KC-46 tanker program contract in Jeopardy.

• Position: Budget Matters

* The Defense Department might have to break its contract for the KC-46 tanker and other programs if budget turmoil continues, Air Force officials said.

The Pentagon has a fixed-price contract with Boeing for the KC-46, and the government's financial liability is capped at $4.9 billion. It calls for Boeing to ultimately provide 179 new tankers.

The aircraft successfully conducted its first test flight at the end of September, and the program is on pace for a Milestone C production decision in April, said Brig. Gen. Duke Richardson, program executive officer for tankers at the Air Force Life Cycle Management Center.

Two low-rate initial production awards would follow, probably in May and June. The quantities for those lots would be seven and 12, respectively, Richardson said at a recent Air Force Association conference.

However, the plan would be derailed if Congress funds the government through continuing resolutions in fiscal year 2016, he noted.

"LRIP Lot 2 is fiscal year ' 16 funding. So if we get into a CR situation this will create a very large problem for this program because you know we can't go above fiscal year ' 15 quantities, and I don't have a contract that says I can award seven aircraft," he said.

Officials raised the possibility that the Defense Department would have to break the KC-46 contract...