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Privately Developed Scorpion Jet Takes to the Air on Maiden Flight over Kansas

December 13, 2013 by · Comment
Filed under: ISR, Kansas, Syndicated Industry News, Textron, United States 

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Beechcraft Corp. to Protest Again on the US Air Force Decision to Award LAS Contract to Embraer

AT-6-Aerial300Beechcraft Corporation today announced that it will formally protest to the U.S. Government Accountability Office (GAO) the U.S. Air Force’s (USAF) recent award of the Light Air Support contract to its Brazilian competitor, Embraer. “We simply don’t understand how the Air Force can justify spending over 40 percent more – over $125 million more – for what we consider to be less capable aircraft,” Bill Boisture, CEO, Beechcraft said.

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

Small, Disabled Business Bags Bag Contract

The United States Department of Defense buys many things to support its troops, their dependents, employees and retirees. One of the services it does provide is Commissaries and Exchanges on bases that allow grocery and household goods to be purchased. As with all stores they need supplies to function.

Envision is a small, disabled business in Kansas. They recently were awarded a contract to provide plastic bags for use at Commissaries and Exchanges. The contract is worth over $47 million.

Envision has already executed several of these contracts and were the only bidder on the new one. It is estimated they will provide over 1 billion bags under this contract.

Federal procurement regulations state that a company employing disabled people is a preferred source. Along with these are Native American owned and those that employ prison labor.

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The New Obama Doctrine: Doing Less with Less

The Obama Administration announced its new strategy for the U.S. armed forces yesterday that will reflect future budget reality for the Defense Department. While no nation ever wants to state that its military size and missions are backed into a total budget number rather they claim to be buying the necessary capability at a certain price. The Obama defense team stood there yesterday and made that claim.

It really is though a combination of the two. The U.S. is under severe budgetary pressure. The Supercommittee failed which mandates a series of cuts to all spending including defense over the next several years. The DoD and Armed Services will have less money to buy things so our capability will be reduced. Similar to the Nineties with the ending of the Cold War but worse due to the current economic state and the overall size of the military.

The core change enunciated is the ending of the “Two War” plan which supposedly drove U.S. strategy since WW II. The U.S. had to have the ability to deal with a major war in Europe and a regional one. The new plan limits our ability to fighting one war and containing another. Conventional forces especially will be reduced to mean troops, aircraft, ships and heavy equipment.

That does not mean there are not opportunities as the hope is to use new systems such as UAV’s and better intelligence to make up for the lack of firepower. Special Forces will be used for regional conflicts rather then heavy brigades deploying such as they did to Iraq and Afghanistan. They will need equipment and force multipliers from across the spectrum.

The defense industry will also have to contract and adjust. There may not be any new heavy programs for several years. Aircraft will be limited to the F-35, the KC-46A and a new bomber of some sort. Carriers, destroyers and submarines along with amphibious ships will be cut and construction of new ones reduced. The Army and Marines will lose boots on the ground and the need to train, equip and support them. Big contracts will be fewer and competition for them much greater until the industry right sizes.

We will probably see many companies exiting the business. Either through M&A or just testing other markets to just disappearing. This will be hardware and support contractors. The DoD workforce will also shrink. Some communities will be hit hard as Wichita, KS is learning this week.

Congress will fight for some programs with each other and the Administration. The budget may not shrink as fast as planned and individual efforts may be saved.

All-in-all the next ten years will see a major adjustment to what the U.S. invests in its military and to the defense economy as a whole. Long term a path similar to the United Kingdom where conventional forces have shrunk precipitously over the last thirty years may be the best case. No matter what the U.S. defense budget will go down for a few years with a magnifying effect on the U.S. economy.

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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.

Northrop to Support Army Senior Leader Training Program

The U.S. Army as have the Marine Corps has been investing in increasingly sophisticated and realistic training for its Soldiers and Marines. These include utilizing not only computer simulations and models but also investing in terrain and cultural mock-ups such as complete Iraqi villages populated with “Iraqi civilians” to teach troops how to interact with the people. They have also created sophisticated close combat ranges to expose personnel to common fighting situations in Iraq and Afghanistan.

