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From Air Force Times

 

Tanker decision made

By Kent Miller, Gayle S. Putrich and Pierre Tran - Staff writers

Posted : Friday Feb 29, 2008 19:35:04 EST

 

After months of deliberations — and more than one delay — the Air Force has finally decided who will build the service’s new refueling tankers.

 

Northrop Grumman and European partner EADS beat out presumptive favorite Boeing for the Air Force’s $35-40 billion, 179-plane tanker deal, Air Force officials said. The bigger size of the plane was the crucial factor, they said. It represents the first of three deals that could eventually be worth as much as $100 billion over 30 years to replace almost 600 tankers.

Compare the two planes

 

The modified Airbus A330 aerial refueling tanker “gives us more,” said Air Force Secretary Michael W. Wynne. “More fuel to offload, more cargo, more passengers, more availability, more flexibility, more dependability and more ability to move patients.”

 

The aircraft, which the Air Force has designated the KC-45A, will provide much greater refueling capabilities than the 50- to 60-year-old KC-135s it will replace. For example, it will be able to refuel two aircraft at the same time, including Air Force and Navy planes, which have different systems for receiving the fuel. Currently, KC-135s must be set up to service one or the other before each flight.

 

Also important, Air Force officials said, are the plane’s defensive systems, which will allow it to get closer to the fight and offload as much fuel as possible.

 

Air Force officials said they used a best-value determination to select the winner based on five factors: mission capability, proposal risk, past performance, price and life-cycle cost, and integrated fleet refueling assessments, in that order.

 

The Northrop entry beat Boeing’s militarized 767 in four of those five criteria and matched in the fifth, according to one source close to the decision.

 

“Considered together, these grading criteria ensured the Air Force maximized the capability delivered to the war fighter while optimizing the taxpayers’ investment,” according to an Air Force statement.

 

The first test models of the KC-45A will be produced in 2010 and the first operational planes will reach the fleet in 2013. Wynne said the Air Force would like to begin retiring older E models of the KC-135 as soon as possible.

 

The contract announcement came as something of a surprise to many industry and government observers, who had expected Boeing to get the nod. The Chicago-based company has been building refueling tankers for the Air Force for nearly 50 years.

 

Boeing is widely expected to protest the decision, even though Air Force leaders, in the weeks leading up to the announcement, tried to convince both sides not to appeal.

 

In Paris, analysts said the decision is a significant victory for EADS, the European Aeronautic Defence and Space Co., which is the parent company of Airbus. It now has a huge entry into the U.S. defense market, they said, but execution of the contract would be crucial.

 

“This is a great success and an enormous challenge for Airbus,” said Loic Tribot La Spiere, chief executive of the Paris-based think tank Centre d’Etude et Prospective Stratégique. “This puts Airbus under great pressure to deliver,” he said. "It has no room for mistakes in design or delivery.”

 

Olivier Brochet, an analyst at the Paris brokerage firm Natixis, said, “This is truly good news for EADS. It opens access to the U.S. market, which has essentially been limited to Eurocopter.”

 

The contract award allows EADS and Airbus to transfer assembly of the A330-200 and the cargo version of the airliner to the U.S., which is a key objective of management.

 

One hotly disputed aspect of the competition was whether the U.S. military should award a contract of this size to a foreign company — and what that might mean for American jobs.

 

Although many of the parts are to be built in Europe, the final assembly will be done in Mobile, Ala., producing 2,000 new jobs there. In addition, the plane’s General Electric engines will be built in North Carolina and Ohio. All told, the contract would support 25,000 jobs for U.S. suppliers.

 

Wynne said, however, that jobs were not a factor in the Air Force decision.

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From Aviation Week

 

Northrop/EADS Clinches U.S. Refueler Deal

Feb 29, 2008

By Amy Butler, David A. Fulghum and Robert Wall

 

The Pentagon’s competition worth up to $35 billion for the new KC‑45 refueling tanker was Boeing’s to lose, and it lost big.

 

The selection of an Airbus design for its KC-135 replacement will freeze Boeing out of a market long considered to be a monopoly for the only U.S. wide-body manufacturer. Airbus has now soundly penetrated the world’s largest defense market.

 

The loss comes after seven years of design work on various versions of a 767-based tanker—planning that stemmed from a derailed attempt by the U.S. Air Force, following the 9/11 terrorist attacks, to lease 100 refuelers from Boeing for nearly $30 billion. Boeing’s team failed after a scandal—landing two former executives in jail—and relentless probing from the now likely Republican presidential nominee, Sen. John McCain (R-Ariz.).

 

This decision could force the U.S. contractor, which has enjoyed a position as the foremost supplier of tanker and transport aircraft to the Defense Dept., to rethink its business strategy. Uncertainty continues to plague the Chicago-based company’s C-17 strategic airlifter production line in Long Beach, Calif. Boeing is funding the manufacture of 10 of the massive aircraft on its own.

