Boeing Can’t Be Seen As Taking Advantage Of Being Sole Bidder
Filed under: Boeing, EADS, K-CX News, KC-X, KC-X Tanker News, Syndicated Industry News, northrop grumman
Now, that Boeing is the only bidder on the KC-X, the Seattle Times notes that Boeing now has to make sure that it is not seen as taking advantage of being the sole bidder:
Northrop Grumman walked away from the $40 billion Air Force refueling-tanker competition Monday, drawing a widely criticized and nearly decadelong procurement process close to an outright Boeing victory.
With the likely prospect of air tankers rolling out of Everett until around 2027 at least, the outcome could secure as many as 2,000 direct jobs in Everett and an additional 6,000 statewide at suppliers and others, according to previous Boeing estimates.
Yet Northrop’s withdrawal leaves Boeing with a pricing dilemma as it prepares a final bid. The Pentagon, embarrassed by the lack of competition, now will be under extra scrutiny over what it pays for its tankers.
On one hand, because the contract is a fixed price — meaning the winner must swallow the loss if program costs escalate beyond the price it bids — Boeing typically would be expected to aim high, especially with no competition.
At the same time, Boeing will want to avoid the appearance that it is taking advantage of Northrop’s withdrawal to jack up the price.
“This competition was supposed to be a model for future procurement,” said Issaquah-based aviation analyst Scott Hamilton of Leeham.net. “It’s clear the Department of Defense fell short again in running a procurement process that works.”
The contract is to supply the Air Force with 179 tankers used to refuel fighter, transport and bomber aircraft en route to their targets.
Northrop had teamed with EADS, parent of European planemaker Airbus, to offer a tanker based on the Airbus A330.
In 2008, the Defense Department cited a rough contract value of $35 billion, or about $196 million per airplane, plus an extra $5 billion in operational support and other costs.
Certainly, the rivalry in the previous round of the tanker competition between the Boeing 767 and the A330 drastically reduced the cost to the taxpayer.
Read the entire article at the Seattle Times.
Boeing To Continue Support Of The C-17
Filed under: Boeing, Business Line, Companies, Contract Awards, Department of Defense, Events, Federal Budget Process, Military Aviation, Services, U.S. Air Force, logistics
Even though the Obama Administration has decided to end production of the C-17 transport aircraft Boeing is still able to make money through modifying and supporting the aircraft. In fact the U.S. Air Force just awarded a contract worth over a billion dollars to the company to do just that. The Air Force provides its own mechanics and has depots but will rely on Boeing for further support including parts, support, logistics management as well as some depot level maintenance.
This is fairly common type of contract to support a system that is utilizing organic military support. If the C-17 used Contractor Logistics Support (CLS) then the contract value would be much higher but the Air Force would not carry the burden of providing mechanics, training and parts.
There is no guarantee that a system’s manufacturer will get this work as there exist plenty of third party companies capable of doing it. The Air Force has the right to choose which ever company makes the best bid. This is more often true after completion of production and fielding. Either way this continues to keep revenue going to Boeing from an existing program in what is looking a like a rough year for the company.
EADS Sells More A330 Tankers To Saudi Arabia
Filed under: Australia, Boeing, Business Line, Companies, Congress, Contract Additions, Countries, Department of Defense, EADS, England, Events, Japan, Military Aviation, Northrop Grumman Corp., Services, U.S. Air Force, UAE, United States, commercial aviation, development program, logistics, production program
EADS announced today that Saudi Arabia had doubled their order for aerial tankers by buying three more A330 MRT aircraft. This means that the Kingdom will now have six of the advanced tankers. They along with the U.K., Australia and the U.A.E. have ordered the aircraft. As part of the buy of the new aircraft Saudi Arabia has ordered logistic and parts support for the tankers although no contract value was announced.
The big contract for military refueling aircraft is the new tanker for the United States Air Force (USAF). EADS and Northorp Grumman had won the contract for the KC-X last year only to see it overturned on a Boeing protest. Now the new Obama Administration and the USAF will try again with a completely new RFP. That contract would be for over one hundred aircraft and would dwarf previous orders. There is still discussion of possibly splitting the contract between the two suppliers with a goal of maximizing the number of aircraft delivered in a short time. The USAF and Defense Department are against that as the two aircraft would require their own substantial support tail of parts, maintenance and training which would be quite expensive.
