Boeing kicks off tanker campaign

Update, Sept. 17: While looking for something else we came across this old item from Forbes magazine in 2004-5, when Boeing was temporarily led by the late Lew Platt following the fall from grace of former CEO Harry Stonecipher.

Platt, then the chairman and CEO, had this to say about the start of the KC-X competition then. It sounds like what we are hearing today:

Faces In The News
Boeing’s Platt Cheers Airbus, Says CEO Search Narrows
Chris Noon, 06.15.05, 1:49 PM ET

NEW YORK – Doers and doings in business, entertainment and technology:

Boeing (nyse: BA news people ) Chairman Lewis Platt plays hard, but fair. Despite the trans-Atlantic spat over subsidies, Platt doesn’t think Airbus should be frozen out of bidding for U.S. military contracts. “What I’m looking for is a level playing field. Part of that means they should be able to compete for business in the United States,” he was quoted as saying in The Associated Press. EADS, which owns about 80% of Airbus, may be disqualified from bidding on a U.S. Air Force contract for refuelling tankers because of a House of Representatives amendment barring the Pentagon from purchasing goods from any foreign companies receiving government subsidies. Brussels countered Washington’s complaint against Airbus subsidies last month with one of its own.

Aviation Week has a long story on the tanker that explains why cargo capability is desired.

Update, September 16: IAG has a 15 minute podcast with Boeing’s Bill Barksdale on the KC-7A7 program.

Separately, Sen. Patty Murray (D-Boeing/WA) and some 45 Members of Congress call on the USAF to consider the WTO findings in the competition for the KC-X contract, and Murray calls on President Obama to penalize Airbus and the KC-30 tanker for the WTO finding. The Members of Congress say the prospect of awarding the contract to Northrop Grumman (Airbus) would reward illegal action.

Don’t these guys get it? (Obviously not.) When (not if, in conventional wisdom) the WTO also finds Boeing benefited from illegal aid, what the devil will these Members of Congress say then?

As for Murray’s call for Obama to act now, Patty needs to read the WTO rules: Article 23 specifically prohibits premature imposition of penalties. Premature means before the case is over, and the case won’t be over until a final report is issued and any appeals are concluded. We know the EU will appeal and we fully expect the USTR to appeal findings on complaints that weren’t upheld. It will be years before these are completed. In the meantime, it would be illegal under WTO rules for the US to adopt any penalties.

On the one hand, Sen. Murray wants to slam Airbus and Northrop for illegal activities. On the other, she wants to do this before the WTO rules say you can, an action that would be illegal. Sen. Murray can’t have it both ways.

Update, September 15: Flight International reports that Boeing is considering moving its tanker finishing work out of Wichita (KS) in order to lower the price. We can’t help but wonder what US Rep. Todd Tiahrt (R-Boeing/KS) and Sen. Sam Brownback (R-Boeing/KS), two of Boeing’s most hyperbolic tanker supporters, might say about this.

Flight also reports in the same piece that Boeing is going to get very aggressive on pricing, having lost on this point to Northrop Grumman and the Airbus-based KC-30. This is going to be watched very closely by Northrop and EADS, because during the Round 2 USAF debrief, the companies noted that their pricing was shared with Boeing lawyers and they fear this sensitive information will put them at a competitive disadvantage in this round.

We had asked Boeing about this at the time, and Boeing’s tanker team told us the pricing information stopped with the Boeing legal team, precisely because of the proprietary nature of this information. Northrop and EADS aren’t convinced (they haven’t seen any proof on this point one way or the other) and could take action if they come to believe Boeing has an unfair advantage in this round.

Original Post

Boeing is wasting no time kicking off its campaign to win Round 3 of the KC-X tanker competition.

This Reuters story says Boeing won’t get fancy in its proposed KC-777 or KC-767 (marketed, for the moment, under the generic name KC-7A7, until Boeing understands what the US Air Force wants and then decides which tanker to offer). Boeing won’t offer a tanker based on its proposed KC-767 Advanced Tanker, the so-called Frankentanker that was offered in Round 2 as a paper concept combining major components from the 767-200, 767-300 and 767-400.

The Defense Department also threw cold water, at least for now, on Congressional suggestions that the September 4 WTO Interim Report finding that Airbus benefited from illegal subsidies will play a roll in the Draft RFP, due out shortly. Defense News has this piece detailing why. George Talbot of the Mobile Press-Register has a longer story.

Boeing also launched a new website to support its tanker bid: UnitedStatesTanker.com. We’ve added this to our links on the right.

12 Comments on “Boeing kicks off tanker campaign

  1. Subtle suggestion, at least the way I read Boeing’s statements, are they are ready to start building upon contract award, no?

  2. Sounds like Northrop Grumman and EADS have the protest already drafted should this round go against them?

    This won’t end soon unless the USAF and DOD get smart and ask the Congress to let them sole source to Beoing. Not enough votes for the airbus.

    • “Sounds like Northrop Grumman and EADS have the protest already drafted should this round go against them?”
      What leads you to believe that?

      Instead, it sounds like Boeing is doing exactly what it should have done first time round. Prepare possible scenarios and wait for the USAF to tell them what they want. No doubt NG/EADS are doing exactly the same.

  3. “On the one hand, Sen. Murray wants to slam Airbus and Northrop for illegal activities. On the other, she wants to do this before the WTO rules say you can, an action that would be illegal. Sen. Murray can’t have it both ways.”

    She can when she operates in the political sphere. This is a warning shot to the USAF. Pick an aircraft other than Boeing, and count on negative publicity in a country worried about jobs and unfair foreign competition. Take a risk that the program is delayed yet again by public outrage. Reasonable? No. But this is military procurement, and military procurement always has a huge political component to it.

    • ‘She can when she operates in the political sphere.’
      Absolutely agree. It is her job to extract as much political capital out of this as possible. They have 6 months until the EU v US ruling comes out. So, strike the iron while it’s hot, as they say! We should see Dicks next, they are like a tag team.

  4. “But this is military procurement, and military procurement always has a huge political component to it.”

    And it has never been covered by WTO treaties. Any military procurement can be exempted by simply saying so. That is all Obama has to say.

  5. Much foolishness or worse about, especially mouthy-head politicians.

    I doubt Defense Secretary Gates wants to hear anything but what is best for the warfighter, a constant them of his, though he does work for a politician. (Gates maintains oversight of the program

    An interesting point about non-fuel cargo needs is that the KC-135 has some ability to carry other than fuel and some US military people say that has been very useful. But any wide-body should have space, so the question is what is the need really compared to the primary missions?

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