No Bad Thing
August 22nd, 2008
“I would rather not turn in a losing proposal than turn in one that’s not competitive,” says Jim Albaugh, President & CEO of Boeing’s Integrated Defense Systems in an interview with the Wall Street Journal.
In the wake of the GAO ruling upholding Boeing’s protest at the tanker award, the revised draft RFP has meant that the Northrop Grumman/EADS Airbus A330 derived tanker seems to still better fit the bill for the US Air Force. In response, Boeing argues that without additional time to submit a counter proposal, it would not be offering the Air Force a viable tanker solution let alone a worthy competitor to the A330.
Images courtesy of Boeing
Given ongoing labour discussions with the IAM, continual work to the delayed 787 Dreamliner and an already busy 777 assembly line, Boeing can ill afford to sink money into a 767-based tanker solution that would stand to lose in this revised contest.
Would dropping out of the contest be a backward step?
Not in the least.
Earlier this month, Azerbaijan Airlines switched one of its 787 orders for a 767-300ER, citing availability to counter the waiting period for its 787’s.
While it is not indicative of other 787 customers doing the same, or even ordering more 767’s in the interim - the fact remains that the current build rate of 777’s is not enough to placate customers seeking more efficient, new build airplanes until their 787’s arrive.
Given the inherent success of the 767 family over the last 30 years, a shift away from the tanker competition would allow Boeing to produce more 767’s for those airlines unable to add 777’s, particularly the much sought after 777-300ER. This dual strategy employing a mix of 767 and 777 airplanes to offset the 787 delays would potentially be much more beneficial than opting to pour money into a 767 tanker that stands little chance of winning the USAF requirements.
Should Boeing be successful in gaining more time to provide a bigger airplane than the proposed KC-767 in the belief that it can win, there is equally an outside opportunity to explore the ramping up of the 777 line to meet demand. Ultimately, Boeing needs to ensure it averts any strike action by employees, which would directly jeopardise the 787 and the 747-8 which has also entered production.
If Boeing doesn’t get the time extension it seeks, then dropping out of the contest to further consolidate its commercial operations which forms the bulk of its core business is no bad thing at all.
Sphere: Related ContentEntry Filed under: Aeroplane, Aerospace, Airbus, Airbus A330, Airplane Order, Aviation, Boeing, Boeing 767, Congress, GAO, KC-30, KC-45A, KC-767, Tanker, US Air Force
12 Comments Add your own
1. Steve | August 22nd, 2008 at 10:25 am
Given the inherent success of the 787 family over the last 30 years
I knew the 787 was delayed, but I didn’t realise it was so far behind schedule!
2. BOEING777 | August 22nd, 2008 at 10:31 am
Typo corrected!
Cheers Steve!
3. Chris Wallace | August 22nd, 2008 at 2:35 pm
It appears Boeing has no realistic chance to win the bid. The KC-30A is a better plane in almost every category compared to the KC-767 Advanced. And while it will be more expensive, the DoD right now gets every dollar it asks for from the Administration and the Democrats can’t say no in an election year, either.
Even if the USAF gave Boeing the time necessary to dust-off the plans for the 767-400ERX and offer it to the tanker, it appears that the lower landing gear height of the 767 family means that field-performance would be terrible due to a much more shallow angle of attack on take-off to prevent a the boom from striking the runway.
As such, Boeing would need to do a serious re-profile of the wings and crank up the engine thrust to address this. Now, if Boeing didn’t have the 787 to replace the 767 family, it might very well be worth the effort just to try and improve competitiveness with the A330-200 in the passenger market, but since they do…
The 777F is a non-starter. While the USAF might just go for it (since it is even bigger then the KC-30A and cost is not on objection), Boeing would need to increase production another one or two planes a month to meet the need and chances are they’ll be doing that to the line anyway to move more passenger/freighter models while they can. So we’d be looking at perhaps one plane a month and I am not sure the line nor the suppliers can do that - especially with the 787 ramp.
It is unfortunate for Boeing in that, having now been (effectively) eliminated as a producer of manned fighters (they help make part of the F-22, but the JSF was the last manned fighter program the USAF will build), they will also now be effectively removed as a producer of cargo planes and tankers. I am quite confident that the KC-10A fleet will be replaced with more KC-45s (nee KC-30As) and that the USAF will not seek a special RFP where Boeing can bid the 777F and Airbus the A350F (should it exist). There is just no need for it and by then, the Defense budget will be more reigned in and the Air Force will need to use those monies for another program. The KC-30A should easily have a fifty-year service life with the USAF, negating the need to source a new plane much before the next century.
4. Manuel | August 22nd, 2008 at 9:05 pm
I agree. The USAF clearly wants the KC-45. However, the longer Boeing drags this out the more it can make from KC-135 spares so I predict they will do just that. They can’t lose!