As part of the Army’s program they have established the Mission Command Training Program run out of the Combined Arms Center, Fort Leavenworth, KS. This provides training for leaders and their staffs in conducting operations. It allows training teams with simulators to go to the field and aid the units in their training as well as observing the conduct of current operations and provide mentoring and advice.

Northrop Grumman (NOC) has just won a contract to support this program. They were awarded a one year base with four option year contract that could be worth up to $388 million if all options are awarded. This contract is a continuation of others that the company has executed providing training support to the Army since the 1990′s.

The MCTP trains all levels of headquarters from battalion to Corps prior to deployment. It also assists them once they are deployed. Northrop personnel will work at Leavenworth as well as across the world as the MCTP visits deployed units or those based overseas.

As the U.S. defense budget grows smaller one way to save money is to invest in computer based training. This is cheaper overall then deploying whole units to locations to conduct exercises that consume fuel, ammunition and increase the maintenance load requiring funds for parts and labor to keep vehicles and systems operational. Of course this cannot completely substitute for realistic field training and as long as the U.S. military is fighting overseas that will have to continue.

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And the Winner is Boeing!

The U.S. Defense Department and Air Force announced that Boeing (BA) has been selected to provide the new KC-X aerial tanker. The design submitted by EADS NA (EADS:P) was not chosen.

The new KC-46A will be based on Boeing’s 767 airliner design.

The Secretary of the Air Force, Mr. Michael Donley, stated that the decision was based on “mission effectiveness in wartime and life cycle costs as embodied in fuel efficiency and military construction costs”. This might be a hint that the larger KC-30 aircraft from EADS might have required more investment in new and bigger facilities then the smaller 767 tanker.

The contract has been very political with states that stand to gain thousands of jobs from the program using their Senators and Representatives to push for the respective bidders.

EADS does have the right to protest the decision as Boeing did in 2008 when the contract was awarded to Northrop Grumman (NOC) and EADS. They will have to wait until their debrief by the Air Force before making any decision about that.

Even an unsuccessful protest may delay the start of the program for several weeks and the Air Force plans on receiving the first 18 aircraft in 2017. The new KC-46A will replace Cold War era KC-135R tankers some of which have been flying for fifty years.

Cross posted at Defense Procurement News.

Air Force Plans Award Before April 1st

Despite the current issues with defense funding the Defense Department and Air Force reportedly said that they hope to award the KC-X aerial tanker contract within a month. The budget sent forward for 2012 on Monday stated that the planned contract was valued at around $35 billion.

It sounds like that even with the Pentagon acting under a continuing resolution rather then an official budget that at least the winner will be announced. There is some concern that without a 2011 budget resolution from Congress a new contract of this magnitude might not be able to be awarded. This means that the Air Force will have to wait until October 2011 to have initial funding for the purchase of the new tanker.

The KC-X saga is heavy with political overtones as supporters of both Boeing (BA) and EADS (EADS:P) in Congress continue to lobby OSD and threaten problems if their preferred source is not chosen.

The Air Force has been trying since early in this decade to buy a new tanker and this award may be the last step towards doing that. Although the chances of a protest by the loser remain high and the current budget situation between President Obama and Congress may make it difficult to get the funding resolved anytime soon.

U.S. Light Support Aircraft Contract Heating Up

The United States is discussing again buying a light, heavily armed aircraft to perform close support and homeland security missions. This would most likely be a turboprop powered rather then a jet and is similar to some aircraft operated by South American nations. This is a traditional aircraft role but one the U.S. really hasn’t invested in in Decades.

Since this is one of the few new aircraft that the U.S. Air Force and other services are pursuing it is attracting a great deal of attention. Two companies are bidding on the work although others such as Air Tractor have shown interest.

Hawker Beechcraft (OCX:C) is bidding their AT-6 aircraft. This company makes agricultural aircraft as well as executive transport and light civil aircraft. If they do win the contract it will aid the company in keeping its Kansas production and support facility at Salina going.

The Brazilian company Embraer which has made a range of aircraft for this mission for years is submitting their Super Tucano aircraft. Argentina and Brazil and other nations have operated these aircraft for over thirty years. Embraer is looking at establishing a production facility in Jacksonville, FL to support the contract.