 

Boeing is now under more pressure to win the upcoming next-generation bomber competition for the U.S. Air Force, as well as the Navy’s EP-3 intelligence aircraft replacement.

 

Paul Meyer, vice president of Northrop Grumman Air Mobility Systems, says the team went into the down select with a 50% expectation of a win. “We are penetrating a new market,” he says. Another executive adds: “I just didn’t think the political system would let us do it.”

 

But the fight may not be over yet. Boeing has been forming a strategy to protest a loss since the competition began, though a protest decision hasn’t yet been made. The company will be briefed on why it lost within two weeks.

 

The Northrop Grumman/EADS team’s $1.5-billion win Feb. 29 of the KC-X competition was announced after multiple delays; it includes the manufacture of four developmental aircraft. Five options worth $10.6 billion for the first 64 aircraft are included. The total buy of 179 tankers begins with the fifth aircraft to come off the line. It will take more than a decade to complete with buy rates between 12-18 aircraft at a cost of about $3 billion per year.

 

KC-X is the first iteration of a three-phased approach to replace the Air Force’s fleet of 530 KC-135E/Rs and 59 KC-10s. The next tranche to replace the Air Force’s larger KC-10 tankers, dubbed KC-Y, is not expected until at least 2020, effectively freezing Boeing out of the tanker market for the foreseeable future. One factor attractive to the Air Force was the ability to use fewer KC-45s per mission, according to sources familiar with the evaluation. Air Force officials were focused on providing refueling services to the massive Pacific theater and cargo hauling for humanitarian missions over the Cold War scenarios focused on Europe.

 

The decision seals the fate for the 767 production line, with Boeing’s orders having shifted to the new 787. The U.S. contractor has about four years of work left for its Everett, Wash., production line without more orders.

 

The Pentagon’s choice indicates that Northrop Grumman/EADS’s strong-arm tactics were worth the risk. The team threatened just over a year ago not to submit a proposal, which would have left the Air Force in a political quagmire without a true horse race. Since joining the competition, Northrop/EADS officials haven’t been shy about lobbying their potential customer and the U.S. Congress for split buy of KC-767s and KC-45s. Without resources to finance separate production lines, supply chains and training regimens, however, the Air Force has held to a winner-take-all approach. And it has now paid off for the underdog.

 

Sole-sourcing the deal to Boeing was not an option after two former executives of the company—including the former top Air Force official who helped to craft the $30-billion lease while working for the government—were found guilty of conducting illegal job negotiations. They both wound up serving jail sentences, and Congress pushed for a competition to reduce the price and improve the design.

 

Before they agreed to bid, Northrop Grumman/EADS officials insisted that the Air Force change its metrics to be more amenable to the team’s larger design. The Air Force subsequently added “Factor 5” to its KC-X evaluation criteria; it includes a review of both designs in various classified operational scenarios. The 767’s strength, according to Boeing, was its smaller size and ability to operate out of more airfields.

 

The Northrop/EADS option, far larger, can carry more fuel and cargo, but it will operate from fewer bases. Using this aircraft will require the Air Force to change its concept of operations that is pinned around the smaller KC-135.

 

Factor 5 was designed to level the playing field between the Boeing and Airbus designs, taking into account the fuel offload, range and ground handling attributes of both bids. It was this change that prompted Northrop Grumman officials to throw their hat into the ring.

 

Sue Payton, USAF acquisition chief, describes the winners’ past performance as “excellent,” and says the Northrop/EADS proposal had an “advantage” in the cost portion of the competition, though this factor was not weighed heaviest. She also adds that the aerial refueling and airlift attributes of the KC-45 were strong. The competition, however, was close, she adds.

 

U.S. orders for the Airbus design also will boost the aerospace industry in the Southeastern U.S. EADS plans to open a facility in Mobile, Ala. The sixth aircraft, the second production version, will be the first assembled in Mobile.

 

In parallel with the Pentagon work, EADS has pledged to shift A330-200F final assembly work from its Toulouse, France, assembly line to the new plant in Mobile. Northrop Grumman plans eventually to add the specialized military equipment to the tankers at its new nearby facility.

 

The aircraft will use the General Electric CF6-80E1 propulsion system.

 

Now, officials plan to add the doors and floors to the first four deliveries, developmental test aircraft, at EADS’s passenger-to-freighter facility in Dresden, Germany. Beginning with the fifth aircraft, the first production model, those modifications will be built into the platforms on the production line, eliminating the need for conversions.

 

EADS CASA will install the first centerline refueling boom on the initial test aircraft in Spain. Fuel was passed through the new boom for the first time in flight from an A310 testbed on Feb. 29. Boom work will shift temporarily with the second test aircraft to Northrop Grumman’s Melbourne, Fla., facility. With the fourth and final test aircraft, Northrop’s new Mobile plant will take over that role.

