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KC-46A Program Moving Forward

The Air Force and Boeing (BA) have been working hard on the KC-46A contract since its award. There have been some major developments including Boeing’s decision to move most of the work to Washington with plans to close their Wichita, KS military aircraft facility.

At the same time there is progress being made. Boeing has opened one of five simulation laboratories (SIL). This one is in Washington and will focus on avionics and software development. The use of the SIL will aid in risk reduction and program development.

There has also begun discussions of possible basing sites across the U.S. The first one chosen will be for crew conversion and training but ultimately the 767 based tanker will have several operational bases as well as flying from overseas locations such as Guam.

Bases also will be selected depending on how many aircraft the National Guard will operate. Already states like Vermont, Maine and Kansas are talking about being used.

“Burlington mentioned as basing possibility for new Air Force tanker” — Burlington Free Press

“McConnell awaiting decision on home for Air Force tankers” — The Wichita Eagle

“Military brass, state delegates christen new hangar for MAINEiacs” — Bangor Daily News

Pratt & Whitney and Boeing Representatives Sign Engine Contract to Power U.S. Air Force’s KC-46 Tanker — Press Release

MUKILTEO, Wash., March 27, 2012 /PRNewswire/ — Bennett Croswell, president of Pratt & Whitney’s Military Engines division, and Maureen Dougherty, Boeing vice president and program manager, KC-46 Tanker Program, hosted a ceremonial engine contract signing event today at Boeing’s Tanker Program Office in Mukilteo, Wash., for contracts previously awarded to Pratt & Whitney. The contracts support PW4062 engine purchases to power Boeing’s KC-46, the U.S. Air Force’s new airlift tanker. Pratt & Whitney is a United Technologies Corp. (NYSE: UTX) company.

“The PW4000 engine family that will power these aircraft has an exceptional track record of performance and reliability with numerous commercial customers operating the engine globally,” said Croswell. “We are confident these engines will continue to perform exceptionally well in a military application for Boeing and for our ultimate customer, the men and women in uniform.”

Two Pratt & Whitney PW4062 engines, each with a 94-inch fan blade diameter, will exclusively power each U.S. Air Force KC-46 aircraft. The program’s scope, if fully exercised, calls for as many as 368 PW4062 engines to be delivered between 2013 and 2027. Actual production engine procurement quantities will be determined over the life of the program as established by future purchase orders.

“Pratt & Whitney’s PW4062 engine offers the KC-46 program an engine that has proven performance, fuel economy, and durability – qualities that make it the clear choice to power the KC-46 Tanker,” said Dougherty. “These engines bring tremendous capability to the KC-46, which supports superior multi-role mission performance by delivering more fuel, transporting more passengers and cargo, and offering enhanced aeromedical capabilities to our United States Air Force customer.”

Pratt & Whitney has delivered more than 2,500 PW4000-94″ engines that have collectively logged nearly 110 million flight hours on commercial aircraft around the world. The PW4062 is the highest thrust model in Pratt & Whitney’s PW4000-94″ commercial engine family and is offered for both commercial freighter and military tanker applications. The two PW4062 engines that will power the KC-46 each deliver 62,000 pounds of thrust.

The PW4000 engine family has an outstanding safety record, high reliability, excellent performance and low maintenance costs. The PW4000-94″ family meets emissions and noise regulations, and offers superior fuel economy and maintainability. The PW4000-94″ engine operates commercially on the Boeing 767, MD-11 and earlier Boeing 747 models.

Pratt & Whitney is a world leader in the design, manufacture and service of aircraft engines, space propulsion systems and industrial gas turbines. United Technologies, based in Hartford, Conn., is a diversified company providing high technology products and services to the global aerospace and building industries.

This press release contains forward-looking statements concerning future business opportunities. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to changes in government procurement priorities and practices, budget plans and availability of funding, and in the number of aircraft to be built; challenges in the design, development, production and support of advanced technologies; as well as other risks and uncertainties, including but not limited to those detailed from time to time in the companies’ Securities and Exchange Commission filings.

GAO Expresses Concerns with KC-46A Development

The Government Accountability Office (GAO) released a report on the KC-46A new aerial tanker program and expressed some concerns with the schedule. Boeing (BA) won the contract to develop a version of their 767 airliner and deliver 17 aircraft after a long struggle with EADS (EADS:P).