Because this is an aircraft that really hasn’t been made in the U.S. since the North American OV-10 Bronco there resides some expertise overseas. The U.S. defense market despite its potential to see limited growth over the next decade is still attractive to foreign defense contractors. The U.S. has also shown willingness due to industrial base and competition issues to purchase non-U.S. designed and developed equipment.

Whichever aircraft the U.S. does buy will aid it in selling to overseas customers as it will have equipment that make it easier to integrate with U.S. communication systems as well as support from the U.S. government in funding and maintenance.

This competition may end up being one more example of that.

Photo from Jerry Gunner’s flickr photostream.

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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.

WTO Report States Boeing Received Illegal Aid Effect on KC-X Undetermined

In the latest round of the back-and-forth at the World Trade Organization (WTO) between the United States and the European Union (EU) over airline development and sales the report on Boeing (BA) was leaked to the press and found that the Chicago based company received illegal subsidies from the U.S. Government and four states. In September this finding was also leaked as a preliminary to the completion of the final report.

Earlier last year the WTO had ruled in favor of the U.S. in their complaint about launch aid for EADS’ (EADS:P) Airbus products. Since that time there have been those in Congress trying to rewrite acquisition law and regulations so that the illegal aid to EADS would be taken into account in the upcoming KC-X new aerial tanker decision on which Boeing and EADS submitted bids for the initial $39 billion contract.

The findings by the WTO that both sides provided illegal aid that caused unfair competition to the other should lead to negotiations to settle the matter. The normal WTO punishment of having the losing company pay back the economic affect on the other will probably not happen due to the large amounts involved.

The two decisions may aid the Pentagon in deciding the KC-X contract as it possibly removes the issue from the competition and might limit some chances for a protest by the loser. The Pentagon has made clear for months that it cannot take into account the WTO rulings in their source selection and evaluation hence the attempts by Boeing’s supporters in the legislative branch to change the rules.

Now with both bidders confirmed to have benefited from illegal subsidies of some sort it hopefully will remove the issue and allow a competition based on merits and meeting the requirements as defined by the Air Force and Defense Department.

Effort to Add EADS Subsidies Consideration to Defense Authorization Bill Fails

Senator Murray (D-WA) and Senator Brownback (R-KS) attempted to attach an amendment to the Senate’s 2011 Defense Authorization Bill today that would force the Defense Department and U.S. Air Force to take into account the World Trade Organization (WTO) ruling on subsidies to EADS (EADS:P) by European governments. Due to the fact that the bill did not win enough votes to advance mainly due to the attempt by the Democratic leadership to add the repeal of “Don’t Ask/Don’t Tell” policy on gays in the military the amendment wasn’t considered.

The two whose states stand to gain several thousand jobs if Boeing (BA) wins the KC-X contract will have to wait for this bill to be re-considered or add the amendment to another one. Certainly there are Senators from Alabama and other Southern states who favor EADS who might try to work against the amendment.

Currently the U.S. military cannot consider these kind of trade disputes and rulings in their source selection which is why the attempt was made to add the rule.

This continues to show that the fight for this contract will continue in Congress, the media and across the internet.

Dueling View on Defense Competition

Last week the former Reagan era U.S. Secretary of Defense John Lehman had an opinion piece in many newspapers across the country discussing the need for competition in large defense contracts. He specifically was writing in support of the dual engine track for the F-35 Joint Strike Fighter (JSF). This controversial program where a second source of engines for the advanced multi-role aircraft is being funded by Congress despite the objections of two Administrations, the Pentagon and the Air Force is being defended as risk reduction and as offering potential cost savings. This is how Lehman discusses it.

Certainly the idea is sound in that the second engine in development by General Electric (GE) and Rolls-Royce (RR:LSE) as an alternative to the main one being made by Pratt & Whitney, part of United Technologies (UTC), may end up costing less and be ready sooner but at a time when the program is struggling as well as the whole Federal budget it may be a luxury that the country cannot afford. Lehman cites previous examples of using alternate engines from when he was at the Defense Department that showed “benefits came swiftly and have endured. Reliability, performance and fuel economy improved steadily. Engine-caused accidents dropped. By the second year of full competition, the cost per engine had dropped 20 percent.” He points out that for the three major fighter programs of the Seventies and Eighties — the F-14, 15 and 16 — this approach was used successfully.