 

Work on the first production KC-45—also the first to undergo final assembly at EADS’s new facility in Mobile—will begin in September 2011. The first test flight will take place in February 2010.

 

The first squadron of KC-45s is to be fielded in 2013.

 

Gen. T. Michael Moseley, Air Force chief of staff, has been eager to introduce the tankers into the fleet. Units at Altus AFB, Okla., will handle training pilots and crews for the KC-45. And the aircraft will be based eventually at Grand Forks AFB, N.D.; McConnell AFB, Kan.; MacDill AFB., Fla.; and Fairchild AFB, Wash.

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From Flight International

 

DATE: 29/02/08

SOURCE: Flightglobal.com

Airbus trumps Boeing as Northrop wins KC-X contract

By Stephen Trimble

 

Airbus today won a Northrop Grumman-backed bid to supply 179 tankers to the US Air Force in a massive defeat for incumbent supplier Boeing.

 

The selection of the Northrop/EADS North America KC-30 -- to be renamed KC-45A -- for the potentially $35 billion deal is expected to draw heavy opposition from US lawmakers.

 

Northrop’s team, which includes engine supplier General Electric, campaigned for three years focusing on strengths of the larger and more modern Airbus A330-200 passenger aircraft.

 

“Northrop Grumman clearly provided the better value to the government when you take a look at the … five factors that were important to this decision,” said Sue Payton, assistant secretary of the air force for acquisition.

 

Payton listed the top three factors as mission capability, proposal risk and past performance, followed by cost/price and an integrated aerial refuelling assessment.

 

Northrop’s bid offered a “great advantage” to the air force on the cost/price factor, and scored “excellent” marks for past performance.

 

The USAF is buying the first 68 tankers, including four test aircraft, for a total sum of $12.1 billion, or at an average price for each aircraft of $178 million.

 

Payton refused to answer questions about why Boeing’s bid was not selected. “I think I owe it to Boeing to discuss the elements of our decision first,” she said.

 

Airbus will build the A330-200 sections in Europe and ship the components to the US. A new factory in Mobile, Alabama will perform final assembly before moving to a nearby Northrop facility to install mission equipment.

 

EADS also plans to manufacture the CASA-designed refuelling boom for the KC-45 in Bridgeport, West Virginia.

 

EADS was hoping the KC-X contest would bring the European manufacturer a major programme win in the US defence market after its C-295 light transport lose to Alenia’s C-27J in the US Army/Air Force Joint Cargo Aircraft competition.

 

Boeing offered the USAF a tanker version of a new derivative called the 767-200 Long Range Freighter (LRF). The aircraft combined elements of four different 767 designs, using the -200 fuselage as the platform.

 

Boeing has a right to appeal the USAF decision. A protest can be filed with the US Government Accountability Office (GAO) within 10 days after the USAF debriefs the Boeing team about the reasons for its decision. GAO is committed to issuing a judgment on the protest within 100 days.

 

“Once we have reviewed the details behind the award,” Boeing said, “we will make a decision concerning our possible options, keeping in mind at all times the impact to the warfighter and our nation."

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From Flight International

 

DATE: 02/03/08

SOURCE: Flightglobal.com

Seattle-area politicians seething over Boeing tanker defeat

By David Kaminski-Morrow

 

Outraged politicians from Washington state, the manufacturing home of Boeing, are demanding to know why the US Air Force selected rival Airbus for a $35 billion tanker contract which will also see the airframer assemble civil A330-200 freighters in the USA.

 

But the Air Force decision yesterday to opt for the Northrop Grumman-EADS KC-45A, which is based on the A330 airframe, has generated strong support from Alabama where, at a facility in Mobile, the tankers and freighters will be built.

 

“Preparatory work is now underway for our commitment to co-locate the final assembly of the tankers and A330 civilian freighter aircraft…creating the first new large commercial aircraft assembly facility in the USA in over 40 years,” says Airbus chief executive Tom Enders.

 

A330F production will add hundreds of personnel to the 1,000 staff already expected to be employed on KC-45A tanker work.

 

But the decision has stunned Boeing’s political supporters. Washington senator Patty Murray says: “We are shocked that the Air Force tapped a European company and its foreign workers to provide a tanker to our own American military.

 

“At a time when our economy is hurting, this decision to outsource our tankers is a blow to the American aerospace industry, American workers and America’s military.

 

“Boeing has 75 years of experience building tankers and its workers are the best in the world. We look forward to asking tough questions about how the Air Force reached this decision.”

 

Boeing, which had offered the rival KC-767 tanker based on the 767-200, is yet to decide on a course of action.

 

Washington congresswoman Cathy McMorris Rodgers says the decision is a “surprising disappointment”, adding: “Boeing was the smart choice for taxpayers for building the tankers quickly and efficiently, right here in the USA.

