Thanks, Damian. Airbus (with some US help) won this one--excerpts from two pieces from "Aviation Week and Space Technology" (texts subscriber only):
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'Tanker Loss Prompts ‘Soul Searching’ at Boeing
Aviation Week & Space Technology
03/10/2008, page 20
Boeing’s ‘Frankentanker’ was too risky, expensive for USAF refueling needs
Boeing is facing an uphill battle as it tries to overturn the U.S. Air Force’s decision to award a $35-billion contract to a competing Airbus design for the KC-X refueling tanker.
Arrogance about its relationship with the U.S. Defense Dept., lack of focus on customer requirements and reluctance to provide detailed pricing data contributed to Boeing’s stunning loss late last month of a Pentagon contract to build aerial refuelers. “Boeing ‘knew more than the customer’ what the customer wanted, and in its arrogance it didn’t listen,” says a source close to the 767 tanker team. The proposal’s executive group spent a lot of time “doing some soul-searching” as a result...
Boeing’s loss in the KC-X competition is twofold. The revenue will not materialize and the likely candidate to be the 767’s final significant customer has evaporated, though the commercial side of the house isn’t giving up (see p. 13). Without new orders, just four years of work remain. Perhaps more daunting is that its only commercial rival, Airbus, will now have a final assembly foothold in the U.S. And a former Air Force official cautions that the new stateside infrastructure only adds to an already bloated industrial base.
The competition winner, Northrop Grumman/EADS North America, plans to select a contractor within the next month to break ground on new facilities in Mobile, Ala., for final assembly of the KC-45 and A330-200F.
That new facility will begin assembling its first KC-45, the second production aircraft, late in 2010. In 2011, five KC-45s and one A330-200F are expected.
Air Force Secretary Michael Wynne told senators that the winner met the performance requirements “across the spectrum.” Boeing’s plan was “a little more risky,” and Northrop Grumman/EADS offered a better price, Wynne said. “The Northrop Grumman airplane was clearly a better performer,” he remarked...
Sources familiar with the proposals say Boeing foundered in all five evaluation criteria outlined by the U.S. Air Force for the competition: Mission capability (including meeting system requirements and program management), proposal risk, past performance, cost and an assessment of each refueler’s performance in various classified operational scenarios...
The Air Force’s request for proposals (RFP), however, opened the door to cargo and passenger carriage, a parameter Boeing downplayed. The Northrop/EADS A330’s longer range and larger cargo and passenger capacity was attractive to the Air Force in light of its fourth key performance parameter, airlift capability. That is an indication of the shift from short-haul missions suppporting the war on terrorism to overflying vast expanses in the Pacific (see p. 24). One analyst notes that the Air Force was shopping for a Ford Explorer, but wound up selecting a Land Rover for the same price...'
An editorial:
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'The EADS/Northrop Grumman Candidate Won on Merit
03/10/2008 , page 58
Political footballs come in all shapes and sizes. The one being tossed around the aerospace/defense playing field of late by select members of Congress and some industry players happens to have wings and a refueling boom sticking out of its tail. And like most political footballs, this one has the same look and feel of self-indulgence and self-aggrandizement.
From the moment the U.S. Air Force announced it had selected an EADS design and the Northrop Grumman-led team over Boeing for its new KC-45 refueling tanker, some lawmakers have been in an uproar, going so far as to issue veiled threats. Rep. Steven Rothman (D-N.J.) has suggested Congress could overturn the tanker decision, even if no laws were broken, if Congress deemed the Air Force simply had made the wrong decision. Rep. Norman Dicks (D-Wash.) has accused the Air Force of “bait-and-switch” tactics. Not to be outdone, Rep. John Murtha (D-Pa.), chairman of the House Appropriations Committee’s defense panel, has reminded the Air Force that “all this committee has to do is stop the money, and [the tanker] program] stops moving forward.” Murtha also has noted that this is hardly the time to be awarding such a large-dollar program to a European-led industrial team—it has a potential value of $100 billion—when the U.S. economy is in a downturn. And, he has pointed out, there’s the potential harm to the U.S. defense industrial base...
Congress pays the bills, but it’s the war-fighter who has the best handle on what’s needed to carry out his mission. This concept seems to have been conveniently overlooked in all the political bombast and emotional fervor of the EADS/Northrop Grumman award. As far as we’ve been able to determine, the basis for the selection of the Airbus A330-derived candidate over the Boeing 767 design was which competitor best met the requirement for a new refueling tanker—not appeasing a bunch of politicians...
...The EADS/Northrop Grumman candidate won on merit, based on mission capability, as well as proposal risk, past performance, and cost and price.
That may be a tough pill for Boeing to swallow, but that’s the cold reality. That Congress or anyone else would focus on such secondary issues as jobs, the economy or even Europe’s support of the U.S. in Iraq and Afghanistan—as Murtha and some others have done—is a disservice to the Air Force and its ability to support warfighters.
The KC-45 is not about the economy, and it’s not a jobs program. It’s about the Air Force’s requirement to replace its decades-old tankers as quickly as possible...'
And that's the way the Canadian government should buy military equipment. It took the Conservative government two years to sign a contract for C-130Js.
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Why? Largely, I believe, in order to negotiate the "industrial benefits", i.e. pork.
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Mark
Ottawa
Like Damian, I found the lack of chronological order really hurt the book. There didn't seem to be an over-arching theme or focus. It's a bunch of very interesting (although at times superficial) stories put together in a slapdash manner.
Posted at 2008-03-09 13:30:10 [PermaLink]Boeing workers are now organizing to oppose McCain, because he didn't favor Boeing for the tanker deal. Shades of Bombardier.
Protectionism is going to be an issue in this election, and I am not sure that it favors McCain. As McCain himself pointed out, there is something a bit ironic about the Democrats preaching multilateralism, while they favor policies that can only worsen relations with their allies.
An earlier book by Mr Newhouse that I enjoyed greatly:
"The Sporty Game: The High-Risk Competitive Business of Making and Selling Commercial Airliners"
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A review:
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Mark
Ottawa