For both 2010 and 2011 the Obama defense budget request asked for no funding for the second engine. In the 2010 budget Congress found it by adding money and not taking it out of the core F-35 program. For 2011 the Senate has moved to try and not fund the program but the House markups so far continue it. If the final bills from each part of Congress contain differences it will have to be worked out in Conference. Obama has threatened to veto the bill if it contains the second engine but he did that last year and ended up accepting it. Obviously the Congressional delegations from the states where GE and Rolls-Royce are doing their work support it while the Connecticut delegation where P&W makes their engine have been trying to counter it.

In another view Congressman Tiahrt (R-KS) recently was interviewed about his efforts to promote the use of American contractors for programs. Tiahrt wants the Pentagon to maximize the use of American defense contractors even when it would have to lead to a sole source contract as there would only be one U.S. company able to do the work. The Pentagon does everything it can to avoid sole source contracts as that transfers most of the risk from the contractor to itself leaving little options of the program’s schedules and cost increases. Competition has long been one of the cornerstones of defense acquisition.

Tiahrt believes that the Defense Department must maximize the use of U.S. companies to provides jobs. At this time of current economic problems basically using the defense budget to provide “stimulus”. The problem this faces is that due to the decline of the U.S. industrial base in the Nineties there are often only one U.S. supplier for a product. Tiahrt uses the example of the buying of Russian Mil-17 helicopters for use in Afghanistan by the Afghan military rather then purchasing the UH-60 from Sikorsky, another part of United Technologies. The reasons given for the purchase are more driven by requirements and the needs of the Afghan environment and capability. This is a system they are familiar with, it is simple to maintain and matches well to the environment.

Tiahrt, a former Boeing (BA) employee, is also a big supporter of awarding the new KC-X aerial tanker to that company and preventing the European defense giant, EADS (EADS:P). He had criticized the previous award to Northrop Grumman (NOC) and EADS overturned on Boeing’s protest in 2008. Now that Boeing and EADS are in direct competition for the latest attempt to award this contract he has kept up the criticism.

The problem that the Pentagon faces is only Boeing and EADS have the capability to provide this aircraft. The last tanker that was purchased was the KC-10 in the Eighties made by McDonell Douglas, who are now part of Boeing. With those two companies merged there is no U.S. competitor for the KC-X. In the early part of this decade the U.S. Air Force did award Boeing a sole source lease for KC-767 tankers but this was overturned after Congress found collusion by Air Force and Boeing officials this decision launched the second contest won by Northrop and EADS in 2008.

Tiahrt is right in that the Defense Department should try to award to American companies but the number of those producing major systems has declined. The increase in spending since 9/11 has seen major market penetration by European companies mainly through acquisition of U.S. companies and the establishment of subsidiaries. This has been driven by the need for multiple sources for systems to help keep prices low.

Without a major investment in revitalizing the U.S. industrial base this will be the situation faced anytime a major contract comes up for award Congressman Tiahrt’s protests notwithstanding.

In order to meet Lehman’s desire for competition the U.S. has to allow foriegn bidders which is an unfortunate fact-of-life. Congress will need to face this unless they just want to give contracts to American companies which would counter their desire to do defense purchasing more efficiently and at less cost. The decline of the Nineties is the root cause of this situation and there is no easy short term answer.

KC-10 photo from Mr. T in DC’s flickr photostream.

F-35 photo from Rob Shenk’s flickr photostream.

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Defense Department Reiterates Stand on C-17 Production

The C-17 transport has been in production now for almost twenty years and forms the backbone of the U.S. Air Force’s strategic lift. It replaced the Cold War era C-141 aircraft and has been built by Boeing (CA) at their plants in Long Beach, CA and St. Louis, MO. The Air Force actually possesses more C-17′s then originally planned because Congress has been adding them to the budget for the last few years. In 2010 the new Obama Administration did not request any further production of the system but Congress added them and the President did not follow through with a veto.

