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F-35 in – Special ops out as part of US forces realignment in UK and Europe

January 8, 2015 by · Comment
Filed under: Syndicated Industry News 

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Bundling Israel Paves Way for Pentagon Sale of Strike Weapons to Saudi-Arabia, UAE

JSOW-f16300A multi-billion arms deal offered by the US to key Middle-East allies bundles advanced fighter planes, strike weapons, radars and special mission aircraft, sold separately to Israel, Saudi Arabia and the UAE. Convinces the UAE to increase the number...

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Boeing May Not Work on KC-46A in Kansas

Update – It has been reported that Boeing has called a mandatory meeting of all its Wichita employees tomorrow. It is also been reported that part of the new contract with the Machinists requires the KC-46A work to be done in Washington if the Wichita site closes.

Previously Boeing (BA) has done a great deal of their work on military and government aircraft at their facility in Wichita, KS. This has included the VC-25 Air Force One version of the 747, the KC-135 tankers and the E-4A command and control aircraft. It was assumed, especially by the Kansas Congressional delegation, that much of the work on the new KC-46A tanker would also be done at the facility.

Now word is leaking out that Boeing is planning on doing all of the necessary tanker effort at their main facility in Everett, WA. The 767 that will be converted to the tankers will be assembled there but rather then being militarized in Wichita they will remain in Washington. This, understandably, has roiled the media, the workers in Kansas and various Senators and Congressmen.

They feel that their support for Boeing to win the contract is now wasted as rather then seeing more work Boeing could be eliminating jobs and laying people off in Kansas.

Boeing has stated that until they understand fully the effects of changes in the U.S. defense budget that they won’t commit to announcing anything about the Wichita plant and their overall work structure. This may not be until later this year. It had been estimated that over 7,000 jobs will be created by the KC-46A militarization and support efforts with the idea that those jobs would be in Kansas. Now that is not guaranteed.

This may be an effect of the new contract Boeing signed with their main union that allowed them to successfully get the U.S. government to drop action against the company for opening a new facility in South Carolina. The National Labor Relations Board (NLRB) had filed a complaint against the company stating that the only reason Boeing expanded to South Carolina was to retaliate against unions in Washington. This was dropped after the company signed a new deal with the union that promised to keep a great deal of jobs in the Northwest.

Boeing intends to use the South Carolina facility to support commercial 787 production.

If the company does not send KC-46A work to Wichita it will cause severe problems with its relations to that state’s Congressional delegation which has in the past been very supportive of Boeing. The next few months could be very interesting for the company, the U.S. aerospace industry and Kansas.

Air Force Continues Commitment to KC-46A

At a recent conference the Air Force Secretary, Mr. Michael Donley, discussed the key programs for the Air Force’s future. Facing a declining budget situation the Air Force as all of the services may be forced to choose which investments have a higher priorities then others. Not surprisingly the keys for the Air Force will be the F-35, Unmanned Aerial Vehicles (UAV), space and the KC-46A tanker.

The KC-46A currently being developed by Boeing (BA) will go into service later this decade to replace the aging KC-135 fleet. In terms of total cost it is one of the largest current defense programs. If the Air Force follows through with the first 170 odd aircraft the cost will be about $35 billion. There are plans to buy another 300 or more.

If there are as significant reductions to the defense budget as being discussed then the KC-46A like so many other programs may see quantities cut. This could be either the total procured or the annual buys. It could also see it being maintained at the expense of other investment programs such as new UAV or space programs.

Tankers are a key force multiplier for the United States. Declining amounts of strike assets increase the reliance on the tanker fleet. The need for the KC-46A is well established and it is a program now that the commitment to Boeing has been made that the U.S. really cannot afford to reduce. Whether this holds true remains to be seen.

Reports that KC-46 Contract Already Showing Cost Growth

Bloomberg is reporting that the U.S. Air Force has been briefing Congress in preparation for the FY12 budget that the KC-46 tanker contract with Boeing (BA) is already showing growth beyond the initial award price. The first part of the program is for development and testing as well as the delivery of the first 18 aircraft.

The value awarded was $4.9 billion but the indications are that it will be at least $300 million more. The way the contract is structured Boeing will have to cover that cost increase themselves. Boeing, though, seems confident that when all is complete the contract will be executed for close to the $3.9 billion and will not cost the company.

Boeing was awarded the contract in February for the new tanker program. The Air Force plans this as the first phase of a new program that could buy several hundred new tankers to replace the KC-135 and KC-10 fleet currently supporting operations. Boeing will ultimately build over 150 of the KC-46 tanker based on their commercial 767 airliner design. Boeing has also sold 767 based tankers to Italy and Japan with Italy just taking possession of their first aircraft.