GAO is worried that some of the software that is being developed to control the mission planning, defense and routing of the aircraft is being done at the same time as production and testing. GAO also considers the new fuel boom operating station and control higher risk as it has yet to be demonstrated in normal operating environment and at a high maturity. Similar systems are in use on only 3 tankers operated by non-U.S. military.

The KC-46A contract as expected has had some cost increases and earlier this year the Director, Operational Test & Evaluation (D,OT&E) also expressed that the test schedule was not adequate and the program did not allow enough time for the necessary testing.

The Air Force and Boeing dispute the reports claiming the program is on track and risks manageable.

DoD Testers Express Concerns with KC-46A Schedule

One of the issues facing Boeing (BA) and the KC-46A new aerial tanker program is that it is already behind schedule. The Air Force originally planned to award a contract in 2001-2002 timeframe and have new tankers flying before 2010. The contract was not awarded until almost a decade later and the first aircraft will begin service in 2017. This was caused by three attempts to conduct the source selection with Boeing winning the third round from EADS North America, part of EADS (EADS:P).

This has meant the current initial development contract is very short. Boeing is planning on taking commercial B-767 aircraft off of their line, installing a new cockpit from the 787 as well as necessary military gear. They also need to demonstrate that the aircraft is able to meet the requirements of the Air Force and keep it all within cost as Boeing agreed to a fixed price development contract.

The Director, Operational Test & Evaluation (D,OT&E) which is an independent body within DoD responsible for evaluating programs performance as well as their overall test plans releases an annual report reviewing major defense programs and their test plans. They expressed concerns to Congress that the KC-46A is hoping to conduct a very aggressive test campaign. In their report, which may be found on their website here, they write that in their opinion “The DOT&E review of the post-Milestone B draft TEMP indicates the KC-46 test program is not executable.”

This is due for the following reasons:

 

  • The plan requires 42 hours of testing a month compared to an average of 30 on similar large aircraft military programs.
  • It assumes that only 15 percent of the tests would be repeated.  A higher repeat rate adds time to the overall testing program.
  • There is not time in the schedule to fix issues found in Developmental Testing (DT) prior to Operational Testing (OT).
  • There is not enough time allocated to test the fuel boom with Air Force and Navy aircraft.
  • The OT time is too short for the 750 flight hours planned to be flown and D,OT&E calculations estimate that 1,250 hours is the minimum required.

 

The organization recommends a new Test & Evaluation Master Plan (TEMP) be developed that includes a more realistic schedule for testing.

The Air Force, of course, disputes D,OT&E claims and believes the testing schedule is appropriate and executable. They feel that they have structured the program to support a proper OT decision and then into production and service.

The other pressure is on Boeing as an extension of the test program will cost them money. The fixed price contract has already reached a point where there is little slack or money left in it. More flight hours, more tests and more re-work will cost Boeing and reduce the potential for any profit on this contract. The Air Force recognizes this as they add in their defense of the program that they “structured the KC-46 development contract as a fixed price contract to protect the DoD and taxpayers from any cost growth on the program if the test program is not executed as planned.” So Boeing will pay for these issues if any.

D,OT&E can tend to be very conservative when it comes to these types of assessments but that does not mean they are right. One of the biggest issues affecting program development timelines is the need for more testing. Problems are discovered that were not necessarily anticipated and they take time to fix and then there is also time added to do the test again. The KC-46A is probably looking at a test program that will take some amount of time between their estimate and D,OT&E. Even if there is only a little growth it will affect Boeing’s cost and bottom line.

Recriminations in Kansas for Boeing

As can be expected with Boeing’s (BA) decision to close their Wichita, KS facility and move work to Washington and Texas the politicians who represent the state are not happy. Many Congressman and Senators who provided support to Boeing to win the KC-46A contract from the U.S. Air Force feel betrayed.

They cite the fact that Boeing executives basically promised the work would be done in Kansas if the contract was one creating thousands of jobs in that state.

The Mayor of Wichita, Carl Brewer, feels the same way. He claims Boeing has betrayed the city by their decision. Wichita has invested millions of the taxpayers money in the plant which has been open since the 1930′s and built bombers during World War II and the Cold War. Now in about 24 months it will stop work and the jobs will be eliminated or moved.

