Defense Industry

Status of the C-17 Program and Related Issues Affecting the McDonnell Douglas Corporation Gao ID: T-NSIAD-92-4 November 14, 1991

The Air Force's C-17 military transport aircraft program continues to face significant schedule, cost, and performance challenges. Because of major schedule delays and increases in overall program costs, Douglas Aircraft is facing an overrun on the development contract. Estimates of that overrun range from $450 million (the company) to $1.4 billion (the Office of the Undersecretary of Defense for Acquisition). In January 1991, the McDonnell Douglas Corporation asked for $1 billion in financial aid from DOD to help overcome an anticipated cash flow shortfall. DOD did not provide that assistance, but considered it because of concern about the corporation's viability and the effect of its financial failure on government programs--particularly the C-17 program. This testimony focuses on C-17 financial issues involving DOD and the McDonnell Douglas Corporation, including whether DOD provided unusual financial assistance to that company through the C-17 program.



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