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No Protest; EADS Urges Close Boeing Tanker Oversight

By Colin Clark Friday, March 4th, 2011 1:39 pm
Posted in Air, International, Policy

UPDATED: Rep. Norm Dicks Comments

Arguing that Boeing may well find it difficult to build and fly its airborne tanker on cost and on schedule, EADS NA made clear the Air Force had run the competition with integrity and fairlness and would not pursue a bid protest on one of the largest Pentagon procurements ever.

EADS made clear that Boeing won the competition with a comfortable margin, underbidding EADS NA by almost 10 percent, $20.6 billion versus $22.6 billion. That bid was so slow that EADS NA Chairman Ralph Crosby said he believed it important that Boeing be watched closely to make sure they can deliver at that price and on schedule. “If they aren’t, then they should be held accountable,” he said. CEO Sean O’Keefe said the company’s friends on Capitol Hill would be watching Boeing to provide oversight.

Crosby said the company decided not to protest because the Air Force “has been absolutely scrupulous in following the rules.”

The breadth of that price difference led Crosby to conclude that Boeing made “extremely low-ball bid to achieve their strategic objectives” of keeping EADS out of the American military market.

“When you are in a fixed price game and the other guy decides he is going to win at any cost there isn’t much you can do,” Crosby said, making it clear that he thought Boeing made a strategic decision to bid low on the tanker to ensure EADS did not start building cargo or tanker aircraft in the United States. He pointed to the fact that EADS would have been ready to fly its first aircraft in 2013, two years earlier than Boeing plans.

The EADS decision drew a kind word from one of Boeing’s staunchest supporters on Capitol Hill. “I am encouraged by the announcement today from the European Aeronautic Defence and Space Company (EADS) that it will not seek to prolong the Air Force’s procurement of Boeing KC-46A tankers by protesting the decision made last week,” Rep. Norm Dicks said. “This clears the way for the tanker acquisition process to move forward rapidly so that we can begin the replacement of the Eisenhower-era KC-135 tankers. It is clear that the competition was fair and objective: Boeing won by offering a more fuel-efficient tanker at a more reasonable price.”

During today’s press conference, Crosby sent one last barb at Boeing, saying his company stands ready to supply some of its tankers should Boeing “falter” in its efforts to build a new airborne tanker.