The decision by Boeing based the company claims on cost considerations alone highlight what may happen across the U.S. as the defense budget shrinks and programs are cut or eliminated. Similar scenes have happened before in the 70′s and 90′s as military spending has been reduced. Wichita may be the first of many cities this time around.

That, of course, does not make those who supported Boeing feel better but now they may join the Florida and Alabama representatives who tried to aid Northrop Grumman (NOC) and EADS North America, part of EADS (EADS:P) who worked for those companies to win the KC-X contract. The goal for them of course was investment and jobs in a time when manufacturing ones are hard to find.

As government spending is cut back there will be many other politicians crying foul.

Boeing to Close Wichita Facility

At a meeting today with its workforce Boeing (BA) announced that it will close their facility in Wichita, KS and move the work from their to Washington state. The closure will take about 2 years and lead to the elimination of over 2,000 jobs.

In their press release Boeing stated “The decision to close our Wichita facility was difficult but ultimately was based on a thorough study of the current and future market environment and our ability to remain competitive while meeting our customers’ needs with the best and most affordable solutions,” said Mark Bass, vice president and general manager for BDS’ Maintenance, Modifications & Upgrades division. “We recognize how this will affect the lives of the highly skilled men and women who work here, so we will do everything possible to assist our employees, their families and our community through this difficult transition.”

Even though the plant in Wichita is closing Boeing will still rely on Kansas suppliers for their aircraft programs.

The full press release follows:

Boeing to Close Wichita Facility by the End of 2013

– Defense budget reductions, limited opportunities for new work and competitive cost structure driving need to close facility

WICHITA, Kan., Jan. 4, 2012 /PRNewswire/ — The Boeing Company (NYSE: BA) today announced that the Boeing Defense, Space & Security (BDS) facility in Wichita will close by the end of 2013. The Wichita facility currently employs more than 2,160 employees.

“The decision to close our Wichita facility was difficult but ultimately was based on a thorough study of the current and future market environment and our ability to remain competitive while meeting our customers’ needs with the best and most affordable solutions,” said Mark Bass, vice president and general manager for BDS’ Maintenance, Modifications & Upgrades division. “We recognize how this will affect the lives of the highly skilled men and women who work here, so we will do everything possible to assist our employees, their families and our community through this difficult transition.”

Boeing Wichita is the base for the company’s Global Transport & Executive Systems business and its B-52 and 767 International Tanker programs. The facility also provides support for flight mission planning and integrated logistics.

Over the past five years, contracts in Wichita have matured, programs have come to a close or are winding down, and the site does not have enough sustainable business on the horizon to create an affordable cost structure to maintain and win new business.

“In this time of defense budget reductions, as well as shifting customer priorities, Boeing has decided to close its operations in Wichita to reduce costs, increase efficiencies, and drive competitiveness,” said Bass. “We will begin program transitions in the coming months, with the complete closure of the site scheduled for the end of 2013. We do not anticipate job reductions as a result of this decision until early in the third quarter of 2012.”

Bass said that Boeing will continue to have a significant impact on the Kansas economy and the health of the state’s aerospace industry.

“The company spent more than $3.2 billion with approximately 475 Kansas suppliers in 2011, spanning its commercial and defense businesses, making it the fourth largest state in Boeing’s supplier network,” said Bass. “Based on Boeing Commercial Airplanes growth projections for the next few years, Boeing anticipates even more growth for suppliers in Kansas. Boeing values its long-term partnership with Kansas, and we will continue to work with all of our stakeholders in Kansas in support of a robust aerospace industry in the state.”

Future aircraft maintenance, modification and support work will be placed at the Boeing facility in San Antonio. Engineering work will be placed at the Boeing facility in Oklahoma City. Although work on the KC-46 tanker will now be performed in Puget Sound, Wash., the 24 Kansas suppliers on the program will be providing vital elements of the aircraft as originally planned.

Boeing is providing employee assistance including retirement seminars, job search resources, and financial counseling, as well as help finding jobs inside or out of Boeing.

A unit of The Boeing Company, Boeing Defense, Space & Security is one of the world’s largest defense, space and security businesses specializing in innovative and capabilities-driven customer solutions, and the world’s largest and most versatile manufacturer of military aircraft. Headquartered in St. Louis, Boeing Defense, Space & Security is a $32 billion business with 63,000 employees worldwide. Follow us on Twitter: @BoeingDefense.

