Boeing Issues Contracts for Cargo Nets

Boeing (BA) issued a contract to AmSafe Industries Inc. to manufacture the internal cargo nets for the KC-46A tanker aircraft. The contract has a value of about $45 million.

The barrier net system will be used to restrain and contain cargo inside the aircraft. One of the secondary missions of the modified 767 tanker being built by Boeing is to carry cargo and these nets are key to ensuring a safe flight.

AmSafe is one of the world’s leading manufacturer of these type of systems. They also build safety curtains as part of this to prevent any fire and smoke from the cargo area entering the cockpit and crew areas.

The KC-46A program is continuing a pace with the first aircraft expected to be flown in 2015. Ultimately the Air Force could buy over 170 of the aircraft from this contract.

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Recent Tanker News Link Round Up

The site has been quiet since the award of the KC-46A contract to Boeing (BA), but here are some links to articles about different aspects of the program and the companies involved in the contest:

Boeing is slowly releasing information about the KC-46A design.

World Trade Organization softens ruling against EADS (EADS:P). Boeing and U.S. still claim victory.

House puts strong cost controls on KC-46A with mandatory reporting requirements for Air Force.

First Australian KC-30 arrives at RAAF base for introduction into service.

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GAO Denies U.S Aerospace’s Protest

The third bidder for the KC-X tanker contract, U.S. Aerospace (USAE) and its Ukrainian partner Antonov, had their protest denied yesterday by the Government Accountability Office (GAO).

The company had filed the protest because the Air Force had said their proposal was delivered past the deadline for submission. U.S. Aerospace claimed that their courier was deliberately delayed and should have been allowed to make the delivery on time.

This decision leaves only the Boeing (BA) and EADS (EADS:P) bids as being considered for the contract. The Air Force had previously said that a decision would be announced around the middle of November but there have been reports that this might slip.

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Can U.S. Aerospace and Antonov Win?

The KC-X new aerial tanker program Request for Proposals (RFP) attracted a third bid this time around. U.S. Aerospace submitted one based on the Ukrainian made Antonov transport. The question that immediately comes to mind is can this team win, or will it be Boeing (BA) or EADS (EADS:P)?

Realistically the chances of this bid being selected are low. The companies had asked for a sixty day extension to work on their proposal. The Air Force already slipping the contract deadline one month to accommodate EADS refused the further two month slip. This would have pushed award into 2011 with the current planned date of mid-November this year already late enough. The U.S. has been trying to get a replacement tanker for the aging KC-135 since 2001.

U.S. Aerospace and its partner obviously felt their proposal could be improved with the extra two months but did go ahead an turn one in that they feel meets all of the Air Force requirements. At the same time in a recent filing with the Securities and Exchange Commission (SEC) U.S. Aerospace makes clear that the Air Force could easily reject them.

The company writes “For any or all of these reasons, the Air Force may not select our bid, may disqualify our bid, or may refuse to consider it on the merits, or at all,” based on myriad factors. These include not meeting requirements, not having qualified sub-contractors, not having necessary facilities or capabilities and even missing the deadline. They didn’t do that turning one in on time.

Of course all of this could be standard “Forward Looking Statements” meant to make clear to anyone investing in their stock that they are being conservative in their estimates. The stock was trading at 18 cents at the close on Friday.

Certainly they have offered a cost effective approach. The Air Force must consider if it meets their requirements and they have the ability to produce the systems to the necessary schedule. Certainly stranger things have happened in defense contracting.

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Boeing and Antonov Follow EADS and Submit KC-X Proposals

Boeing (BA) submitted their proposal for the KC-X aerial tanker program a day after rival EADS (EADS:P) did. Today was the day it was formally due, EADS coming in a little early. The Boeing proposal stresses their cost and size benefits over competing EADS with their larger A330 based aircraft. Boeing is basing their bid on a modified 767 airliner with advanced avionics from the yet to enter service 787.

Also U.S. Aerospace and Antonov submitted their competing proposal after losing a bid to delay things sixty days. There total cost is under thirty billion for a contract the Air Force has estimated at $37.5 billion based on an aircraft cost of only $150 million each.

The Air Force plan is to award the contract in four months. The three bids may make the competition’s source selection last longer and may also raise the chance of a protest.

If the U.S. Aerospace / Antonov team wins it might get very interesting.

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Antonov Team Request Delay in Proposal Deadline

As reported last week U.S. Aerospace and Antonov intend to submit a proposal to the Air Force for the KC-X aerial tanker. Because the actual proposals are due this week supposedly the new team will ask for a sixty day delay to accommodate them. The deadline has already been moved once from June to July to allow EADS (EADS:P) and its team to bid.

The current schedule is for a contract award in November and this new extension would probably push that into 2011 due to the time it will take to evaluate a third bid. U.S. Aerospace did say that they will submit this week if no extension is granted.

A third proposal will make the contest more interesting especially as the Antonov will be very price competitive.

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Air Force Now Slips RFP Award Date to November

Earlier this year in responding to questions about the delay to the submissions of proposals to July due to the accommodation for EADS (EADS:P) the Air Force said the contract will start in mid-November. Now word is coming out that the award won’t be made until “late November”. Critics have seized on this changes as a delay due to the decision to allow EADS to bid.

Technically this is a delay of several weeks from the original schedule. The chances though of the Air Force meeting that were low as it was very aggressive. It only gave them four months to review proposals and conduct the award. Even if they assumed the new proposals were similar to the last ones in 2008 that amount of time to conduct a source selection for a contract of this size may have been a little unrealistic.

This decision will spur EADS’ opponents and Boeing (BA) supporters to further their current war of words.

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Latest KC-X Article At BNET: Government

This is the latest post I wrote for BNET: Government entitled “KC-X Aerial Tanker Contract Starting To Become A Farce”.

It starts “The Air Force‚Äôs ten-year effort to purchase a new aerial tanker continues rapidly seems to be disintegrating. The third attempt at awarding a contract for what has now become one of the most critical needs for the Department of Defense has been roiled by international trade, politics and concerns about the whole approach.”

You may read the rest here.

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Reports Boeing Unhappy With Fixed Price KC-X Contract

Last week reports started to come out that Boeing (BA) may not bid on the KC-X new aerial tanker program. This was due to concerns that the Air Force’s plans for a fixed price development and first production contract may not allow the company to make a profit.

Boeing has denied these reports and it would certainly seem strange for them not to after all of the arguing and noise about giving the contract to them for American jobs. There is though real concern that the contract may limit the ability of the winner to make money on it. In the past fixed price contracts for development often have not worked costing the contractor millions that it can only hope to make up on production.

It would be somewhat ironic that the Pentagon’s desire to limit their cost and exposure would cause even more delays to this critical program. One that is so critical that a sixty day delay in the RFP process has been attacked by legislators, media, retired military and unions.

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Boeing Reorganizes To Form Division For KC-X

Boeing (BA) announced yesterday that they are forming a new division within the company called “Airlift and Tankers” (A&T). This group will have responsibly for the C-17 production and the hopefully capture of the KC-X and production of the KC-767 tanker.

Jean Chamberlin will be assigned as vice president and general manger of A&T.

The group will face serious challenges in the future if the KC-X is not won as C-17 production is winding down for the Air Force and the number of overseas sales is not large. There continues to be support in Congress to keep the C-17 going and if the KC-X contract does go to another source that pressure will only increase.

Good Luck to Ms. Chamberlin in her new job.

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