The current estimate though of about a six percent cost increase is not a good sign for a program just starting which is going to be held to strict cost standards. One of the major reasons that Boeing won was their much lower price then their competition from Europen aerospace giant EADS (EADS:P) U.S. subsidiary, EADS North America. Their proposal based on the KC-30 tanker ordered by Australia and the U.A.E. was more expensive but was a larger aircraft that could carry more fuel. Further cost growth will only bring more scrutiny and criticism from Congress.

This was the third attempt by the Air Force to award the new tanker contract since 2001. An attempt to award a sole source lease to Boeing was derailed by fraudulent activity by Air Force acquisition chief Darleen Druyun and Boeing’s CFO. In 2008 EADS teamed with Northrop Grumman (NOC) won a contest that was overturned on protest by Boeing. This latest contract is the result of the new competition held due to Boeing’s successful protest.

Reports Final Proposals Due Next Week for KC-X

Both Boeing (BA) and EADS NA (EADS:P) have met with the U.S. Air Force reportedly to discuss final changes to the KC-X RFP. The companies have until 11 February to submit their final revisions to their proposed solutions to the new aerial tanking requirement.

Boeing has said that they will update their proposal although EADS NA has said they may not. Swirling around all of this final burst of activity is the concerns by some in Congress, the media and at the bidders about the accidental release of information by the U.S. Air Force to each team as well as the two World Trade Organizations (WTO) rulings on both companies receiving illegal subsidies.

Some Boeing supporters in Congress are now saying that the data release gives EADS an advantage and that there should be deeper investigations. The Air Force “reassigned” two personnel as punishment and Congress did have hearings last week about the matter. Washington state, Illinois and Kansas legislators all from states that stand to gain work if Boeing wins sent a letter to the DOD IG asking them to look to see if the data released skewed the contest in EADS’ favor.

All of these conditions make it seem inevitable that there will be a protest to the contract award no matter who wins it. There will also be political pressure from supporters of both companies to review the contract and make sure that there favored winner was not treated unfairly.

All this adds up to further delays in replacing the KC-135 systems made during the Cold War. Once again this problem has been created by the disappearance from the U.S. industrial base of multiple suppliers of large aircraft. Currently only Boeing and EADS make aircraft acceptable to the Air Force to meet this requirement. If there is to be even a modicum of competition the two have to be involved which leads us to the current ugly situation of charges and counter charges of favoritism, jingoism and bias.

This will probably be the biggest contract awarded for the next decade by the Defense Department and is critical to both companies maintaining a foothold in the large military aircraft business worldwide which is leading us to the current situation which does not seem like it will end well.

Rumors Percolate of a February Award for KC-X

There are starting to be media reports that indicate the U.S. Air Force will announce the winner of the KC-X aerial tanker contract in February of this year. The decision had been planned before the end of 2010 but due to delays in reviewing the proposals and the inadvertent slip up of sending the competition’s information to the two bidders it has now moved to 2011.

In a recent presenstion the Secretary of the Air Force, Michael Donley, said that Senate hearings into the information mess may be limited due to the current source selection process. To some this indicates the Air Force does not want the hearing near the decision announcement. The award and potential protest would also constrain what information could be given to the Senate and discussed at the hearing.

Sean O’Keefe, EADS North America’s CEO, also recently said that he expects the award soon. He believes best and final offers will be submitted before January 31st and then the Air Force decision in February.

This will be the third attempt to buy a replacement for the KC-135 aircraft since 2001. The Air Force, Boeing (BA) and EADS (EADS:P) all hope that it will be the last and final try.

There is a good chance no matter who wins the award that there will be a protest. The 35 billion plus contract for these aircraft is the biggest military aviation contract right now. It is critical to both companies aircraft production plans and would give them a significant advantage in future tanker competitions world wide.

Air Force Keeps Paying to Keep KC-135 Tankers Flying

As the U.S. Air Force and Defense Department works towards awarding the new KC-X aerial tanker contract they still must maintain and operate the existing Cold War era KC-135 aircraft. As the attempt to buy a new aircraft undergoes its third attempt and enters its tenth year the KC-135 and KC-10 fleet supports U.S. combat operations across the globe.

These aircraft require their regular maintenance and modification which means the Air Force has to pay for new parts as well as for the servicing.

Aerospace Products S.E. in a sign that the KC-X won’t be arriving any time in the near future received a multi-year contract to provide hardware and fasteners for the KC-135. The company also works to manage aspects of the parts pool and supply chain for the aircraft. No value for the contract was given.

