Air Force Sends Tanker Recommendation to Capitol Hill

As Congress initiates review of the U.S. Air Force’s report on the 767 Tanker lease, Boeing issued the following statement:

"We commend (Air Force) Secretary (James) Roche and the entire U.S. Air Force leadership for their vision and work over the last 18 months. They have addressed critical needs of the men and women who protect our nation. In doing so they also have provided the best value to the American taxpayer," said Jim Albaugh, president and CEO, Boeing Integrated Defense Systems.

"We committed ourselves to providing the Air Force with the quickest and most cost-effective way of putting modern, safe tanker aircraft into the hands of the warfighter," Albaugh said. "There is no question that as people study this program and understand it, that they will agree – it satisfies a critical need, and it’s a fair deal."

"In a dollar-to-dollar comparison of leasing versus a traditional annual procurement, purchasing the aircraft might save the taxpayers one percent," Albaugh said. "However, the difference in price is eclipsed by the $5 billion taxpayers would save by not having to pay maintenance costs associated with the 100 oldest KC-135’s in service today."

The agreement itself is unprecedented in several ways. Boeing is paying all up-front costs associated with the development of the aircraft. Boeing also agreed to cap its profits at standard DoD levels while taking on all the risk of a firm fixed-price development and production program. The U.S. government will independently audit those profits. Under this arrangement there is no risk to the government of an overrun and they have assurances that Boeing will not make profits above stated guidelines.

The Air Force also has received most-favored customer pricing so the taxpayers will receive a rebate if Boeing sells anyone a 767 aircraft for less than the combined lease/purchase price agreed to by the Air Force. The combined lease/purchase price is the lowest offered by Boeing to any 767 customer in 17 years and the lowest ever at these production rates.

Boeing also offered a more-detailed explanation of this unique lease.

FMI: www.boeing.com/defense-space/aerospace/tankers