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.

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.

U.S. Air Force and Boeing Complete KC-46A IBR

One of the first major steps with the execution of a new contract by the Defense Department is the Integrated Baseline Review (IBR). This is a meeting between the contractor and the Government acquisition community to review the contract and establish cost and schedule parameters. The data will be part of the Earned Value Management System (EVMS) used to measure the contract, and Boeing’s, performance and how well it is remaining on cost and schedule.

The IBR for this contract was completed in late August. According to Boeing the IBR went well and the program is grounded for success. The KC-46A will next have its design reviews and plans to deliver the first aircraft in 78 months. The flight of the first test aircraft will be in 2015.

AUSA 2011 Annual Meeting & Exposition

The Association of the United States Army 2011 Annual Meeting and Exposition is this week.

For more information check out this link.

Department of Defense Not Really That Concerned with Boeing’s Costs for Tanker

At a recent public event the Undersecretary of Defense for Acquisition, Logistics & Technology, Ashton Carter, was asked about the projected cost increases for the KC-46A development. His response was that he, and OSD, are not really that worked up about the fact that Boeing (BA) may exceed the projected ceiling price of the contract.

In his eyes the U.S.’s liability is based on the $4.9 billion price. Boeing’s bid of $3.6 was a conscious business decision on their part. Some members of Congress, led by Senator John McCain (R-AZ), have raised concerns about the increase and the fact that the cost share structure of the contract obligates the U.S. to pay 60% of the first billion in increases.

There is also the idea that this situation would encourage contractors to submit low estimates for development contracts, or buy-in, with the goal of making up the difference in their production or by having the U.S. pay some of the overruns. McCain and the Senate Armed Services Committee (SASC) are also investigating the large cost increases in F-35 production that are requiring the U.S. to pay over $700 million as part of their cost share.

The idea that the Defense Department would accept this kind of business model is interesting. One of the criticisms of defense acquisition is this very point. In the late Sixties when Lockheed, now Lockheed Martin (LMT), did the same with the C-5 transport, although perhaps not deliberately, it is considered one of the examples of acquisition abuse and the program was almost cancelled. Now Carter is saying that as long as it involves a Firm Fixed Price Contract it is an acceptable practice.

This is just the beginning of the situation and Boeing certainly has the ability to not charge more then the ceiling price as they work the KC-46A development. Their current estimate of about $5.2 billion may be conservative and costs for the first 18 aircraft could be under $4.9 billion.

Boeing Signs Contract While Waiting on EADS to Move

The Air Force and Boeing (BA) executed the first part of the new KC-X aerial tanker contract. This is a $3.5 billion development effort that will deliver the first four KC-46A aircraft.

Unlike many other programs of this sort the U.S. is going to try a Fixed Price contract for the development effort as a cost control measure. In the past it has been hard to do real development work this way as there may be unknown issues that cause more schedule and cost. The assumption is because the KC-767 (and the KC-30) were fairly mature systems already in production for other customers that this risk is minimal. Of course the KC-46A is not identical to the other 767 tankers Boeing has built for Japan and Italy.

At the same time it has been reported that EADS NA (EADS:P) received their debrief from the Source Selection Board and now has a few more days to file a protest. There would have had to be something fairly serious revealed in the briefings to warrant such a move but until the deadline passes without one being filed there is always a chance a protest will occur. Although all the reports are now saying that EADS will not protest now even though there remain few future programs for the European aerospace company to bid on and get into the U.S. market.

Boeing Submits Final NewGen Tanker Proposal to US Air Force — Press Release

February 10, 2011 by · Comment
Filed under: Boeing, KC-X, KC-X Tanker News, Syndicated Industry News 

Boeing Submits Final NewGen Tanker Proposal to US Air Force

ST. LOUIS, Feb. 10, 2011 /PRNewswire/ — The Boeing Company (NYSE: BA) today submitted its final proposal for the U.S. Air Force’s KC-X tanker competition. The proposal offers a fleet of Boeing NewGen Tankers – 767-based, multi-mission aircraft that deliver superior capabilities to U.S. warfighters and burn 24 percent less fuel than the competing European Aeronautic Defence and Space (EADS) Company’s tanker. If selected, the Boeing tanker will save taxpayers tens of billions of dollars in fuel costs over the next 40 years and support 50,000 American jobs with more than 800 suppliers in more than 40 states.

