Ashton Carter the Undersecretary of Defense for Acquisition, Technology and Logistics (USD (AT&L), who is the head “weapons buyer” at the Pentagon had a press availability recently. At this he stated he is committed to the current plan for the KC-X program with a final RFP coming out by the end of the year. The draft RFP in his eyes was less subjective then past ones and the questions from industry are being used to shape the final RFP. He is confident that the Air Force will get it right on their third try. It will have to be seen if this is true.
Archive for November, 2009
Several Representatives and Senators from states where Boeing (BA) would do much of the work if they won the KC-X tanker contract are pushing the Air Force to either exclude outright EADS (EADS.P) or place a cost factor on their bid. This is all due to the World Trade Organization (WTO) draft ruling that the company received illegal subsidies from several European governments. Supporters of the Northrop Grumman (NG) and EADS say that the ruling is draft and not finalized and should not apply in this competition.
If there was such a move by the Air Force it would significantly reduce the competition in the contract process. It would make the Air Force award the contract to Boeing as the other bid would not be competitive. Of course this is what the legislators want, but a sole source award to Boeing probably would not be palatable to others in Congress or the Department of Defense. There should be at least two bids for each contract and this one is limited to Boeing, EADS and possibly the Russian company Ilyushin. Chances are that a Russian aircraft would not be chosen no matter how cost effective it is. This leaves the U.S. in a very limited position with the KC-X.
This kind of fighting can be expected to go on for the next several months to after the contract award and resolution of any protest.
Boeing’s (BA) Wichita, KS plant has supported may of their military programs over the years. In their last bid for the KC-X proposal the 767 aircraft would have been modified to become the new tanker there. In October the company would no longer make that commitment to using the Wichita plant. The company had discussed using a lower cost plant to do the work with an eye to lowering their overall cost. This obviously was a blow to the employees and the political supporters of the work being done there.
Now Boeing announced yesterday that at least some of the military conversion of the aircraft will be carried out in Wichita. This will gain them even further support from some key Senators and Congressmen as well as there unions. In many ways the company had no real choice. The Wichita plant has long been established, can do the work and needs it. The announcement makes sense at this time.n
It has been reported that EADS spent almost $200,000.00 last quarter on just tanker related lobbying. It is not uncommon for larger companies of all sorts to spend time in Congress working to support their programs and proposals.
The KC-X contract being so important this effort will be even more concentrated. EADS work with its supportive Congressional members has already worked out well especially with the delegation from Alabama. Support like this will be key as the RFP goes final, proposals are submitted and the source selection works its course. The next quarter reports should show similar numbers.
The U.S. Air Force put out a draft Request for Proposal (RFP) in late September. It has proceeded apace with the receipt of questions related to the RFP and putting out answers. The idea is that the type of questions received should help write the final RFP to make it better and get better proposals.
The Seattle Post-Intelligencer reports that so far two sets of answers have been put out and they already run to several pages. Considering that it is expected only the same two teams will bid it indicates the new RFP is significantly different.
This will be a long, hard slog of a contract award again.
The Boeing plant located in Wichita has a long and distinguished history of supporting that company’s military programs. It is safe to assume that if Boeing does win the KC-X contract that some of the work will be done there. That means that Kansas’ leaders are very interested in Boeing winning the deal. In the spirit of this it was reported that the Kansas Governor, Mark Parkinson, recently met with the Air Force Secretary. The former Governor of the state, Kathleen Sebelius, is now a cabinet secretary in the Obama Administration which certainly allows for some low key lobbying.
With the continued economic problems facing the country good manufacturing jobs are hard to come by and this means that mayors, governors and legislators will all be doing their part to support the different bidders in this process.
Northrop Grumman and EADS continue their preparation of the battlefield by criticizing the draft RFP put out by the U.S. Air Force a month ago. They believe that by focusing on cost as the prime discriminator in the award that it is biased against their possible proposal. In The Miami Herald article here there representative described the situation: “This is tantamount to a cost shootout that accelerates the race to the bottom,”. They have already received support for this view from some in Congress.
See this to continue on until the contract is awarded.