TANKER USAF - Appels d'offres

Concern grows over mum Air Force, but EADS won’t protest, says Reuters

We are hearing from a variety of sources a growing concern that the Air Force hasn’t been as forthcoming as it should be in its debriefs with EADS.
But [Vous devez être inscrit et connecté pour voir ce lien] a short time ago that EADS won’t protest.
The [Vous devez être inscrit et connecté pour voir ce lien], in a rare front-page editorial, and the Alabama Congressional delegation are complaining that the Air Force has been as forthcoming as they believe it should about why Boeing won the tanker contract. Publicly, the Department of Defense said Boeing was the “clear” winner in what had become a price shoot out. DOD, EADS and Boeing will not reveal the pricing.
While the newspaper and the politicians are concerned, we understand that the USAF has complied with its legal obligations in the debriefs to EADS. The debrief occurred for 90 minutes on Monday and 75 minutes on Tuesday.
Here are several stories out today on the topic.
[Vous devez être inscrit et connecté pour voir ce lien]on the process.
[Vous devez être inscrit et connecté pour voir ce lien], on the prospect of a protest and some background.
[Vous devez être inscrit et connecté pour voir ce lien], on the prospect of a European backlash. We’ve heard about this, too, from our sources. Europe, get over it. If Boeing won on price, it won on price. That’s what this contest was about.
The question now is whether EADS’ Congressional supporters will try to block the appropriation in order to force a split buy, or to hold hearings on the procurement and pricing. We hope not. As we previously opined, it’s time to move on.

