President Obama Calls For “Free and Fair” Tanker Contest

At a joint press conference with France’s President Sarkorzy President Obama said that he expected the KC-X contest to be a “free and fair” one. This of course assumes that another company besides Boeing (BA) bids on the program.

France has spoken out strongly about concerns the current RFP was written in such a way that only Boeing could win it. Northrop Grumman (NOC) decided not to submit a bid this time around due to these kind of issues. EADS (EADS:P) who had planned on partnering with Northrop is currently considering submitting a separate bid. Sarkozy has expressed his support of EADS and supposedly discussed the issue with Obama today. Obama also stressed that the DoD makes the final decision and he has no role in any of this.

The political fallout if Boeing doesn’t win will be significant this time around — even for Obama.

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EADS Supports Bid For KC-X

It is being reported by various sources that EADS is pressuring Northrop Grumman to go ahead and submit a bid for the new KC-X RFP. Northrop had informed the Government that they planned not to if the terms were not significantly changed. They felt the RFP was favoring Boeing’s cheaper, smaller KC-767 aircraft.

The final RFP came out two weeks ago and still no word from Northrop that they will go ahead and submit something in May. EADS obviously would like another chance to win the contest after they lost the last one to Boeing’s protest in 2008. The $35 billion would go a long way to make up for the lost A400M revenue.

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As Expected Alabama Press Critical Of Air Force RFP

Writing in support of Northrop Grumman and the “Mobile region” the Mobile Press-Register has and editorial summing up the situation on the new RFP from their view. They do not demand that the RFP be changed or the contract be given to Northrop and EADS but they do point out that:

“If Northrop pulls out of the contest, Boeing may get the tanker contract, but the entire deal will be tainted — first by Boeing’s own corruption and collusion with some Pentagon officials several years ago over an earlier version of the tanker deal, and second by a decision-making process that puts politics above defense needs.”

It is true that a single bid competition is not much of a competition.

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In Comparison To Those In Alabama Boeing Supporters Confident

The Herald a newspaper in Everett, WA has an article discussing how happy and confident Boeing’s legislator supporters are with the new RFP released yesterday by the Air Force. This is the opposite as to how those from Alabama feel. Senator Patty Murray (D-WA) is quoted as saying, “Given a fair shot, Washington state’s workers will bring home this contract,” Murray said. “We have the skills, the technology, and the experience of having built the only combat-ready tanker to prove it.”

If Northrop Grumman (NOC) and its partner Airbus don’t submit a bid it will be hard for Boeing (BA) to not win the contract. Hence the happiness of their supporters.

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Alabama Senators Not Happy With New RFP

In an article in The Mobile Press Register Senators Shelby (R-AL) and Sessions (R-AL) make it clear that they are not happy with the new RFP. Shelby says “The final RFP discredits the integrity of the entire process,” and Sessions seems to feel that Northrop Grumman (NOC) won’t bid. He laments the lack of competition in the process.

This of course is not a surprising reaction as Northrop and EADS planned to assemble the basic A330 aircraft in Mobile, AL and then integrate the military systems at a Northrop facility.

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New RFP Released Today

The Air Force and Department of Defense acquisition officials briefed Congress and the press today on the new RFP for the KC-X. It had some slight changes from the draft release a few months ago. The key question is will Northrop bid this time around?

They won the last contract to have that thrown out on Boeing’s protest. Much more to come on this in the days ahead.

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Air Force Plans Quick Turn Around On KC-X Contract

It is expected that the final RFP for the KC-X New Aerial Tanker program will be released this week. At a recent forum the Secretary of the Air Force, Michael Donley, said that they hope to have the contract awarded by the end of the summer. This means that if you allow a few months for the proposals to be prepared and submitted the source selection will only take ninety days or so. This is an aggressive time line for a contract this large.

