Tanker Contract: Follow the law

Update, Feb. 1:

The newspaper The Hill, which covers Capitol Hill, reports the USAF plans to award a contract for the KC-X this summer, sticking (more or less) to the timetable originally projected. Secretary Robert Gates also plans to urge President Obama to veto any FY2011 defense bill that contains funding for the Boeing C-17, which Gates cuts from the proposed budget.

We believe cutting funding for the C-17 is a mistake. We also believe the Administration ought to take Stimulus funds, double the KC-X procurement from 12-18 tankers a year (resulting in retiring the ancient KC-135s a lot faster) and split the contract between Boeing for the KC-767 and Northrop Grumman for the KC-30. In addition to the only political solution that will work, there are solid strategic reasons for the procurement to be split.

Taking Stimulus money to establish a new aerospace industrial base in Mobile (AL) while supporting the existing 767 program is far more productive than giving Stimulus money to things like a California dinner train.

Original Post:

Here’s a commentary from an outfit we’d never heard of before, the Forerunner Foundation. This op-ed piece appeared in the January 11 issue of Aviation Week magazine. The writer, Jerry Cox, makes an interesting point over the campaign by Boeing supporters to exclude the Northrop Grumman (Airbus) bid for the KC-X tanker.

The Boeing supporters want to exclude the Northrop tanker, based on the Airbus A330-200, because the WTO found in an Interim Report that Airbus violated WTO rules. The final report is expected to ratify the Interim findings. The Boeing supporters assert that any company that is found to have violated WTO rules should be excluded from the competition.

We have long taken the position that we fully expect the WTO to find Boeing violated rules, too, when its Interim Report against Boeing is issued, a timeline now set for June. Therefore, we have argued, both companies would be excluded from competing from the KC-X competition if the Boeing supporters got their way. This is, of course, ludicrous. The only other company producing jet aerial refueling tankers is Russian. (Lockheed produces the KC-130 turbo-prop tanker.)

Cox trumps our argument. He notes that the only company so far found guilty of violating WTO rules is…Boeing. Read his article; it puts an interesting perspective on things.

41 Comments on “Tanker Contract: Follow the law

  1. Mr Cox ends with a similar observation I made in
    a neighboring topic.

    Was the $4B in possible trade sanctions ever imposed? ( q. just for information, didn’t find anything )

    How constructive are the different forms of subsidies? Does this project/reflect on the takers?

    The EU type of “subsidy” appears to be a risky but
    longterm investment in innovation with potential
    high yield for a longer period.

    Tax subsidies on the other hand tend to just move
    public money into private hands. There is no productive requirement beyond selling some goods.

    • The EU decided not to impose the $4 billion in sanctions after the U.
      S. Congress, in 2006, finally terminated the tax breaks for Boeing’s foreign sales.

      As an independent public research and education organization, we are trying to put subsidies into proper perspective – i.e., what’s best for American consumers, workers, etc., not which company will sell the most airplanes or make the most money for their shareholders. The video issue brief we released yesterday addresses two fundamental facts. First, Boeing had plenty of help from Uncle Sam in launching the world’s first airliner. Second, it would have no competition – and airlines would have no effective choices – if the Europeans had not subsidized Airbus. Future videos will explore the impact of subsidies on competition today and how different levels and types of subsidies can help or hurt American interests. We hope you’ll watch and comment on those.

  2. great article.
    I never did understand why Boeing or their supporters weren’t making more of a ruckess to get (IMHO) the better contender booted based on the WTO. Apparently

    I do not understand how america is still incapable of awarding this supposedly simple contrat to the better offer.
    the lease deal was ended because a senator started asking awkward question about what the 767 win was based on. Last time around Boeing only got back in on procedural reasons – the selection itself was never adressed by the GAO. And now the USAF somehow incorporated all the points Boeing brought to the GAO, even those not held up by their final descision – which is most of them…

    In all cases where the MRTT competed against the 767, the MRTT won (yes, the MRTT had some giveaways but the 767 never won a competition in either japan or italy either).
    The only downside of the MRTT compared to the 767 is it’t size. But that does not relate direcly to “booms in the air” – the 767 will spend much more of it’s time en route to or from the refuel area and has less fuel to offload, negating much of it’s ” booms on the ground” margin.

    Sorry for the rant, but this is getting ridiculus.

    • Some countries’ refueling needs are infrequent enough to make a multi-role aircraft fit well (when in an all out war, will they wish they had bought dedicated equipment?). We can see sales of the A330 MRTT having this characteristic. USAF requirements and use characteristics have been and are quite different, and fitting a multi-role aircraft into a more dedicated fleet requires a large change, not just in quantity of aircraft purchased, but fleet use planning and strategy.

      Imagine, in times of peace, planning and using these aircraft as cargo carriers, then as we are attacked, the slow migration to a war time footing; we cannot afford a military without tremendous focus. Tankers must be purchased for their primary mission in refueling, and cargo must be a very secondary option.