 

“Any challenge that may follow [this decision] needs to be done quickly so that we don’t have further delay in getting these new tankers built.”

 

However, Alabama senator Jeff Sessions, a senior member of the Senate Armed Services Committee, describes the decision as “fantastic news” for the state, insisting that the Northrop Grumman-EADS team “won the competition on the merits of the proposal and the outstanding capabilities of the aircraft”.

 

He adds: “It marks a full-circle transition for Brookley Field from a mothballed air base to a world-class aircraft manufacturing centre.”

 

Sessions’ view is backed by senator Richard Shelby, also representing Alabama, who says the KC-45A is “by far the most superior platform”. He says the contract will bring 1,800 jobs to the Mobile area and 5,000 to the state.

 

While Airbus says it could not justify the expense of developing a freighter-only final assembly line at Mobile, building it as an extension of the tanker facility makes economic sense.

 

Customers have placed firm orders for 77 A330Fs. Lessor BOC Aviation became the latest to sign for the type with an order for five earlier this month.

 

EADS says it has started work on US facilities to support the tanker and freighter programmes, adding that the final assembly line will “ensure low risk, high efficiency and increased capacity for both the US Air Force and commercial Airbus customers”.

 

Last September the first KC-45A airframe performed its maiden flight. The US Air Force will acquire 179 KC-45A tankers, although the initial $1.5 billion contract covers four development aircraft. This contract also includes five production options for 64 aircraft, worth $10.6 billion.

 

General Electric CF6 engines will be fitted to the twin-jets. GE, which initially dropped out of offering a powerplant for the A330F, values the overall tanker programme – including other GE components and spares – at over $5 billion.

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From Defense Aerospace

 

Pentagon Contract Announcement

(Source: US Department of Defense; issued Feb. 29, 2008)

 

Northrop Grumman Corp., of Los Angeles, Calif., is being awarded a cost plus incentive/award fee, fixed price incentive, firm fixed price contract for the newly-named KC-45.

 

This contract is awarded after full and open bidding, and provides for the system design and development of four test aircraft for $1.5 billion. This contract also includes five production options targeted for 64 aircraft at $10.6 billion.

 

At this time no funds have been obligated.

 

Contracting activity is the Aeronautical Systems Center, Wright-Patterson Air Force Base, Ohio (contract number FA8625-08-C-6451). (ends)

 

Air Force Awards Tanker Contract to Northrop Grumman

(Source: US Department of Defense; issued Feb. 29, 2008)

 

WASHINGTON --- The Air Force announced today it has selected Northrop Grumman Corp. to build its next-generation air-refueling tanker aircraft.

 

The contract calls for up to 179 new KC-45A tankers to be built over the next decade or so at a cost of around $35 billion. Tanker aircraft are used to refuel other aircraft while in flight.

 

“This initial contract for the newly named KC-45A will provide significantly greater air refueling capabilities than our current fleet of Eisenhower-era KC-135s,” Air Force Secretary Michael W. Wynne told reporters at a Pentagon news conference.

 

The new tanker “will be able to refuel U.S. and allied aircraft in every area of responsibility, worldwide, 24 hours a day, in adverse weather and be equipped with defensive systems,” Wynne said.

 

The new planes eventually will replace hundreds of aging KC-135 Stratotanker aircraft that were introduced in the late 1950s.

 

“Today’s tanker decision is a major step in the Air Force’s critical recapitalizing and modernization that is going to be required to defend the United States and to support our international partners in the 21st century,” Wynne said.

 

The new aircraft also will used to carry cargo, passengers, and medical patients, the Air Force secretary said. “The KC-45, built by Northrop Grumman, will provide our nation and partners the critical ability to reach across the globe and project our combat capability or our humanitarian friendship rapidly and effectively,” Gen. Duncan J. McNabb, the Air Force’s vice chief of staff, said.

 

The new tankers, McNabb continued, will “ensure our bombers and our fighters can deliver global power and give our intelligence, surveillance and reconnaissance platforms the ability to provide global vigilance.”

 

The Airbus-Northrop Grumman partnership had competed against the Boeing Co. for the tanker contract, said Sue C. Payton, assistant secretary of the Air Force for acquisition. Payton cited the transparency of the contracting competition, noting both enterprises had received regular feedback from the Air Force on how they were performing throughout the process.

 

“Northrop Grumman clearly provided the best value to the government,” Payton said, noting the Airbus-allied group’s plane earned superior marks for mission capability, past performance and in several other categories.

 

“I would tell you, that, overall, Northrop Grumman did have strong areas in aerial refueling and in airlift,” Payton said. There was “no bias” involved in the awarding of the contract, she emphasized.

 

Both competitors will be debriefed in coming weeks, Payton said, noting there is an appeal process.