How Boeing Won The Tanker War

After ten years of seeking a replacement for hundreds of Eisenhower-era tankers, the Air Force may have finally found a workable solution last week. On Thursday, Pentagon leaders surprised both teams competing for the prize — a program initially worth $35 billion that eventually could grow to $100 billion — by declaring Boeing’s proposal was the “clear winner.” The losing team, led by Airbus parent EADS, was stunned. Not only had it won an earlier competition to supply the new tanker, but some Boeing executives expected the European company to win this time too. So why did Boeing prevail in an outcome that government officials say wasn’t even close?
In this case, the bottom line really was the bottom line. Boeing offered a very low price to build and own its plane, while over-confidence and maybe funding constraints led EADS to bid less aggressively. Since the two rival tankers had already satisfied 372 mandatory performance requirements, price determined the outcome and Boeing emerged victorious. In other words, Boeing won because EADS made a mistake — it failed to tap the European government subsidies that have allowed it to develop every commercial transport it currently offers to a sufficient degree so it could overcome the pricing advantage Boeing had from offering a much smaller plane. Smaller planes cost less to manufacture and to fly, but that has not stopped EADS subsidiary Airbus from beating Boeing on price in scores of commercial competitions. In the tanker contest, though, EADS either bid too optimistically or failed to leverage subsidies for some other reason, so it was out of the money.
Before I elaborate on how Boeing won, I need to dispose of one inconvenient truth. A big part of the reason why many people thought EADS would win the tanker competition was because I said it would, over and over again in the national media, in the months leading up to the award. Within minutes after the Boeing victory was disclosed, Politico put up a story on its web-site stating that expectations of a Boeing loss were driven mainly by my pronouncements on the matter. And the biggest newspaper in Alabama editorialized on Sunday that the Boeing win was “unbelievable” in part because “one of the nation’s leading defense analysts” — me — predicted EADS would prevail. Obviously, I was completely wrong. So why would you take seriously my explanation of how the opposite of what I predicted happened?
The reason I’m still halfway credible on the subject is because I said all along that the Boeing plane was the more cost-effective solution to the Air Force’s tanker needs. I simply assumed EADS would leverage the same subsidies that allowed it to aggressively market its commercial product line to also win the tanker competition. It wouldn’t have been hard, because the Air Force methodology for comparing the EADS and Boeing planes actually understated the cost of owning the much bigger European tanker over a 40-year service life. Many people within Boeing assumed the same thing, which is why they were worried in the final stages of the tanker contest despite the fact they were offering a more economical solution to Air Force needs. But EADS didn’t tap subsidies to the degree Boeing or I expected, so Boeing won in the kind of competitive climax that defense industry insiders call a “price shootout.”
Boeing executives sensed during the preparation of final offers that EADS had become overly optimistic, in much the same way that Boeing itself had grown too confident in the earlier round of competition. They now think that EADS lost partly because of its own hubris. They’re probably right, but I suspect something more is going on because concessionary pricing has been the centerpiece of the EADS tanker strategy since it first got into the competition in 2006. I’ll come back to the question of why EADS didn’t fully leverage its pricing power at the end of this essay, after I explain why it is so clear that cost was the reason Boeing won and EADS lost. But it’s important first to demonstrate that Boeing won on the merits, because any protest EADS mounts to try to overturn the outcome is unlikely to prevail, and we don’t need conspiracy theories floating around for the next 40 years about why “the better tanker lost.”
The Air Force’s aerial refueling fleet is unique in the world. Without it, U.S. and allied aircraft would have great difficulty sustaining operations in places like Iraq and Afghanistan. But by the beginning of the new century, the Boeing 707-type tankers that provided 90 percent of the aircraft in the refueling fleet had reached nearly 40 years of age, so Air Force officials began what they thought would be a routine effort to convert an existing commercial transport into a replacement tanker. A decade later, no new tankers had been built. An abortive effort to lease tankers from Boeing was killed by Congress, and then a competition to select a new tanker from between rival Boeing and Airbus offerings was overturned by the Government Accountability Office. By the time the Obama Administration was handed the responsibility for finding a new plane the aging tankers in the fleet were approaching half a century of age, and the new team at the Pentagon decided it had to come up with an acquisition strategy that was impervious to further delays.
Its solution was to craft a selection process in which there was virtually no subjectivity that might be challenged by the loser. Rather than weighing the performance features of Boeing and Airbus offerings, the Air Force developed a list of 372 mandatory performance requirements that each team must meet before they could submit a final bid. What this meant in practical terms was that unless one of the teams was disqualified, the key discriminator in the competition would be price. But price was defined to cover more than just the cost of producing the planes. It also reflected the cost of ownership over a 40-year lifetime, including fuel expenditures, construction outlays, and the relative efficiency with which each tanker could accomplish refueling missions. Those life-cycle costs were to prove pivotal in Boeing’s eventual victory.
The tanker competition that began in late 2009 was a “come as you are” competition in the sense that the Air Force did not want to pay for the cost of developing a new tanker from scratch. So Boeing and EADS had to pick an airliner from their existing commercial product lineups and adapt it to the refueling mission. The mandatory performance requirements demanded that it be able to offload at least as much fuel as the 707-type planes in the existing tanker fleet while having a main flight deck available for cargo, passengers and other payloads. Boeing had long since settled on its twin-engine widebody 767 airliner as the best available airframe, since other planes in its line-up were either too small for necessary payloads or too expensive to operate. The 787 Dreamliner was not seriously considered because production capacity was committed to commercial customers far into the future. EADS selected as its offering a modified version of the much bigger Airbus A330, which weighed 28 percent more than the Boeing entry and burned correspondingly more fuel — in fact, over a ton more fuel per flight hour when fully loaded.
On its face, the A330 did not look like much of a bargain for the Air Force because it cost much more to build and operate than the plane it was replacing or the Boeing alternative. However, in the first, abortive round of competition with Boeing’s tanker, EADS and then-partner Northrop Grumman had convinced Air Force evaluators that by doing refueling missions differently they could benefit from buying the bigger plane. That made a certain amount of sense since bigger planes typically are more efficient per pound of payload delivered. The problem, though, was that existing, smaller tankers typically returned from refueling missions with a lot of fuel still on board, so buying a much bigger successor required the Air Force to completely change its approach to aerial refueling. That became all too apparent when the Air Force tried to apply its scenario-based warfighting model to the rival tankers and discovered that the EADS plane couldn’t accomplish some wartime missions due to basing constraints. Under pressure from Congress to keep the Northrop-EADS team in the competition, the Air Force made changes to its model that enabled the bigger plane to execute all the missions.
Northrop Grumman decided to withdraw from the tanker battle when it saw the Obama Administration’s proposed terms for the second round of competition, so EADS elected to go it alone. Despite complaints from Boeing, the Air Force continued using the same modified warfighting model to evaluate the two tanker proposals — which was one reason why EADS thought its bigger plane had a shot at winning. But once the rival tankers met mandatory performance requirements the revised acquisition strategy was all about price, and there EADS faced a big challenge. First of all, the A330 typically sells for about $40 million more than Boeing’s 767, which is a huge difference in cost when multiplied by the 179 planes the Air Force was seeking to acquire in the competition. EADS would need to tap billions of dollars in subsidies to price competitively with the manufacturing costs of the smaller Boeing plane. And then there were the post-production costs — the much higher fuel burn of the A330 over a 40-year service life, and the need to modify hangars and runways to accommodate a bigger plane. The only way Airbus could defray those costs for the Air Force was to offer an even lower up-front pricetag.
Boeing wasn’t happy with the way the Air Force calculated the higher fuel costs of the A330, since evaluators used a price escalator for the next several decades that was only about a third of the actual growth rate in fuel costs since 1970. The company felt the government was undercutting the cost-effectiveness of their offering in the real world, especially given the refusal of policymakers to even consider adjusting the EADS price to reflect use of illegal subsidies as long as subsidy cases were still pending before the World Trade Organization. So Boeing entered the final stages of the tanker competition pessimistic about its prospects. However, one message the company heard loud and clear was that if it was to have any chance of prevailing it had to price very aggressively, and that it did — so much so that its board refused to go any lower for fear of losing money on the contract. When the Pentagon announced that Boeing had won last Thursday company officials were pleasantly surprised, but they knew the government had gotten quite a bargain.
Of course, Boeing got something big too: the continuation of it 50-year tanker franchise with the U.S. Air Force, and a deal that would preclude its main rival in the airliner business from setting up commercial operations in Boeing’s home market. But in the aftermath of Boeing’s convincing win, the question still arises as to why EADS didn’t bid more aggressively when it knew price would be decisive in determining the outcome. Was it really just hubris, or was something else going on? Perhaps people like myself over-estimated how much latitude EADS had in tapping government subsidies, given the huge funding infusions it had already received to fix the A380 jumbo-jet, continue the A400M military transport, and develop a rival for the Boeing Dreamliner. Or perhaps the company’s willingness to leverage subsidies in a politically charged competition had been muted by the WTO finding of massive impropriety in its past use of subsidies to steal commercial market share.
We’ll have to wait a while to learn why EADS failed to price its tanker competitively. The one thing we know for sure is that the real-world costs of the rival tankers weren’t even close, because EADS lost even though evaluators gave the company big breaks in calculating the cost of owning its plane. In other words, the Boeing tanker won on merit, and no protest of the outcome by EADS is going to change that fact.

