The Draft Request for Proposal for Round 3 of the KC-X tanker competition isn’t even out yet and the procurement process is already perverted.
The DRFP is thought to be ready for release tomorrow (September 24). The USAF reportedly has scheduled briefings for Congress at 11 AM EDT.
In what is clearly an orchestrated effort spearheaded by Boeing, the political focus is entirely on the interim report by the World Trade Organization that Airbus benefited from illegal subsidies for its A-series commercial airliners, including the A330-200 on which the Northrop Grumman KC-30 is based.[youtube=http://www.youtube.com/watch?v=Qs7EikHQGlA]
Washington State and Kansas Members of Congress demand that the US Air Force include language in the DRFP that considers the launch aid–a reported but unconfirmed $5bn for the A330/A340 sister program–in evaluating the KC-X proposals.
The Air Force says it does not plan to do so.
We do not understand the rationale behind the focus on the WTO interim report. A final report has to be issued and appeals can be filed, a process which will take several years to consider. More to the point, the European Union’s complaint about “illegal” subsidies provided Boeing is pending before the WTO, with this interim report expected in perhaps six months–or about March–unless delayed.
Here is a link to a story that includes a video clip of Members of Congress standing in front of a Boeing prop focusing on the WTO matter.
It is widely expected that Boeing will be found by the WTO to be “illegal,” too. Then Northrop will demand the USAF consider these findings if the Boeing Congressional supporters prevail in forcing the USAF to consider the Airbus interim report.
We shared with Boeing IDS our view that this politically-focused WTO campaign will hurt Boeing more than help it because of the expectation that Boeing will be found to have benefited illegally, too. All this current campaign does is muddy the waters and, in all likelihood, won’t win any friends in the USAF procurement process.
The Members of Congress are on hazardous grounds under WTO rules in any event. Article 23 prohibits a country that prevailed in a complaint from taking any punitive action while the case is still pending, as is true with the Airbus interim report. If a prevailing country does so, then this opens the country to sanctions.
Our long-held view that the Northrop KC-30 is more capable than the KC-767 in a sole-source selection remains unchanged. So does our long-held view that there are good strategic reasons (not to mention the political ones) to double the procurement and split the purchase.
We believe Boeing’s suggestion of a tanker even larger than the KC-30 based on the Boeing 777-200 (sub-series to be selected) is a perfect replacement for the aging McDonnell Douglas KC-10 in the future procurement for this aging aircraft.
We believe the Boeing-orchestrated, WTO-focused campaign is a grave error. It sets up a similar Northrop campaign when (and in our belief, this is not “if”) Boeing is found by WTO to have behaved improperly. This political campaign subverts an acquisition process that has been tainted twice by improprieties and incompetence. We think it will inflame the USAF procurement against Boeing rather than help its cause–unless a sole-source procurement is forced upon the Air Force and the Northrop-Airbus bid is forced out.
If this happens, the WTO rules will permit the EU to impose sanctions on US trade. We would fully expect Airbus partner-countries to retaliate in their own defense procurements.
It is true the KC-767 (or KC-777) will have no chance in any event to sell airplanes to the UK (which has already selected the KC-30), France (no comment needed on this one), Germany (should it want a tanker) or Spain (does it need a tanker?). This is a sound matter of criticism, where competition should likewise be allowed. We think this is a far, far better-grounded criticism than this spurious WTO thing. The Defense Department has the ability, even under WTO rules, to declare in nation security interests to do a sole source procurement. It missed the chance to do so in Round 2 and now that WTO legal actions are pending, Article 23 would seem to preclude doing so in Round 3.
But what of Boeing’s desire to sell other military goods to these nations, including the 737-based P-8A Poseidon? Boeing IDS clearly has these Airbus member nations on its prospective customer list. Might these countries instead become the launch customers for the Airbus A319 MPA (Maritime Patrol Aircraft) competitor to the P-8A? The A319 MPA has gone “stealth.” Once openly talked about at Airbus and EADS, today you can’t find any reference to the airplane at all on the EADS or Airbus websites. The last time we queried, which was last year, EADS MTAD refused to discuss the airplane. We don’t know if this is an active project or not today. Information about the A319 MPA is scattered about the Internet but an Airbus brochure appears and disappears from time-to-time in Google cache (and at least for the moment it’s here, though this has come-and-gone and may disappear at any time. As a document available (even if off and on) in the public domain for many years, we have downloaded the brochure and can make it available to anyone requesting it.
We think the WTO drive places Boeing on very hazardous ground. Does Boeing and its supporters believe its tankers cannot win on their own merits, so this drive is necessary? We have to wonder.
The whole mess is straight out of the satire movie, Dr. Strangelove, which opens with a KC-135 tanker refueling a B-52 bomber. The music is that of a ballet (we think), which is appropriate since Air Force jockeys liken the refueling process to a ballet.
It’s too bad the KC-X procurement isn’t a satire. Jon Stewart of The Daily Show could have a field day with this one.