 

If everything goes well, the first test aircraft should be flying by 2010, said Air Force Gen. Arthur J. Lichte, commander of Air Mobility Command based at Scott Air Force Base, Ill. Air Mobility Command provides the U.S. military with passenger, cargo, tanker and other aircraft support.

 

The Air Force should receive the first group of operational KC-45A aircraft around 2013, Lichte said.

 

Citing his role as Air Mobility Command’s chief, Lichte expressed relief that the process to deliver a new air refueling tanker to his service is moving forward.

 

“We know that in the future years we will have a new tanker,” Lichte said. “Tankers are what really enable the fight.”

 

Tanker Contract Award Announced

(Source: US Air Force; issued Feb. 29, 2008)

 

WASHINGTON --- Secretary of the Air Force Michael W. Wynne and Vice Chief of Staff of the Air Force Gen. Duncan J. McNabb announced the selection of Northrop Grumman as the winner of the KC-X competition for development and procurement of up to 179 tanker aircraft for approximately $35 billion.

 

The initial contract for the newly named KC-45 is for the system design and development of four test aircraft for $1.5 billion. This contract also includes five production options targeted for 64 aircraft at $10.6 billion.

 

"The tanker is the number one procurement priority for us right now," General McNabb said. "Buying the new KC-45A is a major step forward and another demonstration of our commitment to recapitalizing our Eisenhower-era inventory of these critical national assets. Today is not just important for the Air Force, however. It's important for the entire joint military team, and important for our coalition partners as well. The KC-45A will revolutionize our ability to employ tankers and will ensure the Air Force's future ability to provide our nation with truly Global Vigilance, Reach, and Power.

 

"It is the first step in our critical commitment to recapitalize our aging fleet to move, supply and position assets anywhere. In this global Air Force business, the critical element for air bridge, global Intelligence, surveillance and reconnaissance and global strike is the tanker," he said.

 

The KC-45A will provide significantly greater air refueling capabilities than the current fleet of Eisenhower-era KC-135 Stratotankers it will begin replacing. For example, it will be able to refuel Air Force and Navy aircraft on every flight. These aircraft have different systems for receiving fuel and today, KC-135s must be set up for one or the other before takeoff.

 

The KC-45A will be equipped for both systems on every flight and also will have connections for wing pods. When wing pods are installed, it can refuel two probe-equipped aircraft, such as those flown by Navy and many allied aircrews, at the same time. The KC-45A can even be refueled in flight by other tankers.

 

The KC-45A also will have defensive systems that allow it to go into dangerous environments that tanker aircrews currently have to avoid. It will also supplement the airlift fleet by carrying cargo, passengers and medical patients in a secondary role.

 

The KC-X source selection used a "best value" determination to select a winner based on five factors: mission capability, proposal risk, past performance, cost/price and an integrated fleet air refueling assessment -- performance in a simulated war scenario. These five factors were developed after consulting with industry and were finalized prior to starting the competition. Considered together, these grading criteria ensured the Air Force maximized the capability delivered to the warfighter while optimizing the taxpayers' investment.

 

Air Force officials followed a carefully structured process, designed to provide transparency, maintain integrity and promote fair competition. Air Force officials met with offerors on numerous occasions to gain a thorough understanding of their proposals and provide feedback on their strengths and weaknesses. Officials also provided insight into government cost estimates throughout the process instead of waiting until the post-decision debrief. The competitors indicated they've been very pleased with the degree of communication.

 

The evaluation team comprised experts covering a broad spectrum of specialties from acquisition to operations and was hand-picked from across the Air Force and other government agencies.

 

As part of the process, Air Force officials will now provide a written notice to both the selected and not-selected and offer to provide a debrief on their bid proposals. To maintain the integrity of that process, officials will be unable to provide additional information about the proposals and contract.

 

"Today's announcement is the culmination of years of tireless work and attention to detail by our acquisition professionals and source selection team, who have been committed to maintaining integrity, providing transparency and promoting a fair competition for this critical aircraft program," Secretary Wynne said. "Through these efforts, we believe we will provide a higher-value resource to the warfighter and the taxpayer." (ends)

 

AMC Commander Welcomes Tanker Announcement

(Source: US Air Force; issued Feb. 29, 2008)

 

SCOTT AIR FORCE BASE, Ill. --- The commander of Air Mobility Command hailed today's aerial tanker source selection announcement as an important first step toward ensuring America maintains its global reach capability.

 

Air Force officials announced today that Northrop Grumman Corporation was selected to build the new tanker, designated the KC-45. The new tanker will replace the Air Force's aging fleet of KC-135 Stratotankers.

 

"The KC-45A is the tanker of the future," said Gen. Arthur J. Lichte, AMC commander. "It will enable us to carry more fuel and cargo, and allow us the flexibility to refuel any type of receiver on every mission. It will come equipped with systems to take this capability closer to the fight while protecting our airmen as they operate in hostile skies."

