultaneous Multi-Point Refueling                      Aircraft shall be capable of simultaneous multi-point drogue refueling.
 Key system attribute
 Formation Capability                                    Aircraft shall be capable of day and night formation flight in weather and all phases of flight.
 Aeromedical Evacuation                                  Aircraft shall be capable of providing air transport for up to 50 patients and medical staff.
 Reliability and Maintainability                         Able to deploy, operate, sustain, and recover aircraft at sufficient levels of readiness and
                                                         performance.
 Operational Availability                                Aircraft shall be operationally available at least 80 percent of the time.
 Treaty Compliance Support                               Aircraft shall have the necessary hardware installed to demonstrate compliance with
                                                         applicable treaties.
Source: GAO presentation of Air Force information. | GAO-19-480



                                                                  Table 3 provides a description and status of each technical performance
                                                                  measure.




                                                                  Page 35                                            GAO-19-480 KC-46 Tanker Modernization
                                                                  Appendix I: KC-46 Performance Capabilities




Table 3: KC-46 Technical Performance Capabilities and Statuses

 Technical performance capability                        Description                                      Contract                  Status (meets or
                                                                                                          specification or          projected to meet
                                                                                                          target                    the measure)
 Operational empty weight                                Maximum weight of the aircraft without           204,000 pounds            Yes
                                                         usable fuel.
 Fuel usage rate assessment                              Maximum gallons of fuel per hour used by         1,557 gallons per         Yes
                                                         the aircraft during a mission.                   hour
 Mission capable rate                                    Percentage of time aircraft performed at         92 percent                Yes
                                                         least one assigned mission.
 Fix rate                                                Percentage of time mechanical problems           71 percent                Yes
                                                         were fixed within 12 hours (after 50,000
                                                         fleet hours).
 Break rate                                              Percentage of breaks per sorties (after          1.3 percent               Yes
                                                         50,000 fleet hours.
 Mission completion success                              Probability of completing the aerial             99 percent                Yes
 probability                                             refueling mission and landing safely.
 Operational availability                                Probability an aircraft will be ready for        89 percent                Yes
                                                         operational use when required.
Source: GAO presentation of Air Force information. | GAO-19-480




                                                                  Page 36                                           GAO-19-480 KC-46 Tanker Modernization
Appendix II: Comments from the Department
             Appendix II: Comments from the Department
             of Defense



of Defense




             Page 37                                     GAO-19-480 KC-46 Tanker Modernization
Appendix II: Comments from the Department
of Defense




Page 38                                     GAO-19-480 KC-46 Tanker Modernization
Appendix III: GAO Contact and Staff
                  Appendix III: GAO Contact and Staff
                  Acknowledgments



Acknowledgments


                  Jon Ludwigson, (202) 512-4841 or ludwigsonj@gao.gov
GAO Contact
                  In addition to the contact named above, Cheryl Andrew, Assistant
Staff             Director; Lorraine Ettaro; Kurt Gurka; Stephanie Gustafson; Katheryn
Acknowledgments   Hubbell; Jean Lee; Malika Rice; Jenny Shinn; and Steve Woods made
                  key contributions to this report.




                  Page 39                                 GAO-19-480 KC-46 Tanker Modernization
Related GAO Products
             Related GAO Products




             GAO, KC-46 Tanker Modernization: Program Cost is Stable, but
             Schedule May Be Further Delayed, GAO-18-353 (Washington, D.C.: Apr.
             18, 2018).

             GAO, KC-46 Tanker Modernization: Delivery of First Fully Capable
             Aircraft Has Been Delayed Over One Year and Additional Delays are
             Possible, GAO-17-370 (Washington, D.C.: Mar. 24, 2017).

             GAO, KC-46 Tanker Aircraft: Challenging Testing and Delivery Schedules
             Lie Ahead, GAO-16-346 (Washington, D.C.: Apr. 8, 2016).

             GAO, KC-46 Tanker Aircraft: Key Aerial Refueling Capabilities Should Be
             Demonstrated Prior to the Production Decision, GAO-15-308
             (Washington, D.C.: Apr. 9, 2015).

             GAO, KC-46 Tanker Aircraft: Program Generally on Track, but Upcoming
             Schedule Remains Challenging, GAO-14-190 (Washington, D.C.: Apr. 10,
             2014).

             GAO, KC-46 Tanker Aircraft: Program Generally Stable but
             Improvements in Managing Schedule Are Needed, GAO-13-258
             (Washington, D.C.: Feb. 27, 2013).

             GAO, KC-46 Tanker Aircraft: Acquisition Plans Have Good Features but
             Contain Schedule Risk, GAO-12-366 (Washington, D.C.: Mar. 26, 2012).




(102925)
             Page 40                                 GAO-19-480 KC-46 Tanker Modernization
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