KC-30 (Airbus) beats KC-767 (Boeing) for tanker contract

[The Duchess of Zeon]

She's not talking about peak oil, she's talking about Clinton or Obama somehow forcing the Air Force to shitcan the Airbus tanker contract and go back to Boeing should either of them become President. While I'm unsure exactly how they'd be able to pull it off, I wouldn't put it past them to try if they could, considering the strong protectionist tendencies of the Democrats, a tendency which is clearly not lost on either Obama or Hillery, both of whom have stated they wish to opt out of NAFTA.

Quite. We'll have aerial refueling tankers decades from now--the military will always get what it needs, no matter how much it costs.

Simply put, however, there is no signed contract yet--and if Boeing appeals, there won't be for a while. The procurement process is very long. If Boeing can drag out the appeals until a democrat is in office, they win. As simple as that. Because both democratic candidates are highly protectionist, and this is an obvious, straightforward issue for them to act on with plenty of support, which also pleases the remaining unions in the base.

[Aaron]

Cancelling such a contract is easy. But they would have to pay penalties for doing so.

This reminds me of Canada's attempt to replace its aging fleet of Sea King helicopters. Mulroney's conservative government had signed a contract to buy the EH-101, but this was promptly cancelled by Chretien's newly elected liberal government in 1993 at a $500 million penalty. But we still needed new helicopters, so they re-opened the bid process and ordered the CH-148 instead.

I would not be surprised in the least if this tanker contract becomes political fodder.

They actually did buy the EH-101, for the SAR role. Though Chretien had no idea what the difference was between a Comorant and our existing choppers anyways.

[General Trelane (Retired)]

Cancelling such a contract is easy. But they would have to pay penalties for doing so.

This reminds me of Canada's attempt to replace its aging fleet of Sea King helicopters. Mulroney's conservative government had signed a contract to buy the EH-101, but this was promptly cancelled by Chretien's newly elected liberal government in 1993 at a $500 million penalty. But we still needed new helicopters, so they re-opened the bid process and ordered the CH-148 instead.

I would not be surprised in the least if this tanker contract becomes political fodder.

They actually did buy the EH-101, for the SAR role. Though Chretien had no idea what the difference was between a Comorant and our existing choppers anyways.

I remember that. There was a lot of tinkering with specs and numbers to make it appear they weren't ordering exactly the same helicopter that they had cancelled.

[Adrian Laguna]

Hey, I'm wondering, didn't the old procurement system have things set-up so that no matter which product won every corporation got a slice of the pie?

"We have a superior product," said Richard Michalski, general vice president of the International Association of Machinists and Aerospace Workers, during a press call Monday. "For the Air Force to turn their backs on us is sinful."

I'm sure.

Boeing alleges European governments provided illegal subsidies for Airbus to develop certain commercial jets, including the A330 on which the EADS tanker is based. In turn, EADS and Airbus claim Boeing has received unfair handouts, including the tax incentives Washington state offered to secure final assembly of Boeing's new 787 Dreamliner jet.

Illegal what? What's wrong with a government investing in its own industries?

[Ma Deuce]

This reminds me of Canada's attempt to replace its aging fleet of Sea King helicopters. Mulroney's conservative government had signed a contract to buy the EH-101, but this was promptly cancelled by Chretien's newly elected liberal government in 1993 at a $500 million penalty. But we still needed new helicopters, so they re-opened the bid process and ordered the CH-148 instead.

It does occur to me that much like the EH101, cost could easily be used as a justification for canceling the Airbus contract: The KC-767 is cheaper, around $130 million per unit, compared to ~$200 million for the KC-30.

[Elfdart]

Chalmers Johnson called this one back in 2004. In a C-Span interview he said that the war industries had even the most "liberal" members of Congress in their pockets. He said (paraphrasing): Watch what happens if Boeing should lose a contract. Washington's two liberal senators will be about as "liberal" as Franco.