 

The backbone of America's existing tanker fleet is the KC-135, which was built during the Eisenhower and Kennedy administrations. Replacing this aircraft has been the top acquisition priority for the Air Force for several years.

 

"The KC-135s have served us well and will have to continue to fly for decades until this recapitalization is complete," General Lichte said. "It is vitally important to ensure this recapitalization effort is fully funded and stays on track, to ensure this capability so critical to our national security is always there.

 

"I look forward to seeing the first KC-45A in the field. The success of this program will require a strong commitment from our national leaders, and I'm confident they understand and appreciate what an important asset this modernized tanker is to America's defense," he said.

 

Tanker aircraft have played an essential role in the war on terrorism. Since Sept. 11, 2001, Air Force tankers have passed more than 1.2 billion gallons of fuel to other aircraft. Air Force Chief of Staff Gen. T. Michael Moseley calls tankers "the single point of failure for everything we do."

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From Defense Aerospace

 

Op-Ed: Musings on the USAF’s Tanker Decision

(Source: defense-aerospace.com; issued March 3, 2008)

By Giovanni de Briganti

 

With the benefit of hindsight…

In retrospect, it’s hard to see why selection of the Northrop/EADS KC-45A was so unexpected, given how both candidates stacked up against the five broad criteria that the USAF had previously identified.

 

While speculation had concentrated on the KC-767’s reputed advantages, including its smaller ground footprint and its ability to use smaller airfields, its much bigger handicaps were overlooked.

 

In fact, it should have been clear that Boeing was going to lose on at least three of five main criteria (mission capability, as it offered the smaller payload/offload; proposal risk, given its problems in developing the KC-767 for Japan and Italy; and past performance, given the troubled history of the USAF tanker lease.) while, at best, drawing on the other two (cost price, and integrated fleet aerial refueling rating).

 

The Northrop-Grumman/EADS team, on the other hand, demonstrated a smooth KC-30 development program and the mature configuration of its MRTT tanker, sold to several countries, albeit in small numbers. It thus offered much less risk than its competitor.

 

So, when US Air Force acquisition chief Sue Payton said that Northrop Grumman won because, “overall, [it] did have strong areas in aerial refueling and in airlift, as well as their past performance was excellent and they offered great advantage to the government in cost price, and they had an excellent integrated fleet aerial refueling rating,” she wasn’t saying anything that could not have been inferred.

 

But no-one had dared to gamble that the USAF would play by its own rules, perhaps because of its past performance on the tanker issue, and that the Pentagon would allow it to give such a massive contract to a foreign company, especially in an election year.

 

Europe busts another US monopoly

Tanker aircraft are the third major market segment in which EADS and other European companies are breaking long-standing, de facto monopolies held by US industry, after tactical airlift (with the Airbus A400M), medium-range air-defense missiles (with Eurosam’s Aster), and beyond-visual-range air-to-air missiles (with the MBDA Meteor).

 

With the A380, Airbus has also broken Boeing’s monopoly on jumbo jets while, in the helicopter market alone, the Agusta-Westland AW-101 has broken into the heavy lift helicopter segment formerly shared by the Sikorsky CH-53 and the Boeing CH-47, while the NH-90 has supplanted the Bell UH-1 and Sikorsky UH-60 in the utility helicopter role and the Eurocopter Tiger is effectively challenging the Boeing Apache in the attack helicopter market.

 

Worryingly for the US industry, it has no credible candidates for any of the above market segments in the development pipeline, meaning it has in effect conceded them to Europe for the foreseeable future.

 

To be fair, it should be noted that US industry scored one success when it busted Europe’s near-monopoly on short-range anti-tank missiles with the Javelin.

 

Contract worth at least $17 billion to EADS

EADS Chief Executive Louis Gallois told French media March 1 that the contract would be worth “over half of its total value” to EADS, or over $17 billion. The balance will be shared between Northrop Grumman (defensive and other systems) and General Electric (engines). It will be interesting to see how much of the total value actually ends up as profit in EADS’ accounts.

 

Are teeth gnashing in Farnborough?

In 2006, BAE Systems sold its 20% stake in Airbus to EADS, fearing that it might prove financially risky. BAE made 2.75 billion euros from the sale, and BAE paid down its pension obligations, bought back some shares and acquired Armor Holdings, Inc. in the US.

 

One wonders what BAE’s share of profits from the tanker contract would have amounted to over time. Airbus will make the wings for the tankers at its British plants in Broughton and Filton, The Times reported March 2, adding that “the contract will bring in $6 billion worth of work and help secure 9,000 British jobs” on the wings alone.

 

Was BAE too hasty in baling out of Airbus?

 

Still cheaper than leasing

The KC-45A contract works out to an average of $175 million per aircraft. This compares very favorably to the $215 million per aircraft that the Air Force would have paid had its 2002 leasing agreement with Boeing gone through.

