Archive for February, 2011

Will EADS Protest?

Now that the U.S. Air Force and Defense Department have awarded the KC-X new aerial tanker contract to Boeing (BA) for their KC-46A aircraft the major question is whether the losing EADS NA (EADS:P) bid will protest? In 2008 when the Air Force selected Northrop Grumman (NOC) and EADS Boeing did protest and the choice was overturned leading to this current iteration of the contest. Considering this is the only fixed wing aviation program in the near future or at least until the Next Generation Bomber program emerges it may be hard for EADS not to protest on the chance that they might win or at least there would be another competition.

In their public statement the company is non-committal about the chances of filing a protest with the Government Accountability Office (GAO). They say “EADS North America officials today expressed disappointment and concern over the announcement by the U.S. Air Force that it had selected a high-risk, concept aircraft over the proven, more capable KC-45 for the nation’s next aerial refueling tanker.” but they also say ““Though we had hoped for a different outcome, it’s important to remember that this is one business opportunity among many for EADS in the United States,”. So read into that what you may.

At a minimum the filing of an unsuccessful protest would delay the initiation of the contract for about 100 days making the delivery of any new tankers to the Air Force even later then they will be after an almost ten year process to build a new one.

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Boeing Releases Video of KC-46A

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And the Winner is Boeing!

The U.S. Defense Department and Air Force announced that Boeing (BA) has been selected to provide the new KC-X aerial tanker. The design submitted by EADS NA (EADS:P) was not chosen.

The new KC-46A will be based on Boeing’s 767 airliner design.

The Secretary of the Air Force, Mr. Michael Donley, stated that the decision was based on “mission effectiveness in wartime and life cycle costs as embodied in fuel efficiency and military construction costs”. This might be a hint that the larger KC-30 aircraft from EADS might have required more investment in new and bigger facilities then the smaller 767 tanker.

The contract has been very political with states that stand to gain thousands of jobs from the program using their Senators and Representatives to push for the respective bidders.

EADS does have the right to protest the decision as Boeing did in 2008 when the contract was awarded to Northrop Grumman (NOC) and EADS. They will have to wait until their debrief by the Air Force before making any decision about that.

Even an unsuccessful protest may delay the start of the program for several weeks and the Air Force plans on receiving the first 18 aircraft in 2017. The new KC-46A will replace Cold War era KC-135R tankers some of which have been flying for fifty years.

Cross posted at Defense Procurement News.

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KC-X Soon? Protest Coming

At a recent press availability during the Air Force Association’s winter conference the Secretary of the Air Force indicated that the KC-X new aerial tanker contract will be awarded as early as this week. Earlier rumors had it being done in the next month or so.

Mr. Donley also made it clear that there is a potential for a protest of the award by either Boeing (BA) or EADS NA (EADS:P) if they don’t win and that the Air Force and the Defense Department are prepared to deal with it.

This is the third attempt to award this contract with the last contest won by Northrop Grumman (NOC) and EADS in 2008 overturned on Boeing’s protest. Due to the size, importance and the conflicts between the U.S. contractor and its supporters and the European aerospace giant this may continue to be an messy, extended affair.

For now everyone must wait until the decision is announced which could occur as early as tomorrow after 5:00 Eastern.

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EADS Claims Able to Lower Price on Offer This Time Around

With the submission of their second proposal for the KC-X aerial tanker program EADS (EADS:P) stated that due to production increases they were able to lower the price on their KC-30 tanker aircraft. Chairman of EADS North America, Ralph Crosby, said by about six percent.

EADS and Boeing (BA) are trying for a second time to win the new tanker for the U.S. Air Force that will replace the aging KC-135R aircraft. In 2008 EADS which was teamed with Northrop Grumman (NOC) won the last contest which was overturned on protest by Boeing. The two companies submitted their final proposals last week.

Boeing has not provided such details but has previously stated that their smaller KC-767 aircraft has better fuel efficiency and maintenance costs that will save the Air Force money over the long run.