EADS ne contestera pas le contrat des ravitailleurs US

WASHINGTON, 4 mars (Reuters) - EADS a reconnu vendredi sa défaite dans le bras de fer qui l'a opposé dix ans durant à Boeing sur le contrat de renouvellement de la flotte d'avions-ravitailleurs de l'armée de l'air américaine.
Le groupe européen d'aéronautique et de défense et maison mère d'Airbus a confirmé qu'il ne contesterait pas l'attribution de ce contrat de 30 milliards de dollars, attribué la semaine dernière à son concurrent américain. Le président d'EADS pour l'Amérique du Nord, Ralph Crosby, a exprimé sa déception mais reconnu que l'offre soumise par Boeing au Pentagone était inférieure de deux milliards de dollars.
"Il est évident qu'il n'y a aucune base pour étayer une contestation", a-t-il dit. Reuters rapportait jeudi qu'EADS s'apprêtait à jeter l'éponge afin de se concentrer sur de nouveaux contrats d'armements. (voir [ID:nLDE72220L])
Le retrait définitif du groupe européen devrait apaiser les tensions transatlantiques sur les contrats d'armements. Il constitue toutefois une lourde déception pour les élus de l'Etat d'Alabama, qui espéraient la victoire d'EADS et la construction sur leurs terres d'une chaîne d'assemblage pour les avions-ravitailleurs.
Mais selon EADS, rien n'indique que des élus américains aient l'intention de déposer un recours contre l'attribution du contrat à Boeing.