“This decision is critical to America’s national security and its manufacturing base,” said Boeing Chairman, President and CEO Jim McNerney. “Our best-of-Boeing team has offered the most capable and fuel-efficient tanker that will enable the U.S. Air Force to continue serving as the world’s finest air refueling provider without breaking future defense budgets.”

“Our challenge is to replace the KC-135, one of the most valuable aircraft fleets in aviation history, and we responded to the U.S. Air Force’s requirements by proposing the best multi-mission airplane built by the most experienced people – the NewGen Tanker,” said Dennis Muilenburg, president and CEO of Boeing Defense, Space & Security. “We have an integrated team that has spent the entire competition focusing on our customer and preparing to execute immediately after the contract is awarded. Boeing is ready to build America’s next tanker.”

“Our NewGen Tankers will be built using a proven low-risk, in-line manufacturing approach similar to the highly successful 737-based Navy P-8A, by an already trained and highly experienced U.S. work force at existing Boeing facilities that have delivered more than 2,000 tankers and 1,000 commercial 767s,” said Jim Albaugh, president and CEO of Boeing Commercial Airplanes.

Boeing has been designing, building, modifying and supporting tankers for decades. These include the KC-135 fleet, the KC-10 fleet, and four KC-767Js delivered to the Japan Air Self-Defense Force. The Italian Air Force formally accepted its first KC-767 tanker in December and will receive three more as part of its current contract. In addition to being ready now, the Boeing NewGen Tanker will continue to deliver capability and value to both warfighters and U.S. taxpayers for decades to come. The NewGen Tanker:

* Saves taxpayers up to $36 billion in life-cycle costs compared with the competitor’s aircraft – a difference that could pay for an additional fleet of 179 tankers
* Features a flight control design philosophy that places aircrews in command of the entire flight envelope rather than allowing computer software to limit combat maneuverability
* Provides Air Force pilots with an advanced digital flight deck featuring Boeing 787 Dreamliner electronic displays
* Includes proven air refueling technology and a modernized NewGen KC-10 boom with an expanded refueling envelope capability, increased fuel offload rate and fly-by-wire control system – all from the company that invented the air refueling boom and has produced the world’s most capable and reliable tankers
* Delivers significantly more fuel, cargo, passengers and patients than the current KC-135 tanker in a widebody airplane with a narrowbody footprint that affords the Air Force invaluable flexibility for a variety of operations.

Boeing’s final proposal is the culmination of a process that began when the company started studying tanker requirements after the release of the Air Force’s draft Request for Proposal (RFP) in September 2009, followed by a final RFP in February 2010. Boeing responded to the final RFP by submitting an 8,000-page proposal on July 9, 2010. A contractor will be selected early this year to replace 179 of the 400 Eisenhower-era KC-135 aircraft currently in the Air Force fleet.

More information on Boeing’s NewGen Tanker, including video clips and an interactive tour of the aircraft, is available at www.UnitedStatesTanker.com. For more information on joining the company’s efforts, visit www.RealAmericanTankers.com.

A unit of The Boeing Company, Boeing Defense, Space & Security (www.boeing.com/bds) is one of the world’s largest defense, space and security businesses specializing in innovative and capabilities-driven customer solutions, and the world’s largest and most versatile manufacturer of military aircraft. Headquartered in St. Louis, Boeing Defense, Space & Security is a $32 billion business with 66,000 employees worldwide. Follow us on Twitter: @BoeingDefense.

Boeing Submits Final NewGen Tanker Proposal to US Air Force — Press Release

February 10, 2011 by · Comment
Filed under: Boeing, KC-X, KC-X Tanker News, Syndicated Industry News 

Boeing Submits Final NewGen Tanker Proposal to US Air Force

ST. LOUIS, Feb. 10, 2011 /PRNewswire/ — The Boeing Company (NYSE: BA) today submitted its final proposal for the U.S. Air Force’s KC-X tanker competition. The proposal offers a fleet of Boeing NewGen Tankers – 767-based, multi-mission aircraft that deliver superior capabilities to U.S. warfighters and burn 24 percent less fuel than the competing European Aeronautic Defence and Space (EADS) Company’s tanker. If selected, the Boeing tanker will save taxpayers tens of billions of dollars in fuel costs over the next 40 years and support 50,000 American jobs with more than 800 suppliers in more than 40 states.

