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KC-46A Development Generally Stable, But: The Air Force's KC-46A tanker development program is "generally stable," but still faces several key challenges, according to Government Accountability Office auditors. GAO's new KC-46 report, issued on Feb. 27, highlighted two areas of concern. First, both Air Force and prime contractor Boeing estimate that the tanker's development costs will exceed the fixed-price contract's ceiling of $4.9 billion—although government liability is capped at that ceiling, states GAO's release highlighting the report. Second, Boeing has already allocated about 80 percent of the program's management reserves budget, primarily for identified, yet unresolved development risks, with the bulk of work—about 5 years—remaining, states the release. "GAO maintains that significant use of these funds early in a program may indicate problems," states the release. GAO recommended that the Defense Department analyzes the root causes for the rapid allocation of the management reserves and improve the KC-46 master schedule. DOD concurred with these recommendations, according to GAO. Under the KC-46A program, the Air Force is tasking Boeing to build 179 new tankers by 2027 to replace the service's oldest KC-135 tankers. (See also Sequester and the KC-46A and Air Force Revises Projected KC-46A Usage Rates.)