BOEING DÉSORMAIS SOUS PRESSION
Pour le constructeur américain, la victoire est double. Les chaînes d'assemblage du 767, qui servira de base au nouveau ravitailleur de l'US Air Force, seront tout d'abord maintenues en activité dix ans de plus.
De plus, le constructeur américain s'épargne ainsi de voir Airbus établir une tête de pont aux Etats-Unis qui lui faciliterait l'attribution de nouveaux contrats d'armement.
Le retrait définitif d'EADS permet à Boeing de lancer le contrat de développement des 18 premiers avions sur les 179 que comptera à terme la flotte de tankers.
Selon Loren Thompson, analyste spécialisé dans la défense, Boeing peut effectivement maintenir en vie un de ses avions phares et maintenir à distance son premier rival.
Mais, revers de la médaille, il souligne toutefois que Boeing se trouve désormais sous pression pour respecter le coût annoncé de son offre, jugé très bas.
Ralph Crosby a indiqué que l'analyse faite par EADS permettait de conclure que le prix proposé par Boeing était de 21,4 milliards de dollars, contre 23,4 milliards pour Airbus, soit plus de 9% au-dessus.
Selon le dirigeant d'EADS, le prix proposé par Boeing est "bien plus bas que ce que nous étions prêt à proposer".
Les calculs d'EADS indiquent en revanche que le coût de développement du projet de Boeing est supérieur à celui d'EADS, avec 4,4 milliards de dollars pour la variante du 767, contre 3,5 milliards pour celle de l'A330.
Boeing n'était pas disponible dans l'immédiat pour réagir à l'annonce d'EADS.
Le Pentagone prévoit d'organiser dans les années à venir de nouveaux appels d'offres pour au moins 300 ravitailleurs supplémentaires.

Le groupe d'aéronautique et de défense européen EADS ne va pas contester le choix porté sur son rival Boeing dans l'appel d'offre pour renouveler la flotte de ravitailleurs de l'armée de l'Air américaine, mettant fin à une saga de près de dix ans pour ce méga-contrat.


© 2011 AFP

• en théorie, ceci n'est que la première tranche sur un besoin déclaré de 563 avions ravitalleurs ;
  
• le gain de cette première tranche va sans doute assurer que la plate-forme Boeing ne s'exporte pas vers d'autres "Air Force" du monde !
  

Boeing KC-X Price Was 10 Percent Under EADS

The decision by EADS North America not to protest its loss in the $35 billion U.S. Air Force KC-135 replacement refueling tanker contract competition is largely being based on its adjusted price, which came in a full 10% above that of rival Boeing, according to senior company officials.
EADS North America Chairman Ralph Crosby says the loss is a “dissatisfying outcome,” to a long competitive process. But ultimately the Air Force ran the KC-X competition “in accordance with all of the ground rules” and was “scrupulous” in detailing the factors leading to the decision.
The company spent roughly $45 million competing for this last round of the KC-X duel. EADS had won the contract in 2008 with then-prime contractor Northrop Grumman, but that source selection was scrapped after government auditors turned up procurement irregularities following a Boeing protest.
The Pentagon announced Boeing’s KC-46A won the most recent long-running duel on Feb. 24. EADS received debriefings Feb. 28-March 1. The company had until March 7 to protest its loss to the Government Accountability Office.
Boeing bid $20.6 billion versus the EADS price of $22.6 billion, according to data provided by the Air Force in those debriefings, says Crosby. These are the prices for developing and building 179 KC-135 replacements, including adjustments made by the Air Force in accordance with source-selection rules. The remainder of the $35 billion total contract value includes operational and maintenance expenses over the anticipated 40-year life expectancy of the tankers.
According to Crosby, EADS has derived some estimates of the Boeing offer, which have not yet been confirmed by the Air Force or Boeing. They include a $500 million adjustment in favor of Boeing for the fuel-usage advantage of the 767-based design. The Air Force also calculated a $300 million advantage to Boeing for military construction costs, Crosby says.
The service estimated an advantage for EADS worth $800 million for the A330-based tanker’s performance in various warfighting scenarios included in the Integrated Fleet Aerial Refueling Assessment modeling tool.
Though willing to congratulate Boeing on its win, Crosby questions Boeing’s ability to deliver on its promises under the terms of the fixed-price contract.
Jean Chamberlain, a senior tanker official for Boeing, last week acknowledged “concurrency” in its development program and production. First flight for the KC-46A is slated for 2015 with 18 aircraft delivered by 2017