“This decision is critical to America’s national security and its manufacturing base,” said Boeing Chairman, President and CEO Jim McNerney. “Our best-of-Boeing team has offered the most capable and fuel-efficient tanker that will enable the U.S. Air Force to continue serving as the world’s finest air refueling provider without breaking future defense budgets.”

“Our challenge is to replace the KC-135, one of the most valuable aircraft fleets in aviation history, and we responded to the U.S. Air Force’s requirements by proposing the best multi-mission airplane built by the most experienced people – the NewGen Tanker,” said Dennis Muilenburg, president and CEO of Boeing Defense, Space & Security. “We have an integrated team that has spent the entire competition focusing on our customer and preparing to execute immediately after the contract is awarded. Boeing is ready to build America’s next tanker.”

“Our NewGen Tankers will be built using a proven low-risk, in-line manufacturing approach similar to the highly successful 737-based Navy P-8A, by an already trained and highly experienced U.S. work force at existing Boeing facilities that have delivered more than 2,000 tankers and 1,000 commercial 767s,” said Jim Albaugh, president and CEO of Boeing Commercial Airplanes.

Boeing has been designing, building, modifying and supporting tankers for decades. These include the KC-135 fleet, the KC-10 fleet, and four KC-767Js delivered to the Japan Air Self-Defense Force. The Italian Air Force formally accepted its first KC-767 tanker in December and will receive three more as part of its current contract. In addition to being ready now, the Boeing NewGen Tanker will continue to deliver capability and value to both warfighters and U.S. taxpayers for decades to come. The NewGen Tanker:

* Saves taxpayers up to $36 billion in life-cycle costs compared with the competitor’s aircraft – a difference that could pay for an additional fleet of 179 tankers
* Features a flight control design philosophy that places aircrews in command of the entire flight envelope rather than allowing computer software to limit combat maneuverability
* Provides Air Force pilots with an advanced digital flight deck featuring Boeing 787 Dreamliner electronic displays
* Includes proven air refueling technology and a modernized NewGen KC-10 boom with an expanded refueling envelope capability, increased fuel offload rate and fly-by-wire control system – all from the company that invented the air refueling boom and has produced the world’s most capable and reliable tankers
* Delivers significantly more fuel, cargo, passengers and patients than the current KC-135 tanker in a widebody airplane with a narrowbody footprint that affords the Air Force invaluable flexibility for a variety of operations.

Boeing’s final proposal is the culmination of a process that began when the company started studying tanker requirements after the release of the Air Force’s draft Request for Proposal (RFP) in September 2009, followed by a final RFP in February 2010. Boeing responded to the final RFP by submitting an 8,000-page proposal on July 9, 2010. A contractor will be selected early this year to replace 179 of the 400 Eisenhower-era KC-135 aircraft currently in the Air Force fleet.

More information on Boeing’s NewGen Tanker, including video clips and an interactive tour of the aircraft, is available at www.UnitedStatesTanker.com. For more information on joining the company’s efforts, visit www.RealAmericanTankers.com.

A unit of The Boeing Company, Boeing Defense, Space & Security (www.boeing.com/bds) is one of the world’s largest defense, space and security businesses specializing in innovative and capabilities-driven customer solutions, and the world’s largest and most versatile manufacturer of military aircraft. Headquartered in St. Louis, Boeing Defense, Space & Security is a $32 billion business with 66,000 employees worldwide. Follow us on Twitter: @BoeingDefense.

Article at Washingtonian Magazine

The Washingtonian Magazine has written a good history of the KC-X aerial tanker program. It may be found here.

It is timely to look back at what got the program to this state as we wait for the next contract award announcement in the next few months.

Rockwell Collins Plans for KC-X Delay

Rockwell Collins (COL) had a good fourth quarter when they announced their most recent earnings. Overall revenue was up almost eight percent and profit twelve. Like most defense contractors though the company is planning for rougher times ahead as the U.S. defense budget declines.

Rockwell is part of Boeing’s (BA) team bidding for the KC-X new aerial tanker and the CEO, Clay Jones, said as part of the earnings release that they expect the contract award to be delayed.

