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KC-X Contract Will Have Spillover Effects

by: Matthew Potter
February 25, 2011

Category: Boeing, Business Line, Companies, Congress, Contract Additions, Contract Awards, Department of Defense, development program, EADS, Events, Federal Budget Process, KC-X, KC-X Tanker News, logistics, Military Aviation, Pratt & Whitney, production program, Rockwell Collins, Services, U.S. Air Force, UTC | RSS 2.0

The award to Boeing (BA) of the contract to build the new KC-46A tanker will of course affect many other companies. It is one of the largest defense contracts for the next decade. While the total value if all of the planned aircraft are built is closer to $35 billion the initial contract is for $3.5 billion and provides for the initial development and production of the first batch of aircraft.

Because of its size and scope there will be significant work for the subcontractors on the program. Boeing will do final assembly of the aircraft but it needs to procure things like engines, software and aircraft components from other contractors. These are spread out across the country and provide a web of support for Boeing and the program.

The first company that will receive major subcontracts is Pratt & Whitney, part of United Technologies (UTC). They will provide two engines for each aircraft which will be a boost in revenue and work for the next ten years or so. This revenue stream will allow them to maintain production at their facilities and perhaps invest in new engines for other programs.

Rockwell Collins (COL) will also do well. They will make for Boeing the flight deck, software and communications systems. Interestingly they were also supporting the EADS NA (EADS:P) KC-30 program so if either bidder had been chosen they would have won. The company has a history of supporting Boeing aircraft.

The KC-46A contract if it is not protested and delayed will begin to have secondary effects throughout the U.S. defense economy. The Air Force also plans follow on contracts to buy more then the 179 planned tankers under this effort. Those could go to Boeing or to another bidder and they too will have a significant effect on many other defense contractors and suppliers.

Photo from Jerry Gunner’s flickr photostream.

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  1. Tweets that mention KC-X Contract Will Have Spillover Effects | Defense Procurement News -- Topsy.com on February 25th, 2011 4:09 am

    […] This post was mentioned on Twitter by Dagpotter, DefProcureNews. DefProcureNews said: KC-X Contract Will Have Spillover Effects: The award to Boeing (BA) of the contract to build the new KC-46A tank… http://bit.ly/euZRy0 […]

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