USAF to Tightly Control Tanker Requirements Changes

U.S. Air Force leaders are taking draconian steps to ensure the service's prized Boeing KC-46A tanker program stays in line.
To protect the aerial refueling plane from ever-expanding requirements, changes will not be allowed except at the "highest level," Air Force Secretary Michael Donley told the Senate Armed Services Committee March 17. Related Topics

• Americas
  
• Air Warfare
  

Gen. Norton Schwartz, Air Force chief of staff, who was testifying alongside Donley, added that the KC-46 program would be scrutinized "microscopically" to make certain the "offeror delivers what he promised.
"The level of approval for engineering change orders is not going to be at the program office level," Schwartz said.
Though it has yet to be decided who will have final authority to approve such changes, it might be at the very top level of the Air Force leadership.
"It might be at our level," Schwartz said. "The bottom line is, we intend to maintain discipline on this thing."
Analysts applauded the Air Force's move. Historically, contractors would bid low to win competitions and then use the engineering change order mechanism to avoid fulfilling their contractual obligations, said Loren Thompson, an analyst at the Lexington Institute, Arlington, Va.
"It used to be a common practice in the industry that people would bid low and then try to use engineering changes to restore [profit] margins on the program," he said.
With the new approach, the Air Force cuts off that loophole for any potential contractor, Thompson said.
Byron Callan, an analyst at Capital Alpha Partners in New York, also applauded the move.
"That's pretty prudent on their part. … It's the only way they're going to keep the tanker at the cost that it was bid for," he said.
"It may not be great from a Boeing standpoint," Callan added.
However, in cases where a technology is particularly cutting edge, such an approach could backfire.
"If you were to limit engineering changes on something revolutionary like the F-35 [Joint Strike Fighter], you could really foul up the program," Thompson said.
Callan agreed that the new approach to the tanker program would not be a good idea if it were to be applied to all Air Force contracts.
"Trying to think you can just freeze a design that will last five or six years, that's locking yourself into obsolescence," he said.

Boeing looks to offer 767 for more military aircraft

The [Vous devez être inscrit et connecté pour voir ce lien] of Boeing’s 767-based [Vous devez être inscrit et connecté pour voir ce lien] for a 179-plane contract isn’t necessarily the last triumph for the 767, Boeing Commercial Airplanes President and Chief Executive Jim Albaugh said Friday.
“We’re not done. We’re going to build 179 of these, and then we’ll build another 179 for the U.S. Air Force,” he said after a celebration of the company’s tanker win with U.S. Reps. Norm Dicks and Rick Larsen, both D-Wash. “My guess is there are a hundred (orders) out there internationally.”
Just as the new tankers will replace Boeing 707-based [Vous devez être inscrit et connecté pour voir ce lien], there are other 707-based military aircraft still in operation, such as the [Vous devez être inscrit et connecté pour voir ce lien] airborne warning and control system (AWACS) and [Vous devez être inscrit et connecté pour voir ce lien], Albaugh added. “They all need to be re-platformed and I think this is a great airplane to do it on.”