Boeing (BA) who were the original manufacturer of the KC-135 also recently was awarded a contract to provide technical engineering support for the program. Working at Tinker AFB the location of the Program Manager for the aircraft the contract requires Boeing to provide analysis, modification support and support to the maintenance facility at Tinker as well as support accident

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Loren Thompson Predicts EADS Win

The well known aerospace analyst writes that based on discussions he has had it looks good for EADS North America to win the current KC-X new aerial tanker competition. He believes that the information accidentally shared by the U.S. Air Force with EADS and its U.S. competitor, Boeing (BA), indicate that the analysis by the source selection board favors EADS A330 MTT based bid.

EADS did win the contest two years ago teamed with Northrop Grumman (NOC) only to have it overturned on protest by Boeing. The Government Accountability Office (GAO) ruled that the Air Force had not applied its own criteria properly in evaluating those bids.

This time around EADS bid by itself and proposed basically the same aircraft. Boeing bid a modified version of their 767 tanker incorporating parts of the new 787 cockpit and other improvements.

Last month the Air Force had to admit it sent information to the two bidders about the others after mixing up the CD’s with data.

In Thompson’s analysis the data showed the Air Force favoring the EADS aircraft. Of course Boeing will have a chance to protest if they really do lose this contract.

In another piece of this very complicated puzzle this latest development may have serious affects on the latest attempt to replace the KC-135 Cold War era tankers.

Can U.S. Aerospace and Antonov Win?

The KC-X new aerial tanker program Request for Proposals (RFP) attracted a third bid this time around. U.S. Aerospace submitted one based on the Ukrainian made Antonov transport. The question that immediately comes to mind is can this team win, or will it be Boeing (BA) or EADS (EADS:P)?

Realistically the chances of this bid being selected are low. The companies had asked for a sixty day extension to work on their proposal. The Air Force already slipping the contract deadline one month to accommodate EADS refused the further two month slip. This would have pushed award into 2011 with the current planned date of mid-November this year already late enough. The U.S. has been trying to get a replacement tanker for the aging KC-135 since 2001.

U.S. Aerospace and its partner obviously felt their proposal could be improved with the extra two months but did go ahead an turn one in that they feel meets all of the Air Force requirements. At the same time in a recent filing with the Securities and Exchange Commission (SEC) U.S. Aerospace makes clear that the Air Force could easily reject them.

The company writes “For any or all of these reasons, the Air Force may not select our bid, may disqualify our bid, or may refuse to consider it on the merits, or at all,” based on myriad factors. These include not meeting requirements, not having qualified sub-contractors, not having necessary facilities or capabilities and even missing the deadline. They didn’t do that turning one in on time.

Of course all of this could be standard “Forward Looking Statements” meant to make clear to anyone investing in their stock that they are being conservative in their estimates. The stock was trading at 18 cents at the close on Friday.

Certainly they have offered a cost effective approach. The Air Force must consider if it meets their requirements and they have the ability to produce the systems to the necessary schedule. Certainly stranger things have happened in defense contracting.

SecDef Steps Up for EADS

The Secretary of Defense Robert Gates made clear that the Defense Department and the Air Force want some competition for the KC-X aerial tanker program. This is going to have to include EADS (EADS:P) against Boeing (BA) due to the requirements of the program. Gates stressed disappointment with those in Congress attempting to prevent U.S. companies working with EADS on their bid.

If there is going to be any competition for the third attempt to buy a replacement for the aging KC-135 aircraft it will have to include EADS. The only other potentially viable contender would be a Russian aircraft either based on the Ilyushin IL-78 Midas system or perhaps on the IL-96 wide body airliner. Having a Russian competitor would make the contest even more difficult then just one with EADS.

Analysis: EADS Participating In KC-X Contest

This is an article I wrote at BNET: Government about EADS decision to submit a proposal.

“The decade-long saga to replace the KC-X aerial tanker contract begins a new chapter. The European aerospace giant EADS (EADS: P) and Airbus, its subsidiary, announced that it will definitely submit a contract proposal to the Air Force. The program will replace the aging Cold War KC-135 tankers (pictured).

Boeing (BA) thought it had won the contract for at least 179 new aircraft earlier this year when Northrop Grumman (NOC) who had bid in partnership with EADS withdrew from the bidding. Then, earlier this month, the Pentagon agreed to extend the deadline, at EADS’ request, to allow it time to submit a new bid.”

Read the rest at BNET.