I turn on the tube this morning and what do I see? Sen. Patti Murray in full drama queen fashion blubbering that the new deal is bad because the Air Force didn't consider jobs in Washington when making the decision. Hey dipshit, the purpose of buying things for the armed forces is to get the equipment needed to defend the country, NOT military socialism.


The fact that the USAF didn't include "jobs" among the criteria tells me this deal might be a good one.

[Gerald Tarrant]

Boeing alleges European governments provided illegal subsidies for Airbus to develop certain commercial jets, including the A330 on which the EADS tanker is based. In turn, EADS and Airbus claim Boeing has received unfair handouts, including the tax incentives Washington state offered to secure final assembly of Boeing's new 787 Dreamliner jet.

Illegal what? What's wrong with a government investing in its own industries?

WTO rules probably prohibit this. The argument is that subsidies to Airbus allow Airbus to be profitable at lower prices. I've heard it expressed as "Boeing isn't competing with a company they're competing with an organ of government." In reality Boeing is the beneficiary of plenty of government aid. It's probably a good thing that there are alternatives, i.e. the market isn't ruled by a single seller, so the subsidies on both side mean that no matter what both companies could keep limping along through market reversals.

Quick look at wikipedia found this

On 31 May 2005 the United States filed a case against the European Union for providing allegedly illegal subsidies to Airbus. Twenty-four hours later the European Union filed a complaint against the United States protesting support for Boeing.[29]

I'm sure most of the non-participants are just quietly laughing and buying both planes at their subsidized (lower) prices.

[General Trelane (Retired)]

Boeing alleges European governments provided illegal subsidies for Airbus to develop certain commercial jets, including the A330 on which the EADS tanker is based. In turn, EADS and Airbus claim Boeing has received unfair handouts, including the tax incentives Washington state offered to secure final assembly of Boeing's new 787 Dreamliner jet.

Illegal what? What's wrong with a government investing in its own industries?

It's only wrong when another country does it!

American wheat producers constantly whine about 'unfair' Canadian subsidies, but the US also heavily subsidizes its own producers.

[General Trelane (Retired)]

The fact that the USAF didn't include "jobs" among the criteria tells me this deal might be a good one.

I agree, but I think they actually did consider jobs in the deal. Had it not included plans for the final assembly to be done domestically, I'm certain they would not have chosen Airbus.

[Big Phil]

What's so rotten about this decision is that Boeing was discouraged from offering the 777 because they were told the Air Force wanted a smaller tanker. The Air Force also changed the RFP requirements late in the game specifically to keep the Northrop Grumman-EADS offering in the picture.

The 777 vs. the A330 is a much more favorable comparison for Boeing, and a decision between those two planes in favor of EADS would be much easier to justify, as it's apples to apples. As it is, what the Air Force did looks really bad, and even people who agree tha the A330 is the better plane (compared to the 767) are pissed because of the appearance of impropriety and the advantages that EADS received.

[Aaron]

I remember that. There was a lot of tinkering with specs and numbers to make it appear they weren't ordering exactly the same helicopter that they had cancelled.

Indeed, so much so that it's only entered service in the last few years. They did it again with the Sea King replacement, one company pulled out in protest.

[Big Phil]

In terms of jobs - selecting the Boeing entry would mean at least 10,000 jobs in Kansas and Washington for the next 20 years. The EADS selection means 1500 jobs in Alabama for the next 20 years. In terms of economic impact, selecting the Boeing entry would have been the better decision.

Personally, I hope Obama or Clinton make a huge fucking deal about McCain's role in this decision come general election time. This whole thing stinks to high heaven.

[Ma Deuce]

What's so rotten about this decision is that Boeing was discouraged from offering the 777 because they were told the Air Force wanted a smaller tanker. The Air Force also changed the RFP requirements late in the game specifically to keep the Northrop Grumman-EADS offering in the picture.