That appears to have been part of Boeing’s calculation in making a tanker bid that is aggressive by its own admission. But Albaugh rejected [Vous devez être inscrit et connecté pour voir ce lien] that Boeing’s bid was too low to make a profit.
“I don’t like losing, but I’d rater lose than win and lose money. We’re going to make money on this airplane,” he said. “We took bilions of dollars out of the bill of materials, and we have a profit margin built into this program that, while standing here today might not be as attractive as we have on other programs, over time I think we can make this program very profitable.”
Part of ensuring that profit will be protecting against a creep in the scope of work, Albaugh said. “(I)f additional requirements are needed by the Air Force, that’s fine. But they’re going to have to pay for it.”
During the celebration, Dicks congratulated Boeing for its “courageous bid,” joking: “I didn’t realize how courageous it was until Airbus was explaining it” in [Vous devez être inscrit et connecté pour voir ce lien].
But Friday was mostly a celebration of Dicks’ decade of work promoting Boeing for the tanker contract.
“I think if there’s one singular person among all the people who worked so hard on this program, who allowed us to win it, helped us to win it, it’s Congressman Norm Dicks,” Albaugh said during the ceremony.
“Every time that we had something that had to get done Norm was there,” Albaugh said, noting that Dicks pushed Boeing to protest the Air Force’s 2008 choice of the then competing offering from a Northrop Grumman-EADS team and made sure that the Government Accountability Office “did their work” in reviewing that award and finding flaws that led Defense Secretary Robert Gates to declare a new competition.
“About three weeks later, the Air Force came out with a new set of requirements, and it was a set of requirements written around a big airplane,” Albaugh said. “Norm cried foul and the Air Force withdrew that set of requirements.”
[Vous devez être inscrit et connecté pour voir ce lien] the new competition because it saw the final requirements as favoring Boeing’s smaller tanker, which generally costs less, requires fewer modifications to hangars and runways and, most notably, burns less fuel.
“Key in our winning this competition was Norm calling the Air Force and telling them that they had to look at the life-cycle cost of this airplane not over 25 years but over 40 years,” Albaugh said. “I think that one small change was instrumental in our winning this program.”
The 767-based tanker will use $11 billion to $36 billion less fuel over those 40 years, Dicks said.
“I wanted 50 years,” he said. “I said: ‘Hey, you’ve got these KC-135s that are 50 years old now. They’re going to fly, some of them, until they’re 80 years old. Why not 50?’ I couldn’t sell that, but at least we got 40.”
Dicks said he also talked then House Defense Appropriations Committee Chairman John Murtha, D-Pa., out of promoting a split buy between Boeing and EADS. And he said he and Larsen plan to push to accelerate tanker production to 24 a year.
While Dicks got the biggest chunk of love Friday, Albaugh called Larsen the left hand to Dick’s right in the tanker one-two punch. He also noted that Larsen, whose district includes the Everett plant, pushed a measure that would have required the Air Force to account for [Vous devez être inscrit et connecté pour voir ce lien] to Airbus in the tanker competition (with Boeing’s win, that never came into play).
One reason for Friday’s celebration was that Dicks and Larsen missed the parties [Vous devez être inscrit et connecté pour voir ce lien] and [Vous devez être inscrit et connecté pour voir ce lien], although Dicks spoke by phone.
“How many times are we going to celebrate this,” Larsen asked Friday. “Forever.”

Boeing may exceed aerial tanker cost ceiling by $500 Million

Boeing is projected to exceed by as much as $500 million the cost ceiling on its contract to develop new refueling tankers for the U.S. Air Force, or about $200 million more than previous estimates, according to the Defense Department.

Chicago-based Boeing, which is developing the KC-46A tanker from its 767 airliner, absorbs 100 percent of any dollars over the contract’s $4.8 billion ceiling.

Government officials in June told Bloomberg News that Boeing was projected to exceed the ceiling by $300 million.

A senior official told reporters July 27 the estimate had dropped “a little bit.’’

The new, higher estimate is disclosed in a 37-page Selected Acquisition Report, the Pentagon’s first official cost review for what is planned as a 179-aircraft, $51.7 billion program that includes research, production and aircraft support.

The estimate comes as engineering, manufacturing and development are “progressing well with no significant technical issues,’’ the report said. A major review that ended in mid-August resulted in a well-understood and approved contract, technical, cost and schedule baseline’’ that the government will use to “measure and closely manage Boeing’s progress.’’

“The program manager’s most likely estimated price at completion is $5.3 billion and the contractor’s most likely is $5.1 billion,’’ according to the document obtained by Bloomberg News.

“The government’s estimate is higher than the contractor’s due to the inclusion of schedule risk associated with the remainder of development,’’ it said. “The government’s liability is limited to $4.8 billion.’’

Zero profit?

Program manager Brig. Gen. Christopher Bogdan said of Boeing in July that “if they get to $4.9 billion, they get zero profit.’’

Boeing spokesman Jerry Drelling said he had no immediate comment but planned to provide a statement.

The estimated value for buying four development and 175 production tankers includes $40.2 billion for procurement. A full-rate production decision is scheduled for June 2017.

Procurement spending is scheduled to start in 2015 with $1.6 billion, increasing to $2.6 billion in 2016 and $3.2 billion in 2016 when measured in “then-year’’ current dollars. The production schedule calls for building the first seven aircrafts in 2015, 12 in 2016 and 15 a year annually through 2026, with the final six of 175 in 2027.

Most of $7.1 billion in development funds will be spent through 2016.

The cost per tanker jet in current dollars is estimated at $288.8 million, the report said.