In recent testimony the Secretary of Defense, Robert Gates, indicated that the award announcement will be made in a few weeks following up on the Air Force’s budget document which indicated prior to April 1st.

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Air Force Plans Award Before April 1st

Despite the current issues with defense funding the Defense Department and Air Force reportedly said that they hope to award the KC-X aerial tanker contract within a month. The budget sent forward for 2012 on Monday stated that the planned contract was valued at around $35 billion.

It sounds like that even with the Pentagon acting under a continuing resolution rather then an official budget that at least the winner will be announced. There is some concern that without a 2011 budget resolution from Congress a new contract of this magnitude might not be able to be awarded. This means that the Air Force will have to wait until October 2011 to have initial funding for the purchase of the new tanker.

The KC-X saga is heavy with political overtones as supporters of both Boeing (BA) and EADS (EADS:P) in Congress continue to lobby OSD and threaten problems if their preferred source is not chosen.

The Air Force has been trying since early in this decade to buy a new tanker and this award may be the last step towards doing that. Although the chances of a protest by the loser remain high and the current budget situation between President Obama and Congress may make it difficult to get the funding resolved anytime soon.

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Both Companies Submit Final Proposals But Will Continuing Resolution Allow Award?

It has been confirmed that both Boeing (BA) and EADS North America (EADS:P) submitted their final proposals for the KC-X aerial tanker program. The Air Force had asked that they be submitted by today and both companies turned them in early.

One pressing question that remains is if the Department of Defense remains under Continuing Resolution (CR) for the rest of the year rather then Congress passing a proper budget is it possible to award the new contract? It looks like the Republican controlled House is planning on doing CR until the new Fiscal Year (FY) starts in October. There has not yet been any statement from the Government on this question.

One would think that even if the source selection is carried out and a winner chosen with the caveat that the contract award would have to wait until the next FY it might affect the pricing. Having a requirement to guarantee the pricing for several months has not been identified yet and it would have some effect on each company’s bids.

As everything with this program nothing is easy and it seems this third attempt may be even more complex and controversial than the first two.

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Boeing Submits Final NewGen Tanker Proposal to US Air Force — Press Release

Boeing Submits Final NewGen Tanker Proposal to US Air Force

ST. LOUIS, Feb. 10, 2011 /PRNewswire/ — The Boeing Company (NYSE: BA) today submitted its final proposal for the U.S. Air Force’s KC-X tanker competition. The proposal offers a fleet of Boeing NewGen Tankers – 767-based, multi-mission aircraft that deliver superior capabilities to U.S. warfighters and burn 24 percent less fuel than the competing European Aeronautic Defence and Space (EADS) Company’s tanker. If selected, the Boeing tanker will save taxpayers tens of billions of dollars in fuel costs over the next 40 years and support 50,000 American jobs with more than 800 suppliers in more than 40 states.

“This decision is critical to America’s national security and its manufacturing base,” said Boeing Chairman, President and CEO Jim McNerney. “Our best-of-Boeing team has offered the most capable and fuel-efficient tanker that will enable the U.S. Air Force to continue serving as the world’s finest air refueling provider without breaking future defense budgets.”

“Our challenge is to replace the KC-135, one of the most valuable aircraft fleets in aviation history, and we responded to the U.S. Air Force’s requirements by proposing the best multi-mission airplane built by the most experienced people – the NewGen Tanker,” said Dennis Muilenburg, president and CEO of Boeing Defense, Space & Security. “We have an integrated team that has spent the entire competition focusing on our customer and preparing to execute immediately after the contract is awarded. Boeing is ready to build America’s next tanker.”

“Our NewGen Tankers will be built using a proven low-risk, in-line manufacturing approach similar to the highly successful 737-based Navy P-8A, by an already trained and highly experienced U.S. work force at existing Boeing facilities that have delivered more than 2,000 tankers and 1,000 commercial 767s,” said Jim Albaugh, president and CEO of Boeing Commercial Airplanes.