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	Formula March 4th, 2011 at 2:09 pm Let the lessons learned from the F35 program be applied here. There is no room for the type of cost overruns we are seeing on the F35 to be here on this Tanker program. I hope Boeing can stick to their schedule and costs and I hope the USG withholds incentives when overruns are experienced that are the sole fault of the contractor. If its 100% contractor’s fault, they eat the cost overrun; if the cost overrun is 100% USG causal, then the USG eats it. If it is a shared cost overrun, then the the USG and the contractor negotiate who pays what.….……its that simple.
	Sky March 4th, 2011 at 2:45 pm I’m tired of hearing EADS whine about their loss and how our men and women in uniform are not getting the most capable tanker available. The 767 aircraft has been around for ever and has a long history and proven track record. There are a couple of the 767 tankers out there flying already and when Boeing’s done with this contract there will be many more. Let’s remember who built the KC-135 (Boeing) and how long they have been out there flying. No one has more experience than Boeing when it comes to building tankers.
	Robert March 4th, 2011 at 3:32 pm I totally agree Sky.
	irtusk March 4th, 2011 at 6:18 pm I’m tired of hearing about what Boeing did 60 years ago as ‘proof’ of their experience at building tankers. Is there ANYONE from the original KC-135 program still working at Boeing? In reality both companies have about the same experience. Boeing has built 8 (4 for Italy and 4 for Japan) and EADS has built 5 (3 for Australia and 2 for the UK) with another 28 on order
	pfcem March 4th, 2011 at 8:58 pm P-8A Poseidon anyone?
	pfcem March 4th, 2011 at 9:05 pm Err… It is not what Boeing did 60 years ago, it is what Boeing has been doing for 60 years. Boeing has 60+ years of experience building tankers, EADS has <10 (A310 MRTT IOC 2004).
	Oblat March 4th, 2011 at 9:49 pm American warfighters are used to sacrifice. So when called upon to cope with second best to save an obsolete Boeing production line and prevent EADS investing in America so that Boeing can maintain it’s monopoly — no doubt they will rise to the occasion. Boeing has already outlined how it’s going to jack up the prices — change orders, failed blue sky developments, front loading and extensive rework contracts. Having won the contract through buying congressmen, jacking up a “fixed price” contract is really a minor problem for Boeing. The bid claims that they will build the tankers for less than it costs to build a purely commercial 767 and operate them for less than a 787 which is two generation more advanced. The chance that Boeing isnt going to screw American taxpayers yet again is zero.
	tomtrebblehorn March 4th, 2011 at 10:18 pm You’re a Boeing stock holder or something maybe even a worker. I have flown on the other end of the tanker, A330 MRTT and also hooked up to an Italian 767, I can assure you that you are full of it and know nothing. The A330 offloaded fuel faster and it was easier to do so. I fly to support and defend our nations of the Western World and I do hope Boeing can deliver on time and at cost, but I also have a sneeky feeling that EADS won the battle as within the next 15 years Airbus will be building planes in the USA as there is no way now that Boeing can even afford to produce a 737 Next Generation Single Aisle plane and with the A350 needing room it will only make sense for Airbus to build in America as we have the space and need to in source high paying quality non union jobs. I do hope Mr Dicks and friends hold Boeing to what they agreed to…but like Crosby said, EADS will be ready to deliver when the American War Fighter needs those tankers…
	tomtrebblehorn March 4th, 2011 at 10:19 pm Well said, we will see what Boeing did, but if I owned any Boeing stock it is time to sell now… I really think EADS hoodwinked Boeing into a really bad business deal
	irtusk March 4th, 2011 at 10:30 pm > It is not what Boeing did 60 years ago, it is what Boeing has been doing for 60 years. What has Boeing been doing for 60 years? Not building tankers, I’ll tell you that much. Boeing went 40 years without building a single tanker. Experience degrades over time without constant use. If you don’t do something for 40 years, all previous experience deteriorates to the point of worthlessness.
	Gregory Savage March 4th, 2011 at 10:52 pm They sure supported a lot of tankers over that time though. There is no arguing obviously with the European crew, this was the right tanker though no matter what the other considerations are.
	Gregory Savage March 4th, 2011 at 10:54 pm Do you work for EADS or live in Alabama? If anyone has vested interest in any of this it seems to be you. So passionate, did you loose something.
	DEWright_CA March 4th, 2011 at 10:58 pm They also acquired the knownedge and experience of MD from the KC-10s which were built in the 80’s, so yes that is more current than 40 years ago. The anti-boeing sentiment runs deep; but the reality is that the companies just flat experience is supporting American troops, with American needs is best suited there versus EADS. Even if the last contract was issues; the NG/EADS teams would have had NG playing integrator to EADS. EADS has shown in there commercial aircraft and in there first dedicated mil airframe (A400) that they don’t fully get it. Now, if LMC was still in the commercial market, you could see a L1011 based aircraft better suited than EADS. Why? Because the EADS aircraft are desgned first and foremost for the European markets not American; the aircrews from the US adapt; but they automate and build there airframes for there point of view and that just doesn’t sit well with many american pilots.
	Oblat March 5th, 2011 at 12:56 am Yes 40 years supporting an obsolete airframe — that is real handy experience since the 767 is obsolete already. As Wright says American airmen are used to old crappy aircraft held together with string — and Boeing knows how to build them.
	irtusk March 5th, 2011 at 3:15 am > They also acquired the knownedge and experience of MD from the KC-10s which were built in the 80’s I would be careful pointing to the KC-10 At the time McD had less experience than EADS (ie NONE) and produced a darn fine tanker. Apparently lack of experience didn’t hurt them in the slightest.
	Guest March 5th, 2011 at 4:40 am What is the same is that Boeing has active experience with the KC135, from building first and maintaining since. The beauty of using an already flying off the shelf 767 with mods will make it much more snap-together. The revamped assembly line process from the 787 is where the economies really happen, they are revolutionary for airplane assembly. The miscue with the broken boom for Airbus didn’t help. What this really achieved was it was originally a Cinderella dance for Boeing that has taken years, shed billions and now falls at a time when Boeing needed it worse than Airbus or the Government so Boeing turned in a blowout deal. It is a new plane, built now, not with 50 year old technology. It will have to stand on its own merits and obviously will be a giant enhancement to the KC135, now, what about the other nearly 60 year old planes the B52?