Expectations were that it would be announced early next month but there have been consistent rumors and stories that this will be pushed off at least a few months as the Air Force evaluates EADS’ (EADS:P) and Boeing’s submissions.

The Air Force has been trying to buy a new tanker to replace the aging KC-135 aircraft now for most of this century. The current competition represents the third attempt and the second using competitive bids.

Air Force Hedging on KC-X Award Date

First the contract was going to start in November. Then it was an award in November. Now the U.S. Air Force is saying a winner will be announced in the next few months or so.

Using the argument that it is better to do something right not quick the Air Force chief of staff, General Schwartz, did not commit to the November date or even this year.

This is not surprising considering the complexity of the proposals and the history of this contract. To avoid a protest which will cause further delays to buying the new aerial tanker the source selection must be thorough and done in such a way that the loser cannot feel discriminated against.

A protest by the loser be it Boeing (BA) or EADS (EADS:P) is expected but there is always a chance that they will take the loss graciously and it may be hoped their political supporters as well.

First Protest Filed for KC-X Competition

There has been plenty of expectations that the loser of the latest KC-X competition would file a protest. Boeing (BA) was able to overturn the award to Northrop Grumman (NOC) and EADS (EADS:P) in 2008 when the Government Accountability Office (GAO) upheld its protest of that contract. Now there has already been a protest of this round before the source selection has really got underway. The protester, too, is not one of the usual suspects but U.S. Aerospace (USAE) who announced that they were teaming with Ukrainian aircraft manufacturer Antonov for the multi-billion program to replace the KC-135 in use by the U.S. Air Force.

U.S. Aerospace is protesting the fact that the Air Force said their proposal was received late and will not be considered in the competition. The service has made clear that only the EADS and Boeing ones were received by the deadline of 2:00 PM on 9 July.

The upstart bidder says that their proposal was at the site thirty minutes prior to that time but that Air Force personnel deliberately delayed the courier preventing delivery until five minutes after the deadline. The Air Force is standing by its decision.

The KC-X has been an on-again-off-again program for most of this decade. The initial plan of a lease of 767 based aircraft from Boeing was thrown out amid convictions of U.S. Air Force and Boeing personnel for corruption. The second attempt as mentioned above was lost on protest. This third try looked fairly smooth once EADS committed to bid on their own until late June when the U.S. Aerospace proposal emerged. Now a source selection that is supposed to be complete in early November is facing a potential hiccup depending on how the GAO rules on U.S. Aerospace’s protest. The addition of a third proposal to evaluate may cause delays in the selection and award process.

KC-X just gets more interesting as time passes.

Amid Annoncing Orders Boeing and EADS Snipe About KC-X

The two civil airliner giants both attended the Farnborough Air Show with Boeing (BA) conducting the first overseas flight of the new 787 and EADS (EADS:P) sending an A380. Both companies announced substantial orders from a variety of airlines and leasing agents while also taking the time to criticize their opposition’s bids for the KC-X new Air Force aerial tanker.

Boeing received an order for sixty 737 aircraft from Mr. Udvar-Hazy’s new leasing company as well as Emirates Airlines needing thirty 777 wide body aircraft. GE’s leasing company also bought forty 737 aircraft and Avalon twelve. Royal Jordanian airline purchased three of the new 787.

EADS got an order from Russia’s Aeroflot for eleven A330. That carrier already operates sixty-four A320 and 10 A330. Hong Kong Air followed with a plan to buy fifteen of the new A350 XWB, the equivalent of the composite 787, and ten A330. The Chilean carrier LAN also bought fifty A320.

All-in-all both companies felt very good about their orders and the future of the airline industry. There are hopes that the world economy is recovering and this will lead to more sales and greater investment in new equipment.

At the same time the two companies sniped at each other about the ongoing U.S. Air Force KC-X aerial tanker contract. Boeing submitted a bid to use their new 767 variant, NewGen Tanker, to replace the aging KC-135 fleet. EADS has based their proposal around the A330 like they did with their last proposal.

Boeing is making clear that they will offered a very competitive price based on their reducing production costs by leaning out their line. Boeing believes that in the end the contest will be decided on price and they plan on having the best price including lifetime operating costs.