The A330 is a bigger aircraft then the 767 proposed by Boeing last time but requires larger airfields and more gas to fly a comparable mission. The bigger aircraft can carry more fuel for other aircraft so there has to be a balance struck there. It is definitely conceivable that the loser of the next contract will protest anyway so there may be further delays to the acquisition of the greatly needed capability.
Army Buys Cargo Parachutes
Filed under: BRS, Business Line, Companies, Contract Awards, Events, Services, U.S. Army, logistics, production program
The U.S. Army awarded Ballistic Recovery Systems (BRS) a contract to manufacture twelve hundred cargo parachutes. The $4.1 million contract has an option to for a further fifteen hundred which would make the contract value over $9 million. MSNBC has the press release from the company. BRS has invested recently in staff to help it win such contracts. A few weeks ago they won one from the Air Force. This contract will also allow them to increase the staff at their manufacturing plant in North Carolina. The Army still has the ability to deliver the troops of the 82nd Airborne Division and supporting supplies and equipment by parachute and seems like it will continue to invest in this capability.
UAE to Buy AMRAAM from Raytheon
Filed under: Business Line, Companies, Contract Awards, Countries, Events, Military Aviation, Raytheon, UAE, production program
Raytheon announced that they had signed a contract with the UAE to provide advanced AIM-120 AMRAAM air-to-air missiles for the nation’s F-16 fleet. Reuters reports that the contract is for over two hundred of the missiles. No contract value was given but it is substantial as the AMRAAM is a fairly expensive system. Deliveries are expected to begin in the 2011 time frame. Over the last five years the UAE has invested heavily in upgrading the capabilities of their armed forces. Most recently they have invested over three billion dollars into missile and air defense capability with the purchase of PATRIOT and THAAD systems from the U.S.
Britain signs CV contract
Filed under: Contract Awards, England, Scotland, VT Group, production program
The British Ministry of Defense signed the contract with the VT Group to build the two new aircraft carriers for the Royal Navy. See an article here. Previous reports had the Scottish government worried that Britain might renege on the deal due to differences with the emerging nationalistic mood in Scotland. See a post here. The total contract value is about $7.5 B with as always with these kind of programs the chance to go higher.
More USMC MRAP contracts
Filed under: Contract Awards, Navistar, U.S. Marine Corps, U.S. Navy, logistics, production program
According to this article Navistar International was awarded a contract by the US Navy to provide maintenance support for USMC MRAP vehicles. This contract is to provide parts and most likely Contractor Logistics Support (CLS) for the many vehicles that are being used in Iraq and Afghanistan. The contract value is over $700 M. It again illustrates that modern systems are not only expensive to procure but to maintain which opens up a whole new venue to defense contractors.
DARPA awards contract for development of advanced detection equipment
In a contract award not directly related to the SAIC one below, DAPRA awarded Bioident a contract to develop printed circuit board sensors. See an article here. The goal is to utilize Biodent’s process for making sheets with semiconductor material on them to reduce the size of sensors by incorporating the read out device on the board. Currently larger optical systems are used. No contract value was given, but it continues to demonstrate the amount of R&D the US is doing in such areas.
iRobot Receives Order from the U.S. Army for $35.3 Million
Filed under: Syndicated Industry News
iRobot Announces $6.1 Million Order from the U.S. Army for Robot Spares
Filed under: Syndicated Industry News
CORRECTING and REPLACING KBR Selected for Security Worldwide Environmental Restoration and Construction 2009 Contract by U.S. Air Force Center for Engineering and the Environment
Filed under: Syndicated Industry News
VSE Awarded Second Task Order to Manage and Operate TACOM/TARDEC Corrosion Prevention and Control Program
Filed under: Syndicated Industry News
Tetra Tech Awarded Design-Build Contract with the U.S. Navy
Filed under: Syndicated Industry News
Morpho Detection Wins TSA Contract for Next-Gen Itemiser® DX Desktop Explosives Detection Systems
Filed under: Syndicated Industry News
Tel-Instrument (“TIK”) Announces New Army IDIQ Contract for the T-47N Test Set with a $600,000 Initial Delivery Order
Filed under: Syndicated Industry News
L-3 Awarded Naval Systems Engineering and Technical Services Contract
Filed under: Syndicated Industry News
L-3 Awarded F-16 Mission Training Center Contract Option
Filed under: Syndicated Industry News
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