Boeing is facing an uphill battle as it tries to overturn the U.S. Air Force’s decision to award a $35-billion contract to a competing Airbus design for the KC-X refueling tanker.
Arrogance about its relationship with the U.S. Defense Dept., lack of focus on customer requirements and reluctance to provide detailed pricing data contributed to Boeing’s stunning loss late last month of a Pentagon contract to build aerial refuelers. “Boeing ‘knew more than the customer’ what the customer wanted, and in its arrogance it didn’t listen,” says a source close to the 767 tanker team. The proposal’s executive group spent a lot of time “doing some soul-searching” as a result...
Boeing’s loss in the KC-X competition is twofold. The revenue will not materialize and the likely candidate to be the 767’s final significant customer has evaporated, though the commercial side of the house isn’t giving up (see p. 13). Without new orders, just four years of work remain. Perhaps more daunting is that its only commercial rival, Airbus, will now have a final assembly foothold in the U.S. And a former Air Force official cautions that the new stateside infrastructure only adds to an already bloated industrial base.
The competition winner, Northrop Grumman/EADS North America, plans to select a contractor within the next month to break ground on new facilities in Mobile, Ala., for final assembly of the KC-45 and A330-200F.
That new facility will begin assembling its first KC-45, the second production aircraft, late in 2010. In 2011, five KC-45s and one A330-200F are expected.
Air Force Secretary Michael Wynne told senators that the winner met the performance requirements “across the spectrum.” Boeing’s plan was “a little more risky,” and Northrop Grumman/EADS offered a better price, Wynne said. “The Northrop Grumman airplane was clearly a better performer,” he remarked...
Sources familiar with the proposals say Boeing foundered in all five evaluation criteria outlined by the U.S. Air Force for the competition: Mission capability (including meeting system requirements and program management), proposal risk, past performance, cost and an assessment of each refueler’s performance in various classified operational scenarios...
The Air Force’s request for proposals (RFP), however, opened the door to cargo and passenger carriage, a parameter Boeing downplayed. The Northrop/EADS A330’s longer range and larger cargo and passenger capacity was attractive to the Air Force in light of its fourth key performance parameter, airlift capability. That is an indication of the shift from short-haul missions suppporting the war on terrorism to overflying vast expanses in the Pacific (see p. 24). One analyst notes that the Air Force was shopping for a Ford Explorer, but wound up selecting a Land Rover for the same price...