      Conversely, should a USAF RFP for a new mid-sized transport consider the proposed aircraft’s re-fueling capabilities in a primary role? Then, even more “ridiculous,” how about their bombing capabilities or even sig-int?

      The recent successful A330MRTT bid wins cannot be compared with the USAF’s request. They are used differently within completely different operational frameworks.

      Lastly, “better offer” is in the eyes of the beholder. A more succinct question is, how close are each product’s capabilities to the USAF requirements. Being “bigger,” or offering “more,” may be irrelevant, just as irrelevant as being “a newer design,” or “having a lower life-cycle cost.” So, our opinions are rather irrelevant, unless, of course, we know what the USAF requirements are to the letter.

  3. Ikkeman – Thx for the blog. This mess is not about about gsetting the best plane to the warfighters because the KC-135s can soldier on indefinitely and in any case both planes are arguably too big.

    This mess IS about two things: (1) The immutable fact that the two planes are very different, so each company tries to influence the RFP in its direction. EADS/NG did this the first time when they threatened to w/draw if the RFP did not contain terms more favorable to their larger plane. For the current RFP, Boeing tried to shift the emphasis to price, while EADS/NG is yet again threatening to quit if price is dominant. If the planes had been similar, this dispute would not be happening.

    (2)The US/Europe relationship generally, and how we two will arrange our competing aero space industries. Once one focuses on this, the the two plane solution becomes obvious. We both need the 330 line in the US, no matter what Boeing think. We need cargo planes, which Eur can get from us for a lot les than the A400M. It time to talk holistically about our relationship.

    More in while I have to go.

  4. Says the writer:

    “If the tanker buy is not resolved through real competition and under U.S. procurement laws, a terrible precedent will be set. Weapons systems will reflect political tradeoffs, not the tradeoffs in capabilities that mean life or death to U.S. warfighters.”

    Weapons systems will start reflecting political tradeoffs if KC-X doesn’t change course? Like procurement since hasn’t been tied into political concerns and pork barrel spending until now.

    Holy crap- nobody is that naive or dumb.

  5. Royce,

    Weapon systems contracts have never been settled by real competition as you state. Weapons systems contracts work because the military correctly identifies it’s required operational capabilities, how much it is willing to pay for those capabilities, and when they need them. If there are two or ideally three or more competitor’s who can compete for the contract then that is great and it will only benefit the military. However, a contest such as this one between 2 dissimilar aircraft, where to have a competition you need to obscure your requirements, and have 800 plus trade-able requirements like in round 2 fundamentally violates good procurement practice.

    Round 2 failed for good reasons. The desire to have a 50/50 competition basically guaranteed the military couldn’t properly define it’s requirements and it doomed round 2 to failure. Competition like fairness or justice or anything else is in the eye of the beholder. For this round to work the military must spell out it’s requirements clearly, and unfortunately for NG and EADS that means the KC-30 will enter the contest at a disadvantage. But anything less than a clear and unambiguous contest can only be called politics and will guarantee the failure of this round as surely as it guaranteed the failure of the previous two rounds.

    • The lease deal fell through because a senator noticed the 330 met more of the requirements than the 767 did and started asking questions.
      At the end of round 2 the USAF summed up it’s requirement quite eloquently: “More”
      They should have said so from the start.

      Why is the 330 at a disadvantage to the USAF requirements in round 3?

      If the dRFP was writtin around the USAF operational requirements it wouldn’t have been a fixed number buy, now would it?

      • “Why is the 330 at a disadvantage to the USAF requirements in round 3?”

        Because all wheels have been set a’turning to have a pro Boeing result
        while superficial appearance of a competition is held up.

        This “taint the facts gathering process to get the desired decission
        taken from deciding on facts” is a semantic and cultural failure
        and is difficult to see from inside this system/culture.

        Europe is lagging in this developement, but not by all that much.

      • Yes, Gen. Arthur Lichte, said after the last round: “I can sum it up in one word: more. More passengers, more cargo, more fuel to offload, more
        patients that we can carry, more availability, more flexibility, and
        more dependability.”

        But, does “more” fit into the USAF requirements for a tanker? Is bigger and “more” really a better fit? Or, was the good General playing to his listeners psychology to justify a skewed decision process he supported? Btw, the good General was retired from his command last year.

        And, does an RFP with a “fixed number buy” of aircraft suggest it wasn’t written to accommodate “USAF operational requirements?” “Operational” can be defined narrowly to broadly. I’m confident the RFP includes a version that resembles the first of the three, “KC-X,” “KC-Y” and “KC-XZ,” recapitalization strategy.

