Boeing, Navy take big risk on the MQ-25 unmanned aerial vehicle (UAV)

The MQ-25 aerial refueler is the Navy’s first carrier-based unmanned air vehicle (UAV) – it’s also a big, risky, bet for Boeing and the Navy. Why is it a risk for Boeing? Because there is significant uncertainty about the return Boeing can expect on this program. Under the $805 million fixed-price contract awarded on August 30, Boeing will be responsible for overruns during development and on the first four aircraft. Boeing may also be obligated by additional fixed price production options for the unmanned aerial tanker (where Boeing would also be responsible for any overruns), possibly up to the planned buy of 72 aircraft. The Navy is making a big bet, too. It cannot transfer all the program risk to Boeing; if Boeing fails to execute the program, the Navy customer will not get the UAVs it wants. If Boeing can deliver the aircraft but runs over on costs, claims against the Navy can be expected. Under the fixed price incentive contact, the Navy will also share at least a fraction of the financial risk of development.