 

In Nov. 2003, the Congressional Budget Office estimated that “it would cost $21.5 billion to lease 100 tankers and then purchase them at the end of each lease period,” as proposed by Boeing.

 

So the US Air Force will save about $7.16 billion ($40 million per aircraft, for 179 aircraft), or 20%, by buying the KC-45A – and just on the first contract.

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From Defense Aerospace

 

Tanker Competition: Northrop Won by A Wide Margin

(Source: The Lexington Institute; issued March 3, 2008)

By Loren B. Thompson, Ph.D.

 

Last week Northrop Grumman and European partner EADS confounded expectations by beating incumbent Boeing for the contract to build the Air Force's next-generation aerial refueling tanker. The initial contract will be for 179 modified wide-body jets, but eventually the entire fleet of 600 cold-war tankers will need to be replaced, making this one of the biggest marketing coups in defense-industry history.

 

However, that is just the beginning of what Northrop Grumman has achieved, because Boeing didn't manage to beat Northrop in a single measure of merit. Here's how they were evaluated...

 

1. Mission capability:

Arguably the most important factor, this metric compared the teams on performance requirements, system integration & software, product support, program management and technology maturity. The teams tied in most measures, but the Northrop offering was deemed to offer superior refueling and airlift capacity at 1,000 nm. range and substantially superior refueling and airlift capability at 2,000 nm. range. The superior airlift capacity of Northrop's plane was deemed a "compelling" consideration in giving Northrop the edge for this factor.

 

2. Proposal risk:

This is the sole factor in which Boeing managed to match the appeal of the Northrop proposal, but it did so only after being pressed to accept a longer development schedule for its tanker. The Boeing proposal was initially rated as high-risk because reviewers felt the company was offering a plane that in many regards had never been built before, and yet claiming it could be built fast at relatively low cost. The company was forced to stretch out its aggressive schedule, adding cost.

 

3. Past performance:

The Northrop Grumman team received higher ratings in past performance due to satisfactory execution of half a dozen programs deemed relevant to the tanker competition. Air Force reviewers had less confidence in Boeing's past performance due to poor execution in three relevant programs. In addition, Northrop's subcontractors were rated more highly on past performance than Boeing's.

 

4. Cost/price:

This was the factor in which many observers expected the Northrop-EADS team to shine, because EADS subsidiary Airbus usually underbids Boeing in commercial competitions. But Boeing compounded its difficulties in the eyes of reviewers by failing to adequately explain its assumptions in calculating the cost of developing a tanker. The resulting low confidence in Boeing cost projections undercut its claims of lower life-cycle costs. Northrop was rated higher.

 

5. Integrated assessment:

The "integrated fleet aerial refueling assessment" was designed to compare how the competing planes would fare in an operational setting using a realistic wartime scenario. The review found that the Northrop Grumman proposal could accomplish specified missions with nearly two dozen fewer planes than the Boeing proposal, a big advantage.

 

So Northrop Grumman's victory was not a close outcome. Although both proposals satisfied all performance requirements, the reviewers concluded that if they funded the Northrop Grumman proposal they could have 49 superior tankers operating by 2013, whereas if they funded the Boeing proposal, they would have only 19 considerably less capable planes in that year.

 

The Northrop-EADS offering was deemed much better in virtually all regards.

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From Defense Aerospace

 

Pelosi: Congress Must Examine Air Force Aerial Tanker Contract to Northrop Grumman and Airbus

(Source: Speaker of the House of Representatives; issued March 3, 2008)

 

WASHINGTON, D.C. --- Speaker Nancy Pelosi issued the following statement today on the Air Force’s decision to award a multi-billion dollar aerial tanker contract to Northrop Grumman and the European Aeronautic Defense and Space Company, the parent company of Airbus:

 

“The Air Force’s decision to award the contract for a much-needed modernization of the nation’s aerial tanker fleet to Northrop Grumman and Airbus raises serious questions that Congress must examine thoroughly:

 

-- What are the national security implications of using an aircraft supplied by a foreign firm for this essential mission?

-- Were the risks associated with choosing a conceptual design over a proven capability properly assessed?

-- Was sufficient consideration given to the impact of the contract award on jobs in America and on our technological base?

 

“Given the ramifications of this decision for the United States, the Air Force must explain to Congress how it meets the long-term needs of our military and the American people.”

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From DefenseNews

 

Boeing Seeks 'Immediate' Reasons for Tanker Loss

AGENCE FRANCE-PRESSE

Published: 4 Mar 14:14 EST (09:14 GMT)

 

WASHINGTON - Boeing on March 4 said it has asked the U.S. Air Force for an "immediate" explanation for its decision to reject the U.S. aerospace giant's bid for a lucrative aerial refueling contract.