Indeed. The KC-30/45 is actually larger than the KC-10 Extender, yet cannot carry as much fuel (244,000lb vs. 356,000lb), due to more of it's interior being devoted to cargo rather than fuel. The KC-135, on the other hand is smaller than most people realize, somewhere between the size of a 737 and 757, yet can still carry 200,000lb of fuel. I'm wondering what kind of infrastructure modifications the Air Force would need to make the much larger KC-30 fit the hangar spaces the KC-135 used to occupy.

The "KC-777" for comparison would be able to carry around 350,000lb (expandable to 400,000lb using the stretched 777-300 series fuselage), but is significantly larger than even the KC-30.

[Sidewinder]

More political bullshit, this time from the Democrats.

Lawmakers Threaten to Kill Tanker Deal

By DAVID M. HERSZENHORN
Published: March 6, 2008

WASHINGTON — Lawmakers on the House Appropriations Committee warned Wednesday that they would kill a multibillion-dollar contract to replace the fleet of Air Force fueling tankers if the Pentagon did not adequately explain why it gave the deal to a partnership between Northrop Grumman and the European parent of Airbus, instead of to Boeing.

The lawmakers, including Representative John P. Murtha, Democrat of Pennsylvania, the chairman of the Defense Appropriations Subcommittee, said they were troubled that the contract announced by the Air Force last week puts a huge military construction program substantially in the hands of a foreign company, the European Aeronautic Defense and Space Company, or EADS. And they bluntly warned that they could squash it.

“This committee funds this program and all this committee has to do is stop the money and this program is not going to go forward,” Mr. Murtha said at a hearing that began a formal inquiry by Congress.

“We want to make sure everybody is treated fairly,” he told Air Force procurement officials before their testimony. “We want to make sure you made the right decision.”

Air Force officials, including Sue C. Payton, assistant secretary of the Air Force for acquisition, insisted that the bids by the Boeing Company, based in Chicago, and Northrop Grumman, based in Los Angeles, were judged fairly. “As a result of this fair and open competition,” she testified at the hearing, “the Air Force will deliver a tremendous capacity to the war fighter at a great value to the taxpayer.”

Mr. Murtha and other House Democrats also attacked Senator John McCain of Arizona, the Republican presidential candidate, for his role in scuttling a previous deal to let Boeing supply the tankers. Mr. McCain has boasted of those efforts, saying he prevented wasteful spending, but the Democrats on Wednesday said it was his fault that military industry jobs were going overseas.

“Having made sure that Iraq gets new schools, roads, bridges and dams that we deny America, now we are making sure that France gets the jobs that Americans used to have,” said Representative Rahm Emanuel, Democrat of Illinois. “We are sending the jobs overseas, all because John McCain demanded it.”

The new contract allows spending up to $40 billion in the first phase of a multidecade program to replace the aging aerial tanker fleet, which dates from the 1950s. The fleet is crucial to keeping Air Force fighter jets, bombers, cargo planes and other aircraft aloft on critical missions, allowing them to refuel in midair.

The total contract could be worth as much as $100 billion over 30 or more years, as the Air Force seeks to acquire 400 tankers at a rate of about 15 a year.

Boeing will receive a briefing from the Pentagon on Friday and can then formally appeal the decision.

The Northrop Grumman victory was enthusiastically greeted by lawmakers from Alabama and Mississippi, where the tankers will be assembled and thousands of jobs will be created. But it has been criticized harshly by lawmakers from Washington State, where Boeing builds planes, and Kansas, where Boeing would have assembled the tankers.

Representative Norm Dicks, Democrat of Washington, kept a scowl fixed on his face throughout the hearing. “The Air Force has made a big mistake,” he said.

Under the deal that Mr. McCain helped scuttle, the Air Force would have leased tankers from Boeing under a sole source contract.

That deal collapsed from a scandal that led to the departure of Boeing’s chief executive, the resignation of the secretary of the Air Force and the imprisonment of two Boeing executives, including one who was the former Pentagon acquisition officer on the tanker program. Another Pentagon official involved later committed suicide.