Boeing has been designing, building, modifying and supporting tankers for decades. These include the KC-135 fleet, the KC-10 fleet, and four KC-767Js delivered to the Japan Air Self-Defense Force. The Italian Air Force formally accepted its first KC-767 tanker in December and will receive three more as part of its current contract. In addition to being ready now, the Boeing NewGen Tanker will continue to deliver capability and value to both warfighters and U.S. taxpayers for decades to come. The NewGen Tanker:

* Saves taxpayers up to $36 billion in life-cycle costs compared with the competitor’s aircraft – a difference that could pay for an additional fleet of 179 tankers
* Features a flight control design philosophy that places aircrews in command of the entire flight envelope rather than allowing computer software to limit combat maneuverability
* Provides Air Force pilots with an advanced digital flight deck featuring Boeing 787 Dreamliner electronic displays
* Includes proven air refueling technology and a modernized NewGen KC-10 boom with an expanded refueling envelope capability, increased fuel offload rate and fly-by-wire control system – all from the company that invented the air refueling boom and has produced the world’s most capable and reliable tankers
* Delivers significantly more fuel, cargo, passengers and patients than the current KC-135 tanker in a widebody airplane with a narrowbody footprint that affords the Air Force invaluable flexibility for a variety of operations.

Boeing’s final proposal is the culmination of a process that began when the company started studying tanker requirements after the release of the Air Force’s draft Request for Proposal (RFP) in September 2009, followed by a final RFP in February 2010. Boeing responded to the final RFP by submitting an 8,000-page proposal on July 9, 2010. A contractor will be selected early this year to replace 179 of the 400 Eisenhower-era KC-135 aircraft currently in the Air Force fleet.

More information on Boeing’s NewGen Tanker, including video clips and an interactive tour of the aircraft, is available at www.UnitedStatesTanker.com. For more information on joining the company’s efforts, visit www.RealAmericanTankers.com.

A unit of The Boeing Company, Boeing Defense, Space & Security (www.boeing.com/bds) is one of the world’s largest defense, space and security businesses specializing in innovative and capabilities-driven customer solutions, and the world’s largest and most versatile manufacturer of military aircraft. Headquartered in St. Louis, Boeing Defense, Space & Security is a $32 billion business with 66,000 employees worldwide. Follow us on Twitter: @BoeingDefense.

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Reports Final Proposals Due Next Week for KC-X

Both Boeing (BA) and EADS NA (EADS:P) have met with the U.S. Air Force reportedly to discuss final changes to the KC-X RFP. The companies have until 11 February to submit their final revisions to their proposed solutions to the new aerial tanking requirement.

Boeing has said that they will update their proposal although EADS NA has said they may not. Swirling around all of this final burst of activity is the concerns by some in Congress, the media and at the bidders about the accidental release of information by the U.S. Air Force to each team as well as the two World Trade Organizations (WTO) rulings on both companies receiving illegal subsidies.

Some Boeing supporters in Congress are now saying that the data release gives EADS an advantage and that there should be deeper investigations. The Air Force “reassigned” two personnel as punishment and Congress did have hearings last week about the matter. Washington state, Illinois and Kansas legislators all from states that stand to gain work if Boeing wins sent a letter to the DOD IG asking them to look to see if the data released skewed the contest in EADS’ favor.

All of these conditions make it seem inevitable that there will be a protest to the contract award no matter who wins it. There will also be political pressure from supporters of both companies to review the contract and make sure that there favored winner was not treated unfairly.

All this adds up to further delays in replacing the KC-135 systems made during the Cold War. Once again this problem has been created by the disappearance from the U.S. industrial base of multiple suppliers of large aircraft. Currently only Boeing and EADS make aircraft acceptable to the Air Force to meet this requirement. If there is to be even a modicum of competition the two have to be involved which leads us to the current ugly situation of charges and counter charges of favoritism, jingoism and bias.

This will probably be the biggest contract awarded for the next decade by the Defense Department and is critical to both companies maintaining a foothold in the large military aircraft business worldwide which is leading us to the current situation which does not seem like it will end well.

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