EADS agrees that price is important but at the Air Show the CEO, Mr. Gallois, made clear that there won’t be a sacrifice of profit to just win the contract. Due to problems with the A380 and the A400M transport aircraft EADS has some financial issues to face and while it might be attractive to win the contract the company may not really be able to afford to not have some money made on it. The size of the recent commercial orders indicate that the military contract while it would open the European company up to a new market is not critical to their future.

The European Union (EU) has appealed the recent WTO ruling that their aid to EADS amounted to an illegal subsidy. The company and leaders in Europe have also decried the decision by the trade body to delay their ruling on the similar Boeing case. Boeing’s allies in the U.S. have used the WTO decision to say that EADS has an unfair advantage in the KC-X competition as it received the subsidies. EADS and the EU is countering by saying that the U.S. military contracts over the last fifty years to Boeing are the same thing.

The Pentagon has made it quite clear that despite the desires of some in Congress they cannot take the WTO decision into account in their source selection.

It will be a long hot summer at this rate, and when the decision is announced in November the chance of a protest by one of the losers is very high. The contract is a key military one in the next few decades no matter what each company says about it. Winning the contract will give them a leg up on their competitors for the future orders for tankers and aid them in getting more and better commercial contracts.

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.

Boeing Plans for New Presidential Helicopter Have a Role in KC-X

Here is a post I wrote at Defense Procurement News about Boeing’s (BA) decision to use the Augusta Westland 101 as the base aircraft for their new Presidential transport helicopter bid. It makes them look a little hypocritical on the whole EADS (EADS:P) role in KC-X.

House Adds Language to Force Pentagon to Consider Subsidies to Defense Authorization Bill

The House of Representatives in their vote on the 2011 Defense Authorization Bill added an amendment sponsored by Washington and Kansas members to force the Pentagon to consider the WTO ruling on illegal subsidies when it comes time to consider EADS’ (EADS:P) bid. The Pentagon has made it clear in the past that their contracting and acquisition laws and regulations do not allow them to factor that into their cost evaluations. This language if it is in the final version of the bill when it is passed after Conference will supposedly make them do that.

One question though is the Air Force plans to receive bids on July and announce a decision in the late Fall. There is a good chance that the source selection if it follows that schedule will be complete before the bill makes it out of Congress. While the Authorization Act often is done before the Appropriations one it is often not complete by 30 September as it should be. The Pentagon could also argue to ignore the language setting up some sort of court fight. EADS could also adjust their prices to take into account the effect of the WTO ruling.

Boeing Unloads National Security Risks of “EADS”

Using the example of EADS (EADS:P) marketing a helicopter in Iran in 2005 Boeing (BA) is raising the idea that a successful EADS win of the KC-X might be a security risk. EADS North America of course has shot back that the issue is really not a part of this contest and that the U.S. Defense Department has not issues with their participation. It is really not a fair criticism in this situation. Boeing has certainly sold aircraft to many different nations some of whom are not friendly to the U.S. right now.

The idea of dual placed loyalties for a competitor such as EADS that is located overseas is not an uncommon criticism in these situations. Ideally there would be multiple domestic sources for any government contract but especially defense related ones. The problem is for the KC-X there is only two real world sources for this type of aircraft and only one is American. The real issue here is the decline of the U.S. industrial base over the last twenty-five years.

Congress Continues To Try And Micromange KC-X Process

In the latest move by Congress to try and get the U.S. Air Force and DoD to consider the WTO rulings on EADS (EADS:P) subsidies, legislation has been introduced that will require at least a report by the Pentagon on their affect on the competition.

Congressman Adam Smith (D-WA) (No shock there?) is trying to amend the 2011 Defense Authorization Act to require the Air Force to detail the advantage the subsidies gives EADS prior to issuing the contract. Since the DoD cannot consider the ruling in awarding the contract this at least gets a record out of the effect (if any) on the contest.

Latest KC-X Article At BNET: Government

This is the latest post I wrote for BNET: Government entitled “KC-X Aerial Tanker Contract Starting To Become A Farce”.

It starts “The Air Force’s ten-year effort to purchase a new aerial tanker continues rapidly seems to be disintegrating. The third attempt at awarding a contract for what has now become one of the most critical needs for the Department of Defense has been roiled by international trade, politics and concerns about the whole approach.”

You may read the rest here.

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