An artist's rendering of a KC-46A refueling an F-16.

An artist's rendering of a KC-46A refueling an F-16. Boeing Company

Boeing Defense Creates New Development Business Unit

After aerial tanker delays, Boeing groups its military and space development projects under one new business unit to oversee new projects.

Four years ago this month, Boeing won a decade-long battle over rival Airbus to build new U.S. Air Force aerial refueling tankers. It was a huge $35 billion win for the Chicago-based aerospace and defense firm.

While company officials acknowledged Boeing submitted an aggressive bid, they considered it responsible. And the deal was considered good for the Pentagon as the company would have to pay for development cost overruns.

Boeing has been building commercial 767 airliners for more than 30 years and aerial tankers since President Dwight Eisenhower was in the White House. So, even though the new Air Force tanker would have more modern equipment, the project has not been considered incredibly high tech and few issues were anticipated.

Still, unforeseen problems with the plane’s wiring led to embarrassing delays and cost overruns. Boeing still says it will meet the terms of its contract to deliver the Air Force 18 new tankers by 2017, but it will have to eat millions of dollars in cost overruns.

“The issues we had with tanker last year certainly got everybody’s minds focused on the need to do things differently,” said Todd Blecher, a company spokesman.

Those early issues with the Air Force tanker and other new development projects have prompted Boeing to create a new defense business unit that will oversee projects before they enter production. In the past, the individual business units, such as Boeing Military Aircraft and Network and Space Systems, managed their own development projects.

“It’s a classic centralization activity to bring together skills that have been dispersed and diverse across the organization,” Blecher said.

The company made a similar move two years ago in its commercial airplane business when it created a jetliner development unit.

“This [new] development organization is the next step in breaking the cost curve on our programs,” Chris Chadwick, Boeing defense president and CEO, said in a statement. “We expect our customers to see step-function improvements in affordability and schedule performance as we more effectively apply engineering expertise, development program best practices, and program management and integration from across Boeing to our most important development activities.”

Six programs including the new tanker have been moved into the new defense development division along with a new Air Force One, the CST-100 spacecraft that is part of NASA’s Commercial Crew project, NASA’s Space Launch System rocket, Boeing’s 502 small satellite effort and defense-related work on Boeing’s 777X commercial jetliner.

“[The new unit] reflects the fact that development is a very unique activity that you have to get right,” Blecher said. “If you don’t have a successful development program, you’re going to be behind the curve for years on your programs.”

The creation of the new defense development arm seems like a good idea, particularly in light of problems with the Air Force tanker, said Richard Aboulafia, vice president for analysis at the Teal Group consulting firm.

“Obviously the tanker experience shows they could use some help in the development department,” Aboulafia said. “To a certain extent, you can transfer around development engineers and so having a single organization to allocate resources makes some sense.”

Boeing’s reorganization is part of a growing trend within defense companies to operate their businesses more commercially. With fewer defense dollars on the horizon, the Pentagon has pressured companies to cut production and development costs. To remain competitive, firms have been looking at a myriad of ways to lower the cost of all types weapons ranging from fighter jets to warships. This has included everything from consolidating facilities, automating production and shrinking the workforce.

In recent years, the Pentagon has pulled the plug on number of projects not doing well in development. Defense Department funding for project development has slimmed in recent years, placing a higher emphasis on contractor performance.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.