The 2011 defense budget also contained no C-17 procurement and this has been met with a better reception by Congress in general. There are still those Senators and Representatives from California, Missouri and Kansas who would like to see more aircraft built. They are certainly being used, but the Air Force and DoD argue that the money could be spent on more important parts of the defense budget. There are also concerns that when the Congress adds aircraft they do not necessarily fund the support which takes money out of the budget as well.

The Long Beach plant will close when production of the aircraft ends which would be a big blow to the local economy.

Despite Congress’ better attitude this year the Department must have some concerns as they released a strongly worded article yesterday detailing the reasons why no more aircraft are needed. This reads in part “..defense officials agreed with the subcommittee’s leaders, Sens. Thomas Carper and John McCain, that the C-17, in addition to the C-5, has been critical to airlift in and out of Iraq and Afghanistan. However, they said, the military’s current fleet of 223 C-17s and 111 C-5s is more than enough airlift capability for years to come.” It also contains a threat as last year that the President “.. has promised to veto any legislation that provides for more C-17s.”.

Does that mean there will be no more U.S. orders for the C-17? It might, and it might not. Congress is loathe to end programs like this that are not only successful, used and provide several hundred jobs across the U.S. Boeing certainly would like to keep the line going. The defense budget looks like it may make it to the floor of the Senate and House without C-17. That allows floor amendments and the conference committee to add the transports. If the Congressional leadership is disciplined it may end up without additions.

The other concern is how well Congress believes Obama will veto the bill over a few billion spent on the C-17. If they don’t think he will in the end as happened last year then the aircraft quantity may increase.

Photo from TMWolf Flickr photostream.

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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.

Good Summary Of The KC-X Situation

The Kansas City Star has this lengthy article that describes the whole situation and explains how we got where we are with the KC-X tanker RFP. The article by Cleon Rickle may be found here. Key takeaways are:

“”I am confident Boeing can build the best plane for the Air Force, no matter the competition,” said U.S. Sen. Pat Roberts,of Kansas. “However, I urge the Department of Defense to run a fair competition and avoid coddling EADS to the detriment of American warfighters who have waited eight years for this contest to end and decades for a new tanker.”

“We will offer a modern, more capable tanker in response to the Defense Department’s decision to encourage competition for this major taxpayer investment,” said EADS North America chairman Ralph Crosby, Jr. “Our KC-45 is the only real, flying, low-risk solution that today meets the demanding Air Force air refueling requirements and is actually in production now. ”

Boeing Will Submit Proposal Based on K-767

As it did in the last contest two years ago Boeing (BA) plans to submit a 767 based tanker. This is similar to the ones they are already building for Japan. To differentiate it from previous versions they are calling it a “NewGen” aircraft. Boeing will upgrade the basic 767 design with a new fueling boom and parts of the 787 cockpit technology.

There is still no formal word from Northrop Grumman (NOC) or EADS (EADS:P) if they plan to submit a proposal this time around.

Senator Murray (D-WA) Illustrates She Knows Nothing About U.S. Economy

The competition between Boeing (BA) and Northrop Grumman (NOC) for the KC-X contract is pretty hot. As with many of these contracts the states that stand to benefit the most legislators are supportive. The states being Washington and Kansas for Boeing and primarily Alabama for Northrop. At the same time it doesn’t help anybody to throw insults around and play loose with facts.

Recently Senator Patty Murray of Washington was on National Public Radio (NPR) and supposedly said that “I would challenge anybody to tell me that they’ve stood on a line in Alabama and seen anybody building anything.” Ms. Murray demonstrates taht she knows little or nothing about the U.S. economy and Alabama’s contribution.

Mercedes Benz and Honda make thousands of cars a year in Alabama one assumes on a production line. Hyundai has a 500,000 car a year plant as well. Boeing employs thousands of people in the state as well working for NASA and the Defense Department. So she insulted those people while supporting them at the same time.

The contest should be above such petty insults.

