Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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Boeing takes hard hit on DOD budget
Boeing took a hard hit on the Defense budget announced today by Sec. Robert Gates. The C-17 program will be canceled after the current contract is filled. The CSAR-X helicopter procurement is canceled. The Airborne Laser system based on the 747, is reduced to research only. The Next Gen bomber is off the table. There are other programs in which Boeing was involved that are gone, too.
This makes the recompete for the KC-X aerial tanker all that much more important. Gates said this will proceed in the summer.
Update: Defense Industry Daily has this superb recap of the winning and losing programs.
We did a podcast with Addison Schonland of IAG and George Talbot of the Mobile Press-Register about the implications for the tanker procurement.
Here is a link to Gates’ formal statement.
Including Boeing’s portion of the F-22, and probable major portions of Army’s future combat systems.
Chicago portrays Boeing’s defense business as the good kid to commercial’s bad kid, and has ever since the merger.
Well they just found the baggie of dope in good kid’s sock drawer.
Scott, this “budget” is still in the discussion stage. I read an article where Sec Gates admitted that the industrial base wasn’t a consideration, and that he hopes the Congress takes the broader view for the good of the country instead of focusing on “parochical” concerns. Further, and more revealing, he said he “advised” the Administration, but left out whether they had approved of his recommendations.
Where I am going with this is that there is plenty of time/slack to throw the SECDEF under the bus in the coming months.
This budget makes it all the more likely, if not certain, that Boeing will be awarded the KC-X contract. It would be political suicide for the Obama Administration to award this to a foreign backed consortium in light of the cuts at Boeing’s military division, the perceived loss of the industrial base it represents, and a company with it’s headquarters in Mr. Obama’s home town.