In a sign that they are ramping up work on their bid for the new KC-X aerial tanker program EADS (EADS:P) announced that they are moving their proposal preparation team to new offices in Mobile, AL. If the European defense giant does win the contract they will assemble the A330 aircraft at that city and then apply the specific military modifications there or at another facility.

Reportedly EADS will concentrate about 100 workers in Mobile. They are currently based in Arlington, VA where the EADS North America headquarters is and Melbourne, FL. The Melbourne site was most likely established when EADS was working with Northorp Grumman (NOC) on their last attempt in 2008. Northrop has an aircraft modification facility there used to support the E-8 JSTARS program.

The Defense Department and Air Force expect to received proposals in July and award in the Fall. The Boeing (BA) team and their “NewGen Tanker“ is considered the only other potential offer.

EADS (EADS:P) had decided to go it alone with their own bid for the KC-X aerial tanker after former partner Northrop Grumman (NOC) decided the requirements favored Boeing (BA) too much. All that meant is that EADS would prime the contract but would probably find other companies, including U.S. ones, to sub for them. It is now being said by EADS that they have found at least one U.S. defense contractor to do “sensitive equipment”. The company is unidentified at this point.

This only makes sense as it allows Airbus to deliver a A330 aircraft or tanker to a U.S. facility to do the integration of the military equipment such as radios and defensive equipment. EADS is planning to do this with Lockheed Martin (LMT) on the Army’s new attempt at buying an Armed Reconnaissance Helicopter (ARH) and should do this for KC-X. Lockheed planned the same thing with Augusta Westland on the failed VH-71 program. By using an American company to do this sort of work it helps with security and technology transfer issues. It is also the reason that EADS North America exists.

The Kansas City Star has this lengthy article that describes the whole situation and explains how we got where we are with the KC-X tanker RFP. The article by Cleon Rickle may be found here. Key takeaways are:

“”I am confident Boeing can build the best plane for the Air Force, no matter the competition,” said U.S. Sen. Pat Roberts,of Kansas. “However, I urge the Department of Defense to run a fair competition and avoid coddling EADS to the detriment of American warfighters who have waited eight years for this contest to end and decades for a new tanker.”

“We will offer a modern, more capable tanker in response to the Defense Department’s decision to encourage competition for this major taxpayer investment,” said EADS North America chairman Ralph Crosby, Jr. “Our KC-45 is the only real, flying, low-risk solution that today meets the demanding Air Force air refueling requirements and is actually in production now. ”

Retired Air Force General Arthur Lichte was named to EADS North America’s board. DefenseNews writes that the former head of the Air Mobility Command (AMC) will join EADS (EADS:P) American subsidiary’s board soon.

The AMC commands the Air Force’s tanker assets and having Gen Lichte will aid the company in preparing not only their proposal but the battlefield as he will certainly carry weight with government officials and Congress.

The two Democratic Senators from Washington state, Maria Cantwell and Patty Murray, are raising questions about some recent changes to the KC-X RFP that in their eyes favor EADS North America.  Forexyard.com is reporting that three changes were announced last week that included how the encryption material or “COMSEC” would be treated as well as a clause allowing duty free import of aircraft components.

These two additions especially have attracted the attention of Boeing (BA) supporters as in their view they make it easier for a non-U.S. company to bid.  The Air Force is saying the COMSEC change clarifies how all contracts will treat this important security matter.  Obviously COMSEC material is tightly controlled doubly so when it comes to handling by non-U.S. personnel.

As the contract goes through its process sniping and criticism of every move, change or event will happen from either side’s supporters.  This contract is so large and so important to the two companies that things like this should be expected.

EADS North America has set up a new website, http://www.kc45now.com/index/, that stresses the “Tomorrow’s tanker, ready today” aspect of their program. This is following up on their plan to stress the availability of their aircraft as compared to the newer Boeing (BA) “NewGen” tanker that while is is based on the 767 integrates some 787 avionics into it. This might require some development time.

The A330 is already in production for Italy and the U.K. and will, technically, only require the necessary U.S. Air Force specific equipment integrated onto it.

EADS North America released this press release today relative to their decision to bid on the KC-X contract.

EADS North America Intends to Submit Proposal for U.S. Air Force Tanker

ARLINGTON, VA — (Marketwire) — 04/20/10 — EADS North America announced today that it intends to submit a proposal on July 9, 2010 for the U.S. Air Force’s tanker modernization program and will offer the KC-45 — the most capable, American-built solution that is flown, proven and in production now.

EADS North America is progressing in discussions with potential U.S. partners to build a winning team in order to provide the most capable, best value solution to the Air Force.

The KC-45 is the only aircraft flying today that meets the U.S. Air Force’s tanker requirements as outlined in its KC-X Request for Proposal (RFP). The KC-45 builds on the EADS-based tanker that was previously selected in 2008 by the Department of Defense and that has won the last five consecutive tanker competitions worldwide.

“We will offer a modern, more capable tanker in response to the Defense Department’s decision to encourage competition for this major taxpayer investment,” said EADS North America Chairman Ralph D. Crosby, Jr. “Our KC-45 is the only real, flying, low-risk solution that today meets the demanding Air Force air refueling requirements and is actually in production now. That fact is critical because our warfighters deserve a true best value solution.”