Senator Murray (D-WA) Illustrates She Knows Nothing About U.S. Economy

The competition between Boeing (BA) and Northrop Grumman (NOC) for the KC-X contract is pretty hot. As with many of these contracts the states that stand to benefit the most legislators are supportive. The states being Washington and Kansas for Boeing and primarily Alabama for Northrop. At the same time it doesn’t help anybody to throw insults around and play loose with facts.

Recently Senator Patty Murray of Washington was on National Public Radio (NPR) and supposedly said that “I would challenge anybody to tell me that they’ve stood on a line in Alabama and seen anybody building anything.” Ms. Murray demonstrates taht she knows little or nothing about the U.S. economy and Alabama’s contribution.

Mercedes Benz and Honda make thousands of cars a year in Alabama one assumes on a production line. Hyundai has a 500,000 car a year plant as well. Boeing employs thousands of people in the state as well working for NASA and the Defense Department. So she insulted those people while supporting them at the same time.

The contest should be above such petty insults.

Boeing Confirms Use Of Wichita Facility If KC-X Won

Boeing’s (BA) Wichita, KS plant has supported may of their military programs over the years. In their last bid for the KC-X proposal the 767 aircraft would have been modified to become the new tanker there. In October the company would no longer make that commitment to using the Wichita plant. The company had discussed using a lower cost plant to do the work with an eye to lowering their overall cost. This obviously was a blow to the employees and the political supporters of the work being done there.

Now Boeing announced yesterday that at least some of the military conversion of the aircraft will be carried out in Wichita. This will gain them even further support from some key Senators and Congressmen as well as there unions. In many ways the company had no real choice. The Wichita plant has long been established, can do the work and needs it. The announcement makes sense at this time.n

Kansas Quietly Supports Boeing

The Boeing plant located in Wichita has a long and distinguished history of supporting that company’s military programs. It is safe to assume that if Boeing does win the KC-X contract that some of the work will be done there. That means that Kansas’ leaders are very interested in Boeing winning the deal. In the spirit of this it was reported that the Kansas Governor, Mark Parkinson, recently met with the Air Force Secretary. The former Governor of the state, Kathleen Sebelius, is now a cabinet secretary in the Obama Administration which certainly allows for some low key lobbying.

With the continued economic problems facing the country good manufacturing jobs are hard to come by and this means that mayors, governors and legislators will all be doing their part to support the different bidders in this process.

Brownback Lauds Successful Airborne Laser Test — Press Release

Brownback Lauds Successful Airborne Laser Test

Congratulates Missile Defense Agency, industry team on successful in-flight test of laser tracking system

WASHINGTON – U.S. Senator Sam Brownback today commented on successful tests of the Airborne Laser tracking system over the weekend. “The ABL continues to make history,” Brownback said. “Last Saturday, for the first time, a boosting missile was tracked by lasers able to compensate for atmospheric conditions and remain locked on target for an extended period of time.”

The Airborne Laser is a modified Boeing 747 that carries laser systems designed to track and destroy ballistic missiles during the early, or boost, stages of flight. The ABL consists of three lasers, a tracking laser, an environmental laser that compensates for atmospheric variables, and a weaponized laser, all working in conjunction to track and destroy missiles in their boost phase. The successful test was conducted this weekend while the plane was in flight and was able to continuously track a launched missile.

Brownback continued, “I want to congratulate the Missile Defense Agency and its industry partners on this test. Every day, their hard work brings us a step closer to having a boost phase defense against ballistic missile threats. Especially with North Korea’s recent provocative behavior, ABL’s progress is more important than ever.”

The Airborne Laser is scheduled to undergo a series of tests this summer, culminating in a full system test to shoot down a missile this fall.

STATEMENT: Michael Rinn, Boeing vice president and ABL program director:

This is the first time in history anyone has actively tracked a boosting missile with a laser while closing atmospheric compensation loops. This was done at significant ranges and for many times longer than would be required to kill the missile had the high-energy laser been used.

Additional missile engagements will fine-tune the pointing accuracy and performance of the system. This significant test is a major step toward conducting this year’s missile-intercept test, which will demonstrate the unprecedented speed, mobility, precision and lethality that ABL could provide to America’s warfighters.

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