For nearly a decade the USAF has been trying to replace its Boeing 707-based KC-135 fleet. One of the biggest procurements ever, this deal was always going to be controversial – and now, even though it looks to be all over bar the shouting, the implications will be felt for years to come.
When the USAF selected the Airbus A330-based Northrop Grumman/EADS KC-45 proposal over Boeing's KC-767 two years ago, Washington DC went into uproar over selection of a "foreign" aircraft. Congressional supporters - many from Boeing's home state of Washington - were apoplectic, while Northrop/EADS backers, many from the South - stressed that the KC-45 would be assembled in Mobile, Alabama, creating hundreds if not thousands of jobs and a new aerospace industry hub.
But the furore and a Boeing legal challenge saw the competition nullified and re-run under new selection terms revealed earlier this year. Many observers were not surprised the new request for proposals tilted the playing field to the advantage of Boeing’s smaller 767-based NewGen tanker, which promises 787-derived cockpit technology, a fly-by-wire refuelling boom and winglets.
Then, on 8 and 9 March, Northrop and EADS both made it clear they would not bid again, leaving the competition to sole contender Boeing. Northrop chief executive Wes Bush says the request for proposals "clearly favours Boeing's smaller refuelling tanker and does not provide adequate value recognition of the added capability of a larger tanker, precluding us from any competitive opportunity".
His EADS counterpart Louis Gallois says: "I don't think we have more chance going alone. For the time being, there is no opportunity to come back alone or with others."
So the result is what President Obama has wanted to avoid: a single-bidder competition in which the air force has relatively little leverage to get a good price.
Price remains a big question. "Given the experience of the last eight years, it largely comes down to Boeing's self-discipline, which frankly has been their undoing before," says Richard Aboulafia, vice-president of analysis for the Teal Group.
Boeing says it will deliver its proposal by 10 May and "intends to submit a fully responsive, transparent and competitive proposal that meets the terms the air force has announced." The USAF expects to make a decision later this year.
In Northrop's statement on its no-bid decision, Bush disclosed that the final price Northrop would have offered on the first 68 KC-45 tankers was a unit flyaway cost of $184 million, including non-recurring development costs. The price disclosure could indirectly pressure Boeing to offer a lower price on what Bush calls "a smaller, less capable design", adding that the "taxpayer should certainly expect the bill to be much less".
Boeing declines to comment directly on Northrop's flyaway unit cost disclosure, but says it will offer a lower total life cycle cost.
As for the fairness of an RFP seen by some as designed to ensure a "domestic" winner, Deputy Secretary of Defense William Lynn says: "We did not change the war-fighters' requirements to accommodate either offer." He adds: "The department strongly supports transatlantic defence industrial ties and believes they benefit the American war-fighter and taxpayer."
However, the KC-X saga may end up having serious transatlantic implications. European politicians cry foul, claiming the RFP was intended as an instrument of US economic protectionism.
Pierre Lellouche, French minister for Europe, calls the matter "serious" and says President Nicolas Sarkozy will intervene, and without offering specifics says: "I assure you there will be consequences."
Aboulafia believes that the diplomatic fallout could threaten US access to non-Franco or German defence markets, which have traditionally been readily accessible to US contractors, but sees an expedited push by the USA to replace its larger KC-10 tankers as an opportunity to defuse rising tensions.
In the domestic arena, Alabama senator Richard Shelby claims the RFP was "structured to produce the best outcome for Boeing".
Aboulafia says it is difficult to say how much domestic politics influenced the RFP process, but concludes: "It strains credibility to say partisan politics didn't play a role."
But is the KC-X drama really all but over? Boeing's Jim Albaugh is perhaps just being gracious as he awaits formal selection for the NewGen tanker. But he may well be speaking the truth when he says: "It's the longest-running soap opera since 'Days of Our Lives'. I'm not sure that we've seen the last episode."
Source: Flight International