A spokeswoman for Mr. McCain declined to comment on the criticism on Wednesday but referred to previous comments by Mr. McCain in which he stood by his effort to kill the earlier Boeing deal. “I have always insisted that the Air Force buy major weapons through fair and open competition,” Mr. McCain said after the new tanker contract was announced.

He also said that the impact on American jobs should not be a primary concern. “I’ve always felt that the best thing to do is to create the best weapons system we can at minimum cost to taxpayers,” Mr. McCain said.

At the hearing, Mr. Murtha accused Mr. McCain of delaying the tanker replacement by interfering in the earlier deal.

“There was tremendous pressure from an individual in the Senate to get competition,” he said, adding, “It’s costing billions of dollars, and we are at a point where we don’t know how long it is going to take to get these things out in the air.”

Mr. Murtha also noted that the two major Democratic candidates for president, Senators Hillary Rodham Clinton of New York and Barack Obama of Illinois, had expressed opposition to the deal with Northrop Grumman.

Meanwhile, the USAF's tankers continue to deteriorate as they rack up flight hours.

[Ma Deuce]

Well it's hardly surprising at least some Democrats would respond this way, though if the chairman of the House Appropriations subcommittee wants this deal dead, then Obama or Clinton may not have to take any action against it themselves.

I love the way Murtha totally distorts McCain's role in killing the KC767 lease deal and fails to make any mention of the scandal surrounding it. McCain didn't oppose the deal because he felt the A330 was a better aircraft, it was because the KC767 would have been procured under a lease deal which was not cost-effective, and that was simply handed over to Boeing without any bidding process whatsoever.

On the other hand, the A330's selection still seems a bit suspicious given the fact it was previously dismissed by the Air Force as being too large:

http://www.military-aerospace-technolog ... ?DocID=335

Airbus could have offered the smaller A310 MRTT, but as I recall that has lost every overseas competition it's faced against the KC767.

[Big Phil]

This keeps trying to gain traction, but nothing's taken so far. Maybe this time...

http://my.earthlink.net/article/pol?gui ... 1965174767

McCain Advisers Lobbied for Airbus
March 11, 2008 10:01 AM EDT

WASHINGTON - Top current advisers to Sen. John McCain's presidential campaign last year lobbied for a European plane maker that beat Boeing to a $35 billion Air Force tanker contract, taking sides in a bidding fight that McCain has tried to referee for more than five years.

Two of the advisers gave up their lobbying work when they joined McCain's campaign. A third, former Texas Rep. Tom Loeffler, lobbied for the European Aeronautic Defence and Space Co. while serving as McCain's national finance chairman.

EADS is the parent company of Airbus, which teamed up with U.S.-based Northrop Grumman Corp. to win the lucrative aerial refueling contract on Feb. 29. Boeing Co. Chairman and CEO Jim McNerney said in a statement Monday that the Chicago-based aerospace company "found serious flaws in the process that we believe warrant appeal."

McCain, the Republican presidential nominee in waiting, has been a key figure in the Pentagon's yearslong attempt to complete a deal on the tanker. McCain helped block an earlier tanker contract with Boeing and prodded the Pentagon in 2006 to develop bidding procedures that did not exclude Airbus.

EADS retained Ogilvy Government Relations and The Loeffler Group to lobby for the tanker deal last year, months after McCain sent two letters urging the Defense Department to make sure the bidding proposals guaranteed competition.

"They never lobbied him related to the issues, and the letters went out before they were contracted" by EADS, McCain campaign spokeswoman Jill Hazelbaker said Monday.

According to lobbying records filed with the Senate, Loeffler Group lobbyists on the project included Loeffler and Susan Nelson, who left the firm and is now the campaign's finance director. Ogilvy lobbyist John Green, who was assigned the EADS work, recently took a leave of absence to volunteer for McCain as the campaign's congressional liaison.