EADS Believes Established A330 Program Will Offset Possible Cost Disadvantages

In an article at the Seattle Times, Dominic Gates writes that EADS (EADS:P) is planning on offsetting some of their cost disadvantages related to the bigger aircraft and establishing a new production facility with less development. The aircraft they will offer again for the KC-X program is a modified version of the A330 MRTT already planned for Australia, Great Britain, UAE and Saudi Arabia.

The aircraft is a little behind schedule but is in test flights and will deploy the first of five aircraft to Australia this year. The U.K. ones are slated for 2011 and the two oil states will get there aircraft soon after. There will have to be some modifications to the A330 to meet U.S. Air Force needs but they should be minor. EADS feels that Boeing (BA) will have to spend more money to get their 767 based tanker ready as it does incorporate the 787 cockpit and parts of other 767 models. This means that it is not identical to the 767 tankers ordered by Japan and Italy. Japan has received three of their four aircraft while Italy has seen developmental delays and has not received any.

It is expected that the A330 will cost more to manufacture due to its size and the shipping involved to send the components to the U.S. from overseas. The bigger aircraft while capable of carrying more fuel and having a longer range then the 767 will cost more to operate and may require infrastructure investment as it is much larger then the KC-135 tankers being replaced.

Once the proposals are in it will be seen if EADS can do their pricing correctly.

Hopes High That This Try Is The End Of The KC-X Contest

Over at BNET: Government where I also publish I have a piece on how this third try will be the winning one for the Air Force and Defense Department to get a new aircraft to replace the aging KC-135 fleet. There still remain many challenges with the contest as Northrop may not bid and Boeing has expressed concerns with the fixed price portion of the contract.

It will be an interesting next few months as this is all worked out. Next deadline is May 10th when proposals are due.

Two Tanker Buy Pushed Again

The Mayor of Mobile, AL was recently on Capitol Hill raising the issue of buying the new KC-X tanker from both Boeing (BA) and Northrop Grumman (NOC). Northrop and its partner EADS (EADS:P) plan to assemble the A330 aircraft in Mobile and then fit them out with the necessary equipment at a Northrop plant. The idea of awarding contracts to both companies has been discussed before. The primary benefit besides avoiding a protest and delaying the program again would be to more quickly replace the KC-135 aircraft.

The U.S.A.F. and Defense Department have not been positive about this idea in the past due to the larger, more expensive logistics tail required to support two dissimilar systems. During World War II and the Cold War the U.S. often did invest in multiple systems for a mission often operated by separate services. The U.S. military has not had the resources to afford this kind of commitment.

The new RFP is expected to be released within a matter of weeks. For the Air Force to do a dual award it would require development and approval of a whole new acquisition strategy. This would lead to even further delays in this contract. The chances of buying the two aircraft in the next year or so are very slight.

Northrop And EADS Wait On Final RFP Release

The KC-X Tanker RFP is expected to be released in the next few weeks. Previously Notthrop and its partner EADS had threatened not to participate as they felt the draft RFP was biased in favor of Boeing. Now they are saying they will wait and see what is in the RFP when it is put out. It is in the best interest of the Air Force and the U.S. Government to receive multiple bids on the project.

Without competition the chance of this third attempt proceeding will be difficult. Sole sourcing the contract to either Boeing or the Northrop team will cause an outcry in Congress no matter what as both companies have their supporters. Not putting out a competitive RFP will only lead to protests and further delays in what has become a critical program to replace the aging KC-135 aircraft.

We are all going to have to wait to see what the Air Force puts out and how Northrop, EADS and Boeing respond to it.

Analysis Stresses Increased Cost To Air Force Of A330 Due To Size

October 22, 2009 by · Comment
Filed under: KC-X, KC-X Tanker News, Syndicated Industry News 

This analysis at The Gehrson-Lehamn Group stresses that the Northrop Grumman/EADS A330 based tanker proposal will be more expensive then the Boeing 767 one due to the larger size of the aircraft and the requirements for investments in infrastructure to support it. The conclusion is that the 767 aircraft is currently closer in size to the existing KC-135 fleet and the existing Air Force bases, runways and facilities will support it with little or no modifications.

