The Air Force and Boeing [BA] signed two new agreements regarding to the KC-46A Pegasus program on Thursday, with one intended to provide the aerospace company with cash flow during the COVID-19 pandemic.
The service and contractor reached a memorandum of understanding for a solution to the challenged Remote Vision System that allows operators to observe aerial refueling digitally, rather than through a window.
A second memorandum of understanding reached Thursday will provide Boeing with $882 million of previously withheld contract payments to ensure the entire KC-46 program stays on track amid the COVID-19 coronavirus outbreak, Assistant Secretary of the Air Force for Acquisition, Training and Logistics Will Roper said in a media teleconference that day. The cash flow relates to withheld payments for previous non-compliance in 33 KC-46 deliveries.
“This withhold release is in line with Department of the Air Force and Department of Defense policies to maximize cash flow, where prudent, to combat coronavirus impacts on the industry base,” the service said. “Within 120 days, the Air Force and Boeing will conduct an expedited process to determine final specification compliance or non-compliance.”
Roper noted that his team has not lost its leverage by releasing some of the withheld funds. The service is requiring Boeing submit a 120-day progress review; if the Air Force is not satisfied with the work done in that timeframe, it will continue to withhold payments, he said.
Boeing KC-46 Vice President and General Manager Jamie Burgess told reporters on Thursday that the cash relief agreement is not related to the RVS solution agreement, but rather tied to the COVID-19 pandemic and “the current economic conditions.”
Last week, Boeing announced that it had temporarily ceased operations at its Puget Sound-area facilities outside Seattle to protect its workforce from the pandemic. Workers at the Everett, Washington, facility manufacture the KC-46.