	qwerty March 5th, 2011 at 9:10 am “They also acquired the knownedge and experience of MD from the KC-10s which were built in the 80’s, so yes that is more current than 40 years ago.” Irrelevent. There is no connection between sustaining-type work MD has been performing, and new development work, whch the KC-46 will require. The KC-10 development team was dissolved a long time ago. The experience argument is as overwrought as the claim of 50,000 jobs.
	tomtrebblehorn March 6th, 2011 at 12:37 am No Greg, been out in AZ watching this one for a while, when our great Senator J McCain exposed Boeing for what they are and sent some USAF civs to jail on this one. Do you remember those days gone bye…all I am saying that watching from a business point of view that EADS may have been smart and now Boeing and all the congressional lovers up in WA and KS will now have to beware that Boeing may be coming back to the table for more cash and no tankers in a few years and what will people like you and I do when Boeing asks for more money and EADS has about 50 MRTTs flying for out Allies?
	Mike March 6th, 2011 at 1:06 am Boeing’s 767 based aerial tanker will not be another F-35 because it is based on a proven platform, an aircraft that airliners have flown for 30 years; thus, there will be very little surprises when Boeing rolls out their first 767 based tanker prototype. And if companies like FedEx are buying 767 aircraft to carry freight, it must mean that someone else thinks that the 767 is a good aircraft because I’m sure FedEx would have bought a EADS aircraft if it was cheaper to operate.
	Oblat March 6th, 2011 at 3:40 am Boeing is facing the problem that nobody is buying 767s so FedEx is proposed a deal to them — we’ll buy 767s at bottom of the barrel prices so you don’t have to shut down the production line until 2018 or whenever they can get their act together. It isn’t a done deal even though Boeing is desperate — if they shutdown the production line their razor thin margins evaporate. FexEx is likely wanting to buy the 767 at less than cost.
	Oblat March 6th, 2011 at 3:45 am The breakdown of the competition results shows that the 330 was much better at mission effectiveness — much to the embarrassment of Boeing who wanted the details kept secret. Giving the warfighter second best to make sure Boeing doesn’t have any competition — way to go!
	Oblat March 6th, 2011 at 3:51 am Fedex has a reputation in the industry of buying the scrap aircraft — they recently just transitioned out of 727s for instance to second hand 757s. They buy the stuff nobody else wants anymore at bargain basement prices. The 767 looks perfect from that point of view it’s obsolete right of the production line with no other buyers.
	LeanManufacturing March 7th, 2011 at 10:36 am Nothing about the Boeing tanker is off-the-shelf. It is a paper airplane that has not been put together yet. When they build the first one, they will have experience doing so. Boeing has _ZERO_ experience right now building the proposed aircraft. Yes, the experience from the 767 line is a huge benefit, but since they will have to spin off a new line to produce the tanker, some of that is lost. Also, the lean manufacturing processes used on 767 variants now is out the door as well. I hope this is not the case (as a taxpayer), but as an engineer with Lean experience, I am less than thrilled.
	SKy March 7th, 2011 at 11:04 am Apparently you have not taken in much information on the M400 program EADS has gone back to the table on and requested more money. Not to mention the trade practices that have been exposed on the Majority of the Airbus aircraft. I also want you to know; I have no stock and have never worked for Boeing. I’m an American citizen who spent several years in the United States Air Force working on our military planes. It is people like you who are the reason this economy is in the shape it’s in. We need to put these jobs in the hands of American workers. Building aircraft for the American military !!!!
	old391 March 7th, 2011 at 12:45 pm Sky, the tanker they built for Japan and Italy is not repeat NOT the same tanker they are going to sell to the Air Force. Look at how they were behind in that schedule just to make about 6 or 8 of them. I agress that Boeing will need to be CLOSELY monitored to make sure another F35 overrun does not happen.
	asdf March 7th, 2011 at 4:05 pm italy’s 767 were delayed for FOUR YEARS. and that from a company that’s 60yrs in the business and has a proven etctrack record/ only real wartime experience with tankers… go figure :)
	asdf March 7th, 2011 at 4:08 pm and since 767 was the last plane that doesn’t leave everything to the computer, that means that 787 __pit integration will be a bitch or at least the biggest source of delays, since 787 is an all-electric plane. and that kind of integration is difficult — been tried once on a f111 and was costly.
	asdf March 7th, 2011 at 4:09 pm khm — italy & japans’ problems
	pfcem March 7th, 2011 at 8:56 pm More irtusk BS. Even ignoring the KC-10 (McDonnell Douglas) Boeing built tanker ion the 1980’s. The most obvious are the KC-135Es ‘built/converted’ from used commercial 707 airframes. Another fairly well know example are the 8 Saudi KE-3.
	pfcem March 7th, 2011 at 8:58 pm The 767 is not obsolete.
	pfcem March 8th, 2011 at 8:07 pm Dream on. The KC-30 could not even complete the evaluation missions until the model data was altered from reality so that it could.
	pfcem March 8th, 2011 at 8:10 pm Italy’s KC-767s were delayed mostly by Italy (although Boeing’s best & brightest being put on the US KC-X didn’t help) insisting on doing much/most of the conversion work itself.
	Scott March 9th, 2011 at 5:48 pm What I don’t get is why, after they have won, is Boeing keeping their aircraft configuration a secret. What’s up with that?
	old391 March 10th, 2011 at 6:53 am If Boeing does not create 50,000 jobs in American then they are no better than Obama and the DemocRATs with their Job plan. Too bad we can not track where all the Jobs Boeing claims it will create are. If we find any of the 50,000 jobs being transferred outside the United States then Boeing should pay a fine and apologize to the American people for lying. But that will never happen
	Alan March 10th, 2011 at 10:07 am EADS has built how many tankers?
	Alan March 10th, 2011 at 10:12 am Sour Grapes. Ghut up.
	Oblat March 10th, 2011 at 11:07 am All there in black and white in the report. Perhaps it is too technical for you though.

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