Yet significant cost growth occurred within these programs, contributing to severe financial strain on two contractors. A Defense Business Board analysis cites notable examples in the 1960s, as part of Total Package Procurement, including the C-5A, F-14, SRAM missile, Cheyenne Helicopter, LHA ship, and the F-111. The use of fixed-price contracts to control cost growth during the development phase of weapon system acquisition has been tried before. Nonetheless, as the system progresses toward production and sustainment, the Air Force will need to stay the course, continuing to maintain close control over the development contract, and manage future contract negotiations for the KC-46A to ensure that losses during development are not recovered through future contracts. Industry experts assert Boeing took a calculated risk in its bid, willing to absorb some level of development cost overruns to win, thus ensuring that it remains relevant within the global market for tanker aircraft. So, to date, Boeing has had to absorb approximately $1.2 billion in cost overruns. Boeing is developing the KC-46A under a form of fixed-price contracting the cost to the Air Force for engineering and manufacturing development for this system is capped at $4.9 billion. That comes on top of the approximately $400 million cost of addressing wiring problems reported previously. Boeing costs of developing the KC-46A Pegasus aerial refueling aircraft recently have risen by about $800 million to address problems with the integrated fuel system.
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