EADS North America will build and modify the KC-45, along with A330 commercial freighters, at an EADS North America/Airbus production facility to be constructed in Mobile, Alabama. The KC-45 program and aircraft production/modification center will create and support tens of thousands of high-value American jobs while making a long-term investment in the nation’s economy at a time when other aerospace companies are outsourcing production overseas.

“This tanker competition is all about the warfighter and the aircraft that most successfully meets their requirements. The KC-45 offers what the Air Force needs today: a modern military tanker that is in production now with deliveries beginning this year,” said Sean O’Keefe, EADS North America Chief Executive Officer. “Not only does the KC-45 offer the best value and a huge capability advantage over the competition, it also will support tens of thousands of jobs across America by expanding our nation’s industrial aerospace capacity.”

The KC-45 is the U.S. military version of the proven A330 Multi Role Tanker Transport (MRTT). To date 28 aircraft have been ordered by four U.S. allies. The MRTT has transferred more than 265,000 lbs. of fuel to a range of military aircraft — from F-16 and F/A-18 fighters to the E-3 AWACS — using the same refueling systems offered on the KC-45.

“Our aircraft has demonstrated its unparalleled capability by refueling a variety of military aircraft utilizing both boom and hose and drogue systems, as well as by operating in the receiving position. That’s a statement our competition can’t make,” said Crosby.

The Royal Australian Air Force will receive the first A330 MRTTs later this year. Additional aircraft are in production or undergoing mission-equipment outfitting for the United Kingdom, Saudi Arabia and the United Arab Emirates.

“We’re progressing forward in discussions to expand the ranks of our nearly 200 current U.S. suppliers, some of which are joining us for today’s announcement,” continued O’Keefe.

At the heart of the KC-45 is the most capable aerial refueling system operating today. The aircraft’s fly-by-wire Aerial Refueling Boom System (ARBS) has a demonstrated fuel offload rate of 1,200 U.S. gallons per minute — the only system which meets the U.S. Air Force’s requirements without further modification. The system’s proven all-electric fly-by-wire technology ensures enhanced controllability and safety that greatly aids the boom operator and receiver aircraft’s pilot.

The KC-45 also carries an all-digital hose and drogue system for probe-equipped aircraft. The under-wing refueling pods are the most modern in service today, with the capability to deliver up to 420 gallons of fuel per minute through 90-ft.-long hoses at refueling speeds from 180 to 325 knots. The KC-45 will also feature a modern fuselage refueling unit, common with that of allied MRTT users such as the United Kingdom.

About EADS North America
EADS North America is the North American operation of EADS, a global leader in aerospace, defense and related services. As a leader in all sectors of defense and homeland security, EADS North America and its parent company, EADS, contribute over $11 billion to the U.S. economy annually and support more than 200,000 American jobs through its network of suppliers and services. Operating in 17 states, EADS North America offers a broad array of advanced solutions to its customers in the commercial, homeland security, aerospace and defense markets.

It seems that EADS North America the subsidiary of the EADS (EADS:P) is searching for a U.S. company to partner with them on the KC-X tanker contract. Reports are that L-3 Communications (LLL) had been the prime target for this role but now they are rethinking that role.

EADS had planned to be a sub-contractor to Northrop Grumman (NOC) providing A330 aircraft that would then be militarized by Northrop. Now they are planning on being the prime contractor with a U.S. company to aid them. The roles are different enough that it will put pressure on EADS to prepare most of the proposal themselves as well as provide most of the contract management. With their history so far in the U.S. that might be a bit too much for them.

EADS North America released a statement last night about the sixty day extension granted for KC-X proposals. They stated:

“Since the Department of Defense indicated their interest in EADS’ participation as prime contractor in the KC-X tanker competition, the company has carefully assessed the many requirements necessary to participate. We have firmly indicated that a 90-day extension would be the minimum time necessary to prepare a responsible proposal for this $40 billion program. We will consider the Department’s decision to offer a 60-day extension.”

This seems to indicate that EADS may still have given themselves an option not to participate by claiming the need for ninety days vice sixty.

Over the weekend it was reported that the Russian state owned aircraft company, United Aircraft, might be interested in bidding on the KC-X proposal. With Northrop now planning on not participating with EADS only Boeing was left as a confirmed bidder. Russia was about the only other country that had the capability to submit a proposal as they have already made tankers for themselves, India and other users. The thought though of Il-76 based tankers fueling F-22 is sort of hard to imagine. Documents provided to the Seattle Times show that United Aircraft would team with a World Aviation Maintenance to form a new company to bid. The proposal would be based on the Il-96 airliner rather then the older transport tanker already in service.

At the same time there are reports that EADS may submit a bid with themselves as the prime. Earlier this month the company said that it was not confident of being able to do this. EADS-North America could certainly be used as a prime contractor. The time needed for the company to prepare a proposal of this magnitude is why there is talk of extending the deadline three months.

It would be good for the U.S. Defense Department and Air Force to have some form of competition in the latest attempt to award this contract. Whether the Russian or EADS based bids would be viable is another matter. It is going to be difficult though to award what amounts to a sole-source contract with the mood in Congress of many Northrop and EADS supporters.