5. johnny stick | August 22nd, 2008 at 11:05 pm
I doubt Congress will let Boeing back out. Either Boeing competes fairly with the 767, or Boeing is given the contract outright using the original RFP inputs. Especially in an election year, every person running for office, short the Alabama contigent, will be saying not to let this go oversees (sorry NG).
6. Chris Wallace | August 23rd, 2008 at 12:06 am
While not as lucrative as the KC-45 RFP, the CSAR-X helicopter contract is worth $15 billion in and of itself. Boeing won the first round, but the GAO cried foul. Sikorsky and Lockheed-Martin both argued the same card Boeing is with the KC-45 - the RFP was unclear and favored the incumbent (in this case, Boeing), so the USAF re-did them, as well.
It is possible Boeing and the USAF could work a deal where NG/EADS gets the KC-45 and Boeing gets the CSAR-X. LM and Sikorsky won’t like it, of course, but LM has plenty of other DoD contracts to keep them happy and United Technologies can just sell to Boeing or maybe Eurocopter.
7. Falcon | August 23rd, 2008 at 2:43 am
Tankers are supposed to be produced at about one per month with deliveries starting around 2013. If that will interfere with 787 compensation orders then Boeing is in trouble (and I don’t think they are.)
Similary, Boeing responding to this RFP has nothing to do with “can ill afford to sink money…”, Boeing is not strapped for cash, and much less with the IAM discussions, 787 delay or busy 777 line. Sure they should not spend money on things with unlikely return but that is the only reason they shouldn’t respond.
I’m convinced Boeing will respond because they hope congress will bail them out but since they are not confident it will happen we now see them trying to change the RFP to better suit them and nothing wrong with trying that, hope for them it works.
Johny, I really don’t see the election having any impact as the selection will take place after the election is over.
8. Ward | August 23rd, 2008 at 5:11 am
Congress will take a very negative view if the Air Force changes the original RFP to favor the EADS/NG proposal, especailly if the Air Force does not give Boeing time to prepare a new offer. If the Air Force tries this, they will not be getting a tanker anytime soon. Honestly, people in the Air Force need to fired over this fiasco.
9. Ed | August 23rd, 2008 at 5:50 am
There are other options here, than simply giving the contract to EADS/NG, and that is upgrade the KC-135Es to KC-135Rs. That has always been the cheapest and fastest option, even though upgrading the USAF KC/RC-135 fleet is not a Boeing contract.
BTW Manual, Boeing has not made spares for the KC-135 since 1980, so they are not making money by dragging the KC-X program out.
Chris, the KC-30 carries 100,000lbs less fuel and less cargo than the KC-10, so how can it replace the three holer?
Since Congress, in 2005, decided the KC-X project will be a compitition, if Boeing pulls out, that kills the entire project. The KC-X selection is now under the DOD, not the USAF, because of the GAO report on unequilly competing both OEMs earlier. It apperars the DOD is going to rubber stamp the EADS/NG KC-30, in spite of the GAO. Congress is not going to sit on their hands on that.
This may be a very smart move by Boeing to force DOD and the USAF to actually difine what they want in a new tanker, something the original RFP was very vague on. With more time and a better written RFP, Boeing could give many proposals, getting the four SDDs into the USAF at various time periods, depending on model selected. They can offer a USAF version of the Italian KC-767A, Japanese KC-767J, the KC-767AT, a tanker version of either the B-767-300ERF or -400ER, a tanker B-777-200LRF, or even a tanker B-747-8F version.
OTOH, EADS can only offer the KC-30, a tanker version of the A-330-200F, or a tanker A-340-500 or -600.
10. JerryF | August 24th, 2008 at 2:06 pm
If you bother to read the GAO report you will see how egrgious the Air Force’s decision was. This competitiion has become too convoluted and political to result in a fair and objective choice. Millions of dollars have been wasted already and time squandered. Boeing has been forced to dance to changing tunes and respond with product lines were not envisaged when the rfp was originally offered. This has cost Boeing a great amount of time and money and the taxpayers have not received what was necessary. The process has become absurd.
11. Chris Wallace | August 25th, 2008 at 3:26 pm
> Chris, the KC-30 carries 100,000lbs less fuel
> and less cargo than the KC-10, so how can it
> replace the three holer?
By leveraging the additional fuel and cargo it can carry over the KC-135 fleet. For long-haul ferry ops you will need more KC-30As then KC-10As, but the entire KC-10A fleet is not in operation at any one time, so only a small part of the KC-30A fleet would need to be tasked to such missions, leaving the rest - with their extra lift - well-able to handle their own tasks.
12. James Baloun | August 26th, 2008 at 8:13 pm
Chris wrote:
>The KC-30A should easily have a fifty-year service >life with the USAF, negating the need to source a >new plane much before the next century.
Wow, the thought of yesterday’s aluminum tubes and procuring systems in the late 2000s. I expect aircraft in the late 2000s will look vastly different. But then I will not be here to see them. The KC-135 is still functional today but today’s new systems may be as obsolete by 2060 as a sailing ship next to an aircraft carrier.
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