Department of Defense Willing to do KC-X with only Boeing

In a post on BNET Industries, Matthew Potter notes that the Department of Defense is willing to go ahead with only Boeing bidding on the KC-X:

The Secretary of Defense Robert Gates in testimony to the House Armed Services Committee made it clear that the Defense Department and U.S. Air Force will release the Request for Proposal (RFP) for the new KC-X tanker and award a contract even if only Boeing (BA) submits a proposal. The Department hopes that the Northrop Grumman (NOC) and EADS (EADS:P) will submit a bid but will go forward with the planned contract even if they don’t.

In early December Northrop Grumman’s CEO sent a letter to the Air Force stating that due to the terms of the draft RFP they felt that it so favored Boeing that they and their partner EADS, parent of Airbus, would not submit a proposal. Northrop had won the contract in 2008 only to lose it on protest by Boeing with the Government Accountability Office (GAO) saying that the Air Force changed the requirements and was not completely fair to Boeing. An earlier attempt to award Boeing a lease for KC-767 aircraft collapsed amid scandals and Congressional desire to have contest.

Read the entire post Defense Department Willing To Do KC-X With Only Boeing Bid for more.

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KC-X RFP To Be Released Soon

The Federal Business Operations “FedBizOps” website posted a presolicitation notice yesterday stating that the final RFP for the KC-X will be posted no earlier than 23 February. The draft RFP had been released in September last year. Since then it has been updated and modified several times.

Most recently the latest set of questions and answers were posted on January 27th. The two big issues are how much the final RFP has changed from the draft one and whether Northrop Grumman (NOC) and its partner EADS will bid on the contract. The turn around time for a proposal may be fairly quick as this is the second competition in three years and the draft RFP has been out for six months.

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KC-X Tanker RFP Out In February

At a recent press availability the U.S. Air Force Chief of Staff, General Schwartz, said that he expects the final RFP for the KC-X contest to be released next month. He also stated that it will be little changed from the draft RFP. Both Northrop (NOC) and Boeing (BA) have been submitting questions and comments on the draft RFP and some of these will be addressed in the final one. The RFP will be released a few weeks after the 2011 Defense Budget goes to Congress which is planned for 2 February.

Schwarz did say that the final RFP may have changes based on recent comments by Northrop and its partner EADS (EADS:P) that they might not participate as they felt the RFP favored Boeing too much. Both groups had also commented on the use of a fixed price development contract and how it transferred too much risk to the contractor from the Government.

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Northrop And EADS Wait On Final RFP Release

The KC-X Tanker RFP is expected to be released in the next few weeks. Previously Notthrop and its partner EADS had threatened not to participate as they felt the draft RFP was biased in favor of Boeing. Now they are saying they will wait and see what is in the RFP when it is put out. It is in the best interest of the Air Force and the U.S. Government to receive multiple bids on the project.

Without competition the chance of this third attempt proceeding will be difficult. Sole sourcing the contract to either Boeing or the Northrop team will cause an outcry in Congress no matter what as both companies have their supporters. Not putting out a competitive RFP will only lead to protests and further delays in what has become a critical program to replace the aging KC-135 aircraft.

We are all going to have to wait to see what the Air Force puts out and how Northrop, EADS and Boeing respond to it.

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OSD Committed To Current KC-X Strategy

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.

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Northrop Threatening No Participation Over Cost Data

Yesterday Northrop announced that it is considering not participating in thew new KC-X competition. They are concerned that the the way the price requirement is structured may not be fair to them. They are also pursuing the complaint that their cost data was provided to Boeing during the protest of the last award and want access to the same information.

If Northrop and EADS don’t submit a bid it will be hard to get actual competition on the contract. That would leave just one submission, Boeing, or perhaps two from them if they go the route of having a 777 as well as a 767 proposal. This situation would make it hard for the Air Force to proceed.

The chances of Northrop doing this is low and the Department of Defense realizes it. This is the largest procurement coming down the road and both EADS and Boeing need the work. Of course if there is really a belief that their bid cannot win no matter what then Northrop should just save the money and not prepare one. This is only the draft RFP so the next year or so should be interesting.

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Alabama Congressional Delegation Pressing For Northrop And EADS

The Alabama Congressional Delegation will hold a press conference tomorrow to discuss the newly re-started KC-X contest. Based on comments today made by Senator Shelby (R-AL) there is concern among them that the cost focused draft RFP is not the best solution and my be biased against the Northrop Grumman/EADS proposal. The war of words over this has just begun and will drag on until the contract is awarded and the protests end.

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Working Through the Process

Just wanted to comment on a Reuters story ("U.S. tanker aircraft rules spark concern in industry") that hit the wire last night. It describes "industry executives as starting to raise fundamental questions" about the U.S. Air Force's KC-X Tanker draft Request for Proposal released Sept. 25. If you've been following our blog, we've been very clear about how we’re approaching this. We continue to submit our draft RFP questions to the program office and see them answered at the Federal Business Opportunities website. Now, I don't know who the anonymous quotes were from, and it is not my concern to try and find out. (I can tell you it wasn't me.) I do know, however, that our competitors held a number of "on-background" briefings with reporters yesterday on the draft-RFP.

The bottom line is that the U.S. Air Force is running this tanker competition and both sides have to step forward and meet their mandatory requirements. We will continue to work through the process and look forward to offering a KC-7A7 combat-ready tanker featuring max capability at lowest cost for America.

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Alabama Expresses Pessimism On KC-X

The Northrop Grumman and EADS team will build their tanker in Mobile, AL if they win the contract again. Last year when they had done so before the Boeing protest the plant was ready to go. This means that the team has the support of Alabama’s politicians and media. Senator Sessions had tried to get language inserted into a defense funding bill that might have helped Northrop but lost that vote.

Now the Mobile Press-Register has an article where the experts they interviewed question the structure of the new draft RFP and how it may be unfair to Northrop and EADS. It is certainly true that a focus on price over capability might affect the Air Force’s source selection but it may be too early to tell that. Plan on seeing more articles supporting the local favorite in Alabama media.

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Just wanted to keep folks following (via the web site, Twitter, and email) updated on our latest KC-X activity.

John Lockard (Chief Operating Officer, Boeing Integrated Defense Systems) and Pat Shanahan (Vice President/General Manager, Airplane Programs - Boeing Commercial Airplanes) led our team today as we met with members of the U.S. Air Force's KC-X Tanker program office at Wright-Patterson Air Force Base, Dayton, Ohio.

This was our first opportunity to meet face-to-face with our customer since last Friday's release of the KC-X Tanker Draft Request for Proposal (DRFP) and we appreciated both their time and emphasis on transparency.

We feel that one of our key discriminators in this new competition will be a 'one-company' approach. The Air Force will only have to turn to a single point of contact if we are fortunate enough to win this contract and replace America's critical refueling fleet.

Speaking of our approach, here's an update on how we're handling the Draft RFP:

Our team has been dissecting this important document for a week now. We have chosen to ask our questions and highlight areas of interest directly to the Air Force first before discussing them publicly.

As for timing, we should see a Final RFP in late November followed by proposals due in January 2010, and finally a contract award some time next summer.

Regardless of the timing, you can count on one thing. Boeing plans on offering a combat-ready tanker with max capability at lowest cost.

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