Pentagon: Boeing's latest tanker cost projection around '6 percent' over $4.9B

Boeing's freshest cost estimate for the first phase of the KC-46 aerial tanker program is just under $300 million over the $4.9 billion contract ceiling, a senior Pentagon official said Wednesday.

"It's a $5 billion job," Shay Assad, the Pentagon's director of defense pricing, told reporters Wednesday morning. "Right now, we're saying" KC-46 prime contractor Boeing is "6 percent off that," he added.

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That would put the engineering and manufacturing development (EMD) phase of the program — which includes four flying gas stations — on track to cost around $5.2 billion.

A Boeing source confirmed that figure accurately reflects a recent program cost projection following several media reports about it.

Boeing's most recent cost projection is a bit lower than 6 percent more than $4.9 billion, Assad said during a breakfast with reporters sponsored by the Center for Media and Security.

Under terms of the contract for the first phase, Boeing will absorb all costs above $4.9 billion, Pentagon and company brass say. 

Boeing won the $35 billion, 179-plane contract earlier this year, beating out rival Airbus in a bitter competition that had gone on for a decade. Boeing officials have said their bid was aggressive, with Pentagon officials making it clear the Chicago-based firm’s bid was much lower than that of its European rival.