Boeing’s United States Tanker: Always Remember the Customer

A key part of building a good proposal and running a smart acquisition campaign is to always remember the customer. That's not very tough on KC-X. We see the U.S. Air Force working very hard to fly and maintain their current fleet of KC-135 air refueling tankers each day and realize they must have a new tanker as soon as possible. I just read a posting in Air Force Magazine's Daily Report eNewsletter ("Afghan Surge Prompts Mobility Records") describing the service's record breaking efforts in Afghanistan that tells it all. According to the story, USAF mobility forces have set records for cargo airdropped (4.1 million pounds in September). On the tanker side, approximately 80 million pounds of fuel was offloaded last month compared to 60 million pounds way back in February. For those of you who have served in the Air Mobility Command, this type of surge is not new but still very impressive. Whether it's the planners at the Tanker Airlift Control Center managing the global movement of aircraft or the aircrews and maintainers keeping it all on schedule despite some difficult challenges, it is very clear how important the U.S. Air Force is to keeping America safe and projecting our nation's reach. Read more at United States Tanker

DoD Early Estimates Two Tankers Have High Costs

October 20, 2009 by · Comment
Filed under: KC-X, KC-X Tanker News, U.S. Air Force 
Prior to the release of the latest RFP for the KC-X tanker program some in Congress and the media mooted using a split award for the aircraft. This would allow for faster fielding of tankers to expedite replacement of the older KC-135’s. It would also possibly reduce the chance of a protest by either Northrop or Boeing as well as spreading the contract around to different states. The biggest issue with the idea is that it would add cost to the program. Through the necessity of having two separate support tails the overall program would be more expensive. There would be two training tracks, sets of support equipment and parts pools alone. The aircraft also may not be complimentary. The DoD estimated back in April that the total additional cost would be over $14 billion. Obviously neither the Air Force or the U.S. Government has this kind of money available to support the idea. It would have to be payed for at the expense of other Air Force or DoD programs. It may be that cost estimates with more refinement are created that reduce this, but right now the plan is one company and one aircraft.

Air National Guard To Have Role With KC-X

October 19, 2009 by · Comment
Filed under: Syndicated Industry News 

Since 9/11 the U.S. military has moved to integrate even more their National Guard and Reserve Forces. They have been called up at high rates and have received more and upgraded equipment. Currently the Air National Guard of various states like Alabama fly KC-135 tankers. If the full fleet of KC-X aircraft are built then some of the states will receive these new tankers. Recently it was announced that the Air National Guard will provide participation on the KC-X source selection. This is most likely to help make sure that any specific requirements of the Air Guard are considered and is not common with programs of this size.

Just Ask The Question

October 16, 2009 by · Comment
Filed under: Syndicated Industry News 

One of the main reasons we created UnitedStatesTanker.com and this blog was to provide some insight into a very critical acquisition effort to replace America's air refueling tanker fleet.

For those who've been following that newly-started KC-X competition, you know the U.S. Air Force released their draft Request for Proposal (RFP) Sept. 25. This document goes into detail about the 373 requirements that must be met to participate in the competition. It also describes how proposals will be scored and even what happens in case of a tie. Our United States Tanker team has spent a great deal of time studying the draft RFP. Remember this is the main document we'll be using to decide which member of our KC-7A7 'family of tankers' to offer, or whether to offer both.

But we can't just make decisions on what's written in the document alone. Our main focus as we drive toward some key internal decisions is clarity. We must clearly understand how the service's requirements are defined and prioritized, and how our proposal will be evaluated.

So how do we get those answers? Simple...just ask.

Any company seeking to compete to build the replacement for the KC-135 Stratotanker fleet can submit questions to the KC-X Tanker Program Office at Wright-Patterson Air Force Base, Dayton, Ohio, and have them answered online at the Federal Business Opportunities website.

We began submitting questions earlier this month and look forward to seeing the answers posted on the public website soon. While some of that Q&A may be administrative in nature, you might gain some interesting insight into how the process works by checking out the site. Feel free to tell us what you'd ask.

M7 gets KC-135 work

Because of  the ongoing struggle with the KC-45 contract, the KC-135 tanker still has to fly.  Boeing is the prime support contractor for an aircraft they originally built 50 years ago.  They awarded M7 a subcontract to build spoilers for the aircraft.  M7 has been supporting Boeing with parts since 2005.  This contracts illustrates how diverse the business is with the big companies paying lots of little companies to make parts at a cheaper price then they could.

The story is at The San Antonio Business Journal site.

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Boeing reported as submitting last KC-X proposal

Reported here that Boeing submitted their latest, and last, proposal for the KC-X tanker requirement. Boeing had proposed a 767 based solution in the past, but had also mooted a 777 version as well. Competition comes from Airbus, which submitted a variant of the A340 for this RFP. The tanker replacement program has been controversial since 2002, when originally the Air Force planned to just lease 100 or so 767’s to replace the aging KC-135. That idea was rejected by Congress and led to the current competition.

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