If the federal government fails to increase the debt ceiling next week, work can still continue on defense contracts, Richard Ginman, director of defense procurement and acquisition policy at the Pentagon, said Wednesday. “The issue is not one of default,” Ginman told defense writers in Washington, D.C. “We have appropriations. The issue is cashflow.” If a payment is due to a contractor and the government is short of funds, Ginman said, invoices would be payable when the money became available, though “there may be interest” charged by the contractor. If there’s no new debt ceiling, “we can continue to write contracts,” said Ginman, but the day of payment would be in question, and not under the Pentagon’s control. “As revenues come in,” he noted, the issue will be for the Treasury Department, and not the Pentagon, “to determine what is the sequence in which we pay bills.”
The Air Force and Boeing agreed to a nearly $2.4 billion contract for a new lot of KC-46 aerial tankers on Nov. 21. The deal, announced by the Pentagon, is for 15 new aircraft in Lot 11 at a cost of $2.389 billion—some $159 million per tail.