It may be that the Air Force is expecting the Boeing (BA) and Northrop Grumman (NOC) proposals to be much like the ones they submitted in 2008. This will make it easier to do an evaluation and award. There is a great deal of historical work to draw upon. Of course that competition ended in a Northrop win, a Boeing protest, and the GAO upholding it. This led to the current attempt at a contract.

Of course if only Boeing submits a bid as might happen it will make the whole selection process easier.

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Support For Northrop Not Bidding On KC-X

Northrop Grumman and its partner EADS threatened a few weeks ago not to participate in the next attempt at buying a new tanker for U.S.A.F. Many feel that this is just a negotiating ploy to have the terms of the RFP changed to make it easier for Northrop to win. The company has expressed concern that the way the RFP is written now it will favor Boeing to the point that Northrop sees no reason to bid.

The U.S.A.F. and DoD need to attract multiple bids. They cannot go through with the program without some sort of competition. Now it has been made clear that both the Board of Directors of Northrop, stock analysts are shareholders are supportive of the plan not to propose. One would think that there should be an attempt to win $35 billion of work but the goal of Mr. Bush, the new CEO, and his supporters is to increase the margin and profitability of the company. This means he and his supporters want to concentrate on getting work and getting it done.

The KC-X program in its third iteration faces some problems. The chance of a protest by either losing side is high. Both teams have supporter in Congress. The program may be hard to get up-and-running with so much politics involved. If Northrop feels there is little chance of them winning this contract again or quickly making money off of it then they should not proceed.

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Presumed Bidders Meet With Air Force

It has been reported that last week Boeing (BA), Northrop Grumman (NOC) and EADS (EADS.P) had a series of meetings with the Air Force to discuss the draft KC-X RFP and the final one. After these meetings EADS and Northrop made clear that their threat not to submit a bid without changes to the RFP language was not an idle negotiation ploy as some have said. The companies believe that the current RFP is biased towards the smaller, cheaper Boeing 767 rather then the larger Airbus 330.

The discussions also indicate that the final RFP will come out before the end of January. Without two bidders it will be hard for the Air Force to proceed so they need a proposal from Northrop and EADS. At the same time they must have an RFP that will hopefully be protest proof and get the needed capability quickly.

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Northrop Congressional Supporters Continue Harsh Words

Last week Northrop Grumman (NOC) and its partner EADS (EADS.P) wrote a letter to the Defense Department stating that they are not interested in bidding on the KC-X contract if the current RFP language stands. Their argument is that it is currently biased towards a smaller aircraft which means that it is set up to give Boeing the contract. In their eyes there is no reason to go through the motion of bidding just not to win.

This of course caused all sorts of critics to rise up and claim that Northrop was trying to force the Government to bias the RFP and contract towards Northrop. Basically this is an attempt to blackmail the Government. The problem the Air Force has faced is that they need to write a RFP that gets them the best value bid meeting all of its requirements and is done in such a way that no protest occurs. This is proving difficult to do. The two aircraft, KC-767 or A330, are dissimilar enough that the requirements have to be carefully chosen. At the same time there is a great deal of pressure in Congress to support American companies and products. This is the state that the U.S. has gotten itself into by allowing only one major source of aircraft of this size to remain — Boeing (BA).

Now Northrop’s supporters in Congress are striking back. In a recent editorial the Congressman for Mobile, AL where EADS will assemble the aircraft, Jo Bonner (R-AL), writes that it is unfair to tar Northrop. In his eyes the Government is going out of their way to award a sole source contract to Boeing. This violates the spirit if not the law on contracting. He writes “And the reason Northrop Grumman, and its partner EADS, was not playing a game of chicken is because the draft RFP, released by the Air Force in September, has been all but written to guarantee the pre-selection of the smaller, older and much less capable Boeing 767”.

That is the crux of the problem. The Government lost the last attempt to award the contract competitively. Their attempt to let a sole source lease to Boeing before that was overturned by Congress. This next round doesn’t look good either. There is a crying need for this capability and it lags because of politics, industrial policy and poor management.

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