"The aesthetics are not good, especially since he is an advocate of reform and transparency," said Richard Aboulafia, an analyst with the aerospace consulting firm Teal Group. "Boeing advocates are going to use this as ammunition."

McCain, a longtime critic of influence peddling and special interest politics, has come under increased scrutiny as a presidential candidate, particularly because he has surrounded himself with advisers who are veteran Washington lobbyists. He has defended his inner circle and has emphatically denied reports last month in The New York Times and The Washington Post that suggested he helped the client of a lobbyist friend nine years ago.

He has also cast himself as a neutral watchdog in the Air Force tanker contract, one of the largest in decades.

"All I asked for in this situation was a fair competition," he told reporters Monday at Lambert Field in St. Louis, home of a Boeing fighter jet plant.

On Friday, he defended his aggressive oversight: "I never weighed in for or against anybody that competed for the contract. All I asked for was a fair process. And the facts are that I never showed any bias in any way against anybody - except for the taxpayer."

Last week, Air Force Secretary Michael Wynne told the Senate Armed Services Committee that the EADS-Northrop Gruman plane was "clearly a better performer" than the one proposed by Boeing.

It is unclear what EADS hired the lobbyists to do. Loeffler and Airbus officials did not immediately respond to phone and e-mail messages left late Monday.

A Boeing spokesman declined to comment Monday on the links between McCain and lobbying efforts on behalf of EADS.

But Boeing supporters already have begun to accuse McCain of damaging Boeing's chances by inserting himself into the tanker deal.

One of them, Rep. Norm Dicks, D-Wash., said the field was "tilted to Airbus" because the Pentagon did not weigh European subsidies for Airbus in its deliberations - a decision he blamed on McCain. Everett, Wash., is where Boeing would perform much of the tanker work, and Dicks is a senior member of the House Appropriations defense subcommittee.

In December 2006, just weeks before the Air Force was set to release its formal request for proposals, McCain wrote a letter to the incoming defense secretary, Robert Gates, warning that he was "troubled" by the Air Force's draft request for bids.

The United States had filed a complaint with the World Trade Organization alleging that Airbus unfairly benefits from European subsidies. Airbus in turn argued that Boeing also receives government support, mostly as tax breaks.

Under the Air Force proposal, bidders would have been required to explain how financial penalties or other sanctions stemming from the subsidy dispute might affect their ability to execute the contract. The request was widely viewed as hurting the EADS-Northrop Grumman bid.

The proposed bid request "may risk eliminating competition before bids are submitted," McCain wrote in a Dec. 1, 2006, letter to Gates. The Air Force changed the criteria four days later.

Dicks said the removal of the subsidy language was a "game-changer" that favored EADS over Boeing.

"The only reason that they could even bid a low price is because they received a subsidy," Dicks said last week. "And Senator McCain jumped into this and said that (the Air Force) could not look at the subsidy issue - which I think is a big mistake, especially when the U.S. trade representative is bringing a case in the (World Trade Organization) on this very issue."

EADS' interest in the tanker deal is evident in the political contributions of its employees. From 2004 to 2006, donations by its employees jumped from $42,500 to $141,931, according to an analysis by the nonpartisan Center for Responsive Politics. So far this election cycle, company employees have donated $120,350. Of that, McCain's presidential campaign has received $14,000, the most of any other member of Congress this election cycle.

McCain prides himself in the role he played blocking an earlier version of the tanker deal that gave the contract to Boeing. As chairman of the Senate Commerce Committee and of an Armed Services subcommittee, McCain led an investigation that eventually helped kill that contract in 2004. A former Air Force official and a top Boeing executive both served time in prison, and the scandal led to the departure of Boeing's chief executive and several top Air Force officials.

"I intervened in a process that was clearly corrupt," McCain said Friday. "That's why people went to jail."

While McCain has praised Boeing for fixing its practices, his campaign said the experience prompted him to demand "a full, fair and open competition." His letters - one to Deputy Defense Secretary Gordon England in September 2006 and the other to Gates - were sent with that spirit in mind, Hazelbaker said Monday.

