The US Air Force has rejected Boeing's offer of 60 discounted C-17 Globemaster transports. But while it says the cost is too high, the USAF remains receptive to further talks.
Meanwhile, to cut costs, BAE Systems has been dropped as provider of logistics and training in Boeing's bid to supply the C-17 as the UK Royal Air Force's Short Term Strategic Airlifter (STSA).
Boeing presented an unsolicited five-year deal early last year, offloading C-17s at $149 million each instead of today's $199 million. Deliveries would have started in fiscal year 2003 when existing production contracts for 120 C-17s are set to end.
About 15 C-17s would have been built a year, and with Boeing planning to invest $275 million to further cut production costs. The USAF ordered 15 more C-17s last year for special operations, although it also reduced this year's purchase from 15 to 12 to free funds for two Lockheed Martin C-130Js.
The USAF says Boeing's offer "was not compelling" as the price "was higher than anticipated based on ongoing planned cost reduction efforts". Congress requires a 25% saving for a multi-year procurement. "The terms and conditions proposed by Boeing were not fully understood," adds the USAF.
An air mobility requirements study is under way and further offers from Boeing would not be ignored, says the USAF. Boeing says it has not been informed of the decision, but says the offer remains on the table.
Meanwhile, the UK Government's request for US-supplied support and training for four USAF-standard C-17s means that BAE can no longer be part of Boeing's STSA bid. BAE had teamed with Boeing to provide logistics and training. Included in the $210 million package is a spare Pratt &Whitney F117 (PW2000) engine, other spares, support equipment and 14 Boeing personnel to provide support for up to nine years from first delivery. Buying in USAF standard aircraft is the "quickest, easiest, shortest way of achieving the capability quickly", says an industry source.
The original STSA competition was scrapped last August as none of the five bids offered an acceptable solution at an affordable price. Industry sources suggest the C-17 submission failed to meet the financial requirement because of the cost of setting up UK-based maintenance and training.
An STSA decision - between Air Foyle, offering the AntonovAn-124, and the C-17 - was due before late April, but treasury concerns have delayed a conclusion (Flight International, 25 April-1 May). Key to the decision is the cost, with Air Foyle claiming its bid is around 40% of its competitor.
Source: Flight International
