Not a Pretty Picture: Budget sequestration could have a "near-catastrophic" effect on the Air Force's KC-46A tanker program, said Maj. Gen. John Thompson, who oversees the project, in a briefing at AFA's Air & Space Conference outside Washington, D.C., on Sept. 18. "Depending on how sequestration is implemented, I might have to break my fixed-price contract that I got a really good deal on," Thompson later told reporters at the conference. He added, "If I have to break my fixed-price contract, then I stand the potential to lose out on some of the great things that we put in this vehicle. So, the bottom line is I don't want to break my contract." KC-46A developer Boeing is operating under a fixed-price-incentive contract valued at $4.9 billion for the tanker's engineering and manufacturing development phase. Under that deal, Boeing is liable for cost growth above the $4.9 billion cap. "I think that it if you have to break open the contract, there are all sorts of terms and conditions that are now renegotiated," said Thompson, when asked if Boeing would be obligated to negotiate another fixed-price contract if the Air Force must break the existing one.
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