Just hours before the Air Force announced the winner of a $35 billion contract to build aerial refueling aircraft on Feb. 29, an Airbus plane lumbered off the runway in Getafe, Spain, and climbed to 27,000 feet to rendezvous with a Portuguese F-16 fighter.
Then, in the skies south of Madrid, the two aircraft edged closer and closer, until they were joined by a 50-foot boom hanging off the back of the big Airbus plane. For the first time, the boom pumped fuel into another plane, 2,000 gallons in all during several connections.
The technology to pass fuel from one plane to another may not be rocket science ”” in fact, aerial fuel booms have been in use for more than 50 years ”” but it helped Airbus’s parent and its partner, Northrop Grumman, establish their technical bona fides.
Eager to enter the American defense market, the European Aeronautic Defense and Space Company, the owner of Airbus, made several bold plays, perhaps none more dramatic than building the $100 million state-of-the-art refueling boom on spec.
As a result, Boeing, the pride of American aerospace, was outmaneuvered on its home turf for a contract that could grow to $100 billion, becoming one of the largest military purchases in history.
Boeing really blew it in proposing a smaller, older plane as compared to the EADS KC30 aircraft. Superior in virtually every way (size, range, payload) to the KC30 is Boeing’s 777 aircraft – it is a mystery to me why Boeing did not offer this plane as their tanker.
Boeing had no inducement to offer the best bid, because they counted on precisely what seems to be happening: that Congress would bail them out because they are an American company (in fact, the only American company that could bid on this contract without a foreign partner). Many of the same Members of Congress passed a law that specifically requires the DoD to pick the best military bid without reference to civilian job creation, but who cares about consistency?
This is a repeat of the Dubai World Ports fiasco, when Congress forced the rejection of the world’s largest and best port operator, which is actually run by a largely American management team, because it is owned by citizens of a strong American ally rather than by American citizens. Do people not remember what happened the last time the US went into protectionist mode? Do the terms “Great Depression” or “World War II” ring any bells?
I think it’s because the 777 production line is busy while the 767 line is about to close.
The cynic in me says that if they can keep this tied up in political fighting for a few more years, they can make more money selling 707 spares to keep the KC-135s going, and then come in with a KC-777 once the airline orders start to slow down a bit. I believe 777s are on about a 3 year backorder, and the government can certainly move that slowly.
Per Boeing’s head of the tanker program on CNBC Friday – the Air Force did not indicate that size of tanker was a key consideration. He said if they had, Boeing would have bid the 777 as their tanker offering. Shame on Boeing for being arrogant, if, in fact, they were. But shame also on the Pentagon for trying to stick it to Boeing to make a point about their illegal conduct in the earlier bid. Boeing did a complete housecleaning after this sordid affair and completely revamped their corporate ethics program. EADS is not known for being completely without sin in their ethics either.
I wonder if the Air Force will be getting fine bottles of French Champagne from their new EADS friends to celebrate? Anybody want to bet that the test flights the Air Force has to observe will be near the French Riviera?
As a Mobilian, I couldn’t be happier. There will be much-needed jobs to this area with Northrop Grumman and the ancillary activities will be almost as important.
r.d.
the newest tanker currently in the AF fleet is the KC10, based on the commercial DC10 – it is comparable in size to the 777. So why would Boeing think they’d go for a smaller (25+ years old in design) plane? Part of EADS pitch was that they offered superior equipment (and they did). Dumb, dumb, dumb.
Boeings pathetic whining is pitiful. They knew what the rules of the game were when they went in. They got beat-soundly. Now they are crying to the leftist US congress to void the results of a perfectly fair competition-again, one in which they were very familiar with the rules of the game going in. All their obstructionism is going to achieve is to waste valuable time which would be much better spent in getting Northrops vastly superior product into the hands of our military-and in the air where its service is needed.
I suspect Boeing bid 767 because it that airframe was a more feasible financial offering for the government. Contractors have some idea how much money the government has to spend. They project how much plane the government is willing to purchase with the allocated money. Boeing might have considered bidding 777, but decided the offering would have exceeded the government’s budget. And so I return again to the cryptic statement by NG that they “aggressively priced” their offering. Was this a low-ball bid subsidized by European government money? Where did the NG team find the savings in their bid?
carl
Airbus is european government subsidized. Will we, in the future, find ourselves held hostage by those who may disagree with our military decisions?
If you don’t want non US companies to bid it’s not difficult to do. Set up the bidding process so that only US based companies can bid. Of course, in this contract, that would place Boeing in a more or less monopoloy situation. You pays your money and takes your choices.
Seems to me that when you’re the only real act in town, you get a little testy when the competition shows up with a better bid. Boeing’s had all of the marbles in their bag for so long, they think they own the defense market. Competition is good for them in the long run.
Let’s be honest. A novel concept right? If Congress wants a military bid to stay onshore, which it may want to do, then it should say so up front. If, on the other hand it’s the best milspec bid at the lowest price, even if it’s offshore, then it should say so and let the bids fall where they will. Gruman won under the specific rules, it’s that simple.
Business Week has the [url=http://www.businessweek.com/bwdaily/dnflash/content/mar2008/db20080310_043966.htm]Northrop Grumman response[/url] to the furor.
Bingo. A 767 tanker is far more profitable; it users a line that couldn’t have made money otherwise, versus either expanding the 777 line or slowing deliveries to airlines.
Thank you, Dale, for sharing that Business Week link. Perhaps that will put the kabosh on Boeings “spaghetti throwing” campaign.
I don’t understand why the emphasis is on Airbus vs Boeing. Northrup Grumman is the primary on this contract. It is their technology, engineering, and know how that is going to turn a simple airframe into the military hardware that the Air Force needs. NG is also very much aware of how Boeing does business; dealing with their foolishness, what-not and mayhem on the 767 J-Stars program. I say bravo for NG.
The emphasis is on Airbus because if you talk about NG you can’t snivel about damn foreigners.
Not to mention that fact that Airbus is building the actual airframe, while NG is doing a conversion job.