      • Might be my problem – I interpret “operational” as meaning “during excecution of it’s intended missions”

        When you look at it in that way, how can you justify buying a set number of tankers to replace the kc-135’s –
        Surely the AF doesn’t require a set number of tankers at each base (though there might of course be a minimum or maximum), but rather whatever number is required to achieve the desired fuel offloaded, medevac’ed and/or cargo transported

  6. The main point is that to pass the legal muster the primary issue is that the USAF must clearly define their requirments, spell out their requirements, and make a selection based on those requirements. This is true regardless of whether or not they desire a larger airplane in the same class of the A330 or smaller KC-135 replacement. If they USAF tried to run a contest like the last one, it wouldn’t fly and they’d wind up settling for nothing more than re-engined KC-135s for the next 15 years.

    The problem for NG/EADS is that 1) existing tanker use data clearly points towards a smaller tanker, and it puts little emphasis on cargo and pax, since the current tanker fleet is rarely used in the role. Addtionally, given Boeing’s much greater political influence it would be 2) difficult for the Air Force to select a set of requirements that greatly disadvantaged Boeing, even if they wanted a plane the same size as the A330 (e.g. bigger than a KC-135, but not as capable as a KC-10).

    The truth is once the Air Force made the determination that this contest must be bulletproof there was little chance it would be designed in such a way that NG/EADS would be the favorite.

    • John
      basing your requirements on the current inventory (ie, 50+ year old airframes) will result in a replacement rather than an improvement, let alone a modernisation. Saying that because the KC-135 and KC-10 are inefficient cargo planes, their replacement shouldn’t be good at that is wrong.
      And there we come to the crux – the USAF has never investigated their requirements for an future tanker (at least, no such research is known to the public domain).
      The airforce doesn’t really know what they want and thus the requirements keep shifting. The last award was undone mainly because the AF changed it’s mind during the competition. This time around, they simply included almost every complaint Boeing had the last time around – even those complaints not upheld by the GAO.

      You’re right of course, Boeing’s Americana aura – deserved or not – does put NG/EADS at an disadvantage. unfortunately.

      • Ikkeman,

        The real problem is that no one has an accurate crystal ball as to what kind of wars will be fought in the future. Some scenarios will favor a larger aircraft like the KC-30 and some wil favor a smaller airframe like the KC-767. Given the level of uncertaintity about what the future holds the most defensible thing to do is to base your requirements on past data and past tanker usage. Again, my main point was if the Air Force is going to have a bulletproof RfP they have to avoid using their crystal ball too much and focus on what they know and what they can defend.

        As far as investigation of future needs, the USAF has engaged in many studies over the past 20 years. The issue again comes down to what kind of wars will be fought in the future and what the needs are, and the fact is unless there is very good reason for them to determine that a tanker inbetween the current KC-135 and KC-10 is what is needed it is unlikely that they will define their requirements in a way favorable to the KC-30.

  7. Correct me if I am wrong, but I understoo that the Air Force has very little input on this competition due to their “failures” on the last 2 attempts to award a contract.
    Hence, as 123xyz duly pointed out, for the third go around, Air Force personnel who supported a larger (i.e. not Boeing) tanker were foreced out and the competition was taken over by the politicians.
    I think there is a term in card play that aptly describes this tactic.

    • Shortly after the GAO released its report for the last competition, Sec. Gates took the program away from the USAF and put it under his office, “OSD.” Then, before this new dRFP was developed, gave it back to the USAF. The USAF Chief of Staff, General Norton Schwartz (member of the Joint Chief’s of Staff) is keeping good watch over the process, as are the civilian bosses. Schwartz had been the top Transportation Command general and General Lichte’s (“More”) immediate commander.

      The current USAF military leadership is at odds with the manufacturers in their attempt to influence the RFP content directly, or indirectly via politicians. Just recently, Schwartz rebuffed, “I do find it curious that some have indicated they understand our requirements better than we do.”

      A side note, high level military commanders are commonly retired or re-assigned by the the Chiefs or civilian leadership and replaced with those they feel may better implement the goals of the administration. One big example is Army Chief of Staff General Eric Shinseki. The Bush Admin. retired him after proposing “something in the order of several hundred thousand soldiers,” to successfully complete the Iraq mission. Shinseki is now Sec. of Veterans Affairs.

      My impression is, this new RFP will not be as skewed by the manufacturer’s as the last one.

  8. Here’s is a hard hitting opinion piece published yesterday in the American Spectator. Poor Tood Tiahrt, he really gets his a** whipped….

    http://spectator.org/archives/2010/01/28/air-bust

    However, one bloke with the blog signature “Thom” wrote a truly excellent analysis regarding the tragicomic tanker saga:

    Thom| 1.28.10 @ 9:17PM

    Quote:

    ……….Last point, this “tanker” while very important in the scheme of things is not a “war bird”. It is a commercial cargo airframe with military com gear, SAM defensive systems and refueling gear added. At 200 million plus a copy, more expensive than the F-22s we are discontinuing, it is important but not in any shape form or fashion in the same league as a true military system. Equating this to something with military grade weapons, sensors or other critical components is disingenuous at the least. Our allies are flying, driving, firing a whole lot more of our stuff and we will ever be doing the same of theirs by a huge margin. The F-22 is going down the tubes despite two