And Boeing’s target cost to develop the tanker and deliver an initial 18 by the end of 2017 may run above its target of $3.9 billion.
“For every dollar the program costs above target cost of $3.9B, the government pays $0.60 and the contractor pays $0.40, until the total amount paid to Boeing reaches $4.9 billion,” at which point Boeing assumes all further costs, the Air Force told Reuters.
“Under this formula, taxpayers would pick up $600 million up to the $4.9 billion ceiling. Boeing would cover the other $400 million plus any ceiling overrun,” Reuters said.
Boeing predicted it would have cost overruns above the ceiling of $300 million for the development phase, a congressional source said last week, the report said.