 

The air force late Feb. 29 announced its decision to select a team led by Northrop Grumman Corporation and the European Aeronautic Defence and Space Company (EADS) to provide new KC-45A aerial refueling tankers to start replacing its aging tanker fleet Boeing had been heavily favored to win the 35-billion-dollar contract for an initial phase in replacing the air force's aging fleet of Boeing tankers.

 

Its arch-rival in commercial aircraft, EADS subsidiary Airbus, will now assemble the new tankers in Alabama.

 

Boeing said that as of March 4, it had not yet received a briefing on the decision and pointed out that the air force had said a briefing would occur on or after March 12, calling the delay "inconsistent with well-established procurement practices."

 

"A delay of this length in the formal debriefing is unusual," said Mark McGraw, Boeing vice president of the 767 tanker programs.

 

"Consistent with past practice and recent experience, we would expect this briefing to occur within days, not weeks, of the selection announcement."

 

Boeing said its request was "more than fair and reasonable" because of media reports containing detailed information on the competing bids.

 

The Chicago-based Boeing hinted Feb. 29 that it may protest the decision, which has sparked an outcry among some lawmakers over the spending of tax dollars on a military project that will partly profit a foreign company.

 

[CV32: Explanation? How about, "the other plane is better?" Just tossing that out there].

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Tony's unscientific analysis:

 

Advantage Airbus - The better/younger plane. It will be in production for commercial use as well as military. The 767 is near the end of production.

 

Advantage Airbus - Larger tanking capacity means fewer tankers required for the job.

 

Advantage Boeing - Smaller plane able to land at many many more airfields. There will be a future KC-10 replacement, this contest was for a more versatile tanker.

 

Advantage Airbus - No huge tanker scandal yet

 

Advantage Boeing - American product. I don't really buy into any argument that soured relations with the EU would make the KC-45 suddenly useless but the current mood is definitely buy American and I've always been a bit too far in that camp for my own good.

 

 

Now if I were dictator of the US, I'd be strongly urging Boeing to build me a 787 tanker for this competition and heck, why not the 747-8 for the large tanker.

 

I say 787 since it is a newer than new plane, and requires a shorter field for both takeoff and landing, and has impressive range and efficiency. Of course it isn't realistic given that the 787 is totally unproven. It's very much a multi-national sourced plane for better or worse, the wings are made in Japan, other parts from around the world. I mean the thing has a HUD!

 

Wrapping up the ramble here I don't like the A330 deal mainly in the limiting of acceptable airfields, even if not all that many airfields can efficiently make use of a tanker, I'd like to have that greater landing choices capability when the bombs start to fall.

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Granted, I'm biased (work at Boeing, although in R&D and not in defense or commercial aircraft), but something is a bit odd about the whole thing.

 

The A330 and 767 are about the same age (A330 mid-late 80s, 767 early-mid 80s); one could say the A330 is really just an extended A300 which makes it older. Both airframes are ok. Avionics on the 767 were based on 777 (and in fact did have a HUD!). There were delays in the other tanker progs, but the deliveries are happening now (first one to Japan in Jan or Feb this year). A330 tanker variants are in early development; avionics are I'm sure fine.

 

The oddities to me are:

 

A quote from Air Force Secretary Michael Wynne in Jan 2007:

 

"We want to buy a tanker. We do not want to by a cargo airplane that tanks, we also do not want to buy a passenger airplane that tanks. We want to buy a tanker," Wynne stated emphatically. "It's primary mission is going to be a tanker. The fact that it can carry cargo or passengers is a benefit, but it is not the primary reason for the procurement."

 

And the fact that Boeing talked to the USAF in 2006 about using the 777 (which is a better and more modern airframe than the A330), but the USAF indicated it wanted a medium sized aircraft.

 

One of the other Boeing statements about the lost tanker bid said:

 

“We bid aggressively with specific focus on providing operational tanker capability at low risk and the lowest total life cycle cost,” said McGraw. “For instance, based on values disclosed in the Air Force press conference and press release, the Boeing bid, comprising development and all production airplane costs, would appear to be less than the competitor. In addition, because of the lower fuel burn of the 767, we can only assume our offering was more cost effective from a life cycle standpoint."

 

“Initial reports have also indicated that we were judged the higher risk offering. Boeing is a single, integrated company with its assets, people and technology under its own management control – with 75 years of unmatched experience building tankers. Northrop and EADS are two companies that will be working together for the first time on a tanker, on an airplane they’ve never built before, under multiple management structures, across cultural, language and geographic divides. We do not understand how Boeing could be determined the higher risk offering."

 

 

 

Sooo....either the Boeing interfaces to the USAF were clueless and incompetent (possible, but hopefully doubtful for a contract this size), or the USAF somewhere along the lines changed major criteria for the competetion, or...who knows.

 

I just find it bad that a lot of negative stuff has been leaked and conjectured about without people knowing the facts...

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