Once the rules were in place, Hazelbaker said, bidders submitted proposals, the Air Force reviewed them and the contract was awarded.

"That is a process that McCain, appropriately, had absolutely no role in," she said.

----

Associated Press Writers Glen Johnson and Libby Quaid contributed to this report.

[Glocksman]

God knows I'm no McCain supporter, but given the proven criminality shown WRT the scuttled 'lease' deal, he performed a genuine public service in scuttling it.

That said, the picture of a would-be 'Mr. Clean' having an inner circle made up of DC lobbyists certainly undercuts the image McCain would like to project.

[Edward Yee]

I side with whichever of the two is in the best long-term strategic interest of the United States, jobs be damned.

[Big Phil]

I side with whichever of the two is in the best long-term strategic interest of the United States, jobs be damned.

Then it's either the 767 (smaller and more agile than the A330) or the 777 (same size as the A330, but carries more fuel).

Where the A330 is superior to either Boeing entry is in its ability to carry significantly more cargo. It seems like the Air Force is trying to have its tankers double as freighters - I'm not sure that's a good idea. Trying to cram too many abilities into a single airframe gets you mediocre craft like the F/A-18 and the JSF, instead of aircraft that are very good at a single thing.

[Simplicius]

Both the KC-10 and the KC-135 can handle cargo, though. If I were the Air Force, I wouldn't want a new tanker that sacrificed a useful capability of my old ones.

[Sea Skimmer]

Where the A330 is superior to either Boeing entry is in its ability to carry significantly more cargo. It seems like the Air Force is trying to have its tankers double as freighters - I'm not sure that's a good idea. Trying to cram too many abilities into a single airframe gets you mediocre craft like the F/A-18 and the JSF, instead of aircraft that are very good at a single thing.

It’s not just a good idea, it’s damn vital and we’ve been suffering from only the KC-10s having a worthwhile cargo capability. The KC-135 can carry cargo on paper, but its limited by what you can pass by hand through the crew doors. Our cargo plane fleet is absurdly overworked as it is, and being able to put palletized cargo on tankers would greatly reduce the number of sorties needed to deploy an air wing. It also means that all sorts of ferry and training flights flown by tankers can now become cargo mission at the same time.

Any airliner derived tanker design is going to have huge open spaces inside the fuselage, there is no way you can fill the whole plane with fuel and still have it fly. That means it’s really crazy not to have a decent way handling some cargo to use that volume when you need it.

[Big Phil]

Where the A330 is superior to either Boeing entry is in its ability to carry significantly more cargo. It seems like the Air Force is trying to have its tankers double as freighters - I'm not sure that's a good idea. Trying to cram too many abilities into a single airframe gets you mediocre craft like the F/A-18 and the JSF, instead of aircraft that are very good at a single thing.

It’s not just a good idea, it’s damn vital and we’ve been suffering from only the KC-10s having a worthwhile cargo capability. The KC-135 can carry cargo on paper, but its limited by what you can pass by hand through the crew doors. Our cargo plane fleet is absurdly overworked as it is, and being able to put palletized cargo on tankers would greatly reduce the number of sorties needed to deploy an air wing. It also means that all sorts of ferry and training flights flown by tankers can now become cargo mission at the same time.

Any airliner derived tanker design is going to have huge open spaces inside the fuselage, there is no way you can fill the whole plane with fuel and still have it fly. That means it’s really crazy not to have a decent way handling some cargo to use that volume when you need it.

As I understand it, where Boeing has a legitimate gripe is that the Air Force asked them to put a bid forth on a tanker, and then changed the criteria mid-stream and asked for a tanker/freighter hybrid. The 777 would have been a superior offering than the 767 in that case - at that point it's a question of whether the Air Force wants a tanker first and a freighter second (select the 777), or vice versa (select the A330).