KC-46A Selected Acquisition Report (SAR) Indicates Higher Costs

The Department of Defense is required to submit Selected Acquisition Reports (SAR) annually for Major Defense Acquisition Programs. A SAR is also submitted at the beginning of the program and if a change to the baseline is approved. The KC-46A new aerial tanker program submitted a SAR dated 30 September to Congress and it shows that the current Estimate for Completions (EAC) for the current contract are above the ceiling.

This would mean that Boeing (BA) would make no profit on the initial contract for 17 aircraft as it is responsible for all costs above it.

The Washington Post reports that Boeing’s EAC is a $5.1 billion and the Government’s $5.3 billion. The ceiling is $4.8 billion.

Estimated costs for this initial development of the program have been up-and-down over the last six months but last reports had Boeing still under the ceiling.

The SAR also shows that the Air Force plans to spend $40 billion on procurement for the 179 tankers with the last order placed in 2027.

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Boeing Releases Video of the Italian KC-767

Boeing (BA) has released a video on their Youtube channel of the Italian acceptance of the first two of their four KC-767A tankers.

The video may be found here.

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Israeli Modified 767 Tanker for Colombia Seen

Israeli Aerospace Industries (IAI) has been modifying at least one Boeing (BA) 767 aircraft to be a tanker for the Colombian Air Force. The major difference between this aircraft and the KC-X the U.S. Air Force is buying is that it doesn’t rely on a boom for refueling but just the drogue and hose system.

A photo of the aircraft named “Jupiter” was taken recently and posted at Airliners.net. It may be found here.

The aircraft is painted in the correct national markings and has camouflage. It has a pod under each wing for the drogue to refuel aircraft.

Boeing is proposing a version of their 767 aircraft for the KC-X as well as building tankers for Italy and Japan. IAI’s product demonstrates that the 767 is certainly flexible enough to be modified for the tanker mission. It also raises the question about why the new tanker for the Air Force has taken so long to get off of the ground.

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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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U.S. Air Force Continues To Invest In Older Tankers

The current U.S. fleet of aerial tankers consists of a few hundred Cold War era KC-135 aircraft and less then a hundred KC-10 built in the Eighties. The KC-135 is based on the Boeing (BA) 707 airliner but were built as tankers not converted from passenger aircraft. The KC-X program will replace most of the KC-135 if all 400 or more are purchased and built. The initial contract which the proposals are due on is for about 150 aircraft.

Because it will now be several years before the first KC-X flies and a substantial number are available the U.S. Air Force will need to continue to upgrade, maintain and overhaul the existing aircraft. The most modern variant of the KC-135 is the R model. Today ARINC Engineering Services was awarded a contract to upgrade several KC-135R models with new avionics. No value was given for the contract but it will provide modern, digital instruments for the older aircraft. Eventually all KC-135R will receive this upgrade.

Due to the fact that it has taken almost ten years to get to this, the third, attempt to award a contract for a new tanker the KC-135 and KC-10 fleets will fly for several more years beyond what was expected. The continued investment in modernizing these aircraft will help them meet the current set of mission requirements while waiting for the new tankers.

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Reports of Other Bidders for KC-X Emerge?

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.

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Backers of Two Tanker Contracts Want To Stay Anonymous

The Wichita Eagle reports that the a group backing building both the Boeing and EADs tankers, doesn’t want to reveal its backers:

The investors backing a campaign asking the government to split its contract for aerial refueling tankers between Boeing and Northrop Grumman want to remain anonymous for now. The campaign is called Build Them Both.

“We are funded by a group of investors who have asked to remain nameless at this time,” said the effort’s campaign manager, Carrie Giddens.

The group is not union sponsored and does not have ties to either Northrop or Boeing, Giddens said in an e-mail exchange. However, “we have sought out funding from both companies, their suppliers and unions who would be impacted by building them both.”

The requests went out in the past two weeks.

On Monday, Giddens called Northrop’s decision to pull out of the bidding process “bad news for American workers, our men and women in uniform, and for the taxpayer.”

With only one company seeking a contract, 50,000 jobs that would have been created won’t be, Giddens said in the statement. “Without an ongoing competition there is no way to control costs, to the detriment of our military and taxpayer.”

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Wall Street Journal Says Trans Atlantic Defense Deal Falters

The Wall Street Journal has weighed on the KC-X Tanker bid process, in an article entitled “Trans Atlantic Defense Deal Falters.” The article notes:

The decision by Northrop Grumman Corp. and its European partner this week to drop out of a $40 billion competition to build aerial-refueling tankers for the Air Force is the latest example of how trans-Atlantic defense ventures have faltered.

Many observers view the size of the tanker deal, and the prominent role played by Northrop partner European Aeronautic Defence & Space Co., as the most significant instance of how trans-Atlantic partnerships can get tripped up.

Noorthrop billboard in Alabama in 2008 advertised a future tanker plant, but the company quit the project.

“There’s no doubt that this outcome will reinforce the long-held understanding in Europe that the U.S. defense market is highly protected,” said Alex Nicholl, a specialist on European defense companies at the London-based International Institute for Strategic Studies.

“This is not the first time that the rules of a U.S. competition have been rewritten to suit the American competitor. No doubt it won’t be the last.”

Read the entire article at theJournal.

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Long Term Aircraft Plan Includes 109 KC-X Tankers

The Air Force, Navy and Marine Corps released to Congress their “Aircraft Investment Plan”. This lays out how many fixed wing aircraft they intend to buy and maintain through 2020. The U.S.A.F. intends to buy 109 tankers by that year at an estimated cost of over $30 billion.

The Air Force also plans to maintain a force of 223 C-17 and 91 C-5 heavy lift aircraft. The core of the services aircraft though will be the F-35 JSF with about 600 planned for purchase at the current schedule.

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New Group Advocating For Split Tanker Buy

The Washington Post writes today about a new group buying advertisements to support the concept of buying KC-X tankers from both Boeing (BA) and Northrop Grumman (NOC). The group is called “Build Them Both” and its financiers have so far remained private. The idea of a split buy was floated last year but despite the ability to produce aircraft faster the related logistical costs are so high that the Air Force and DoD won’t consider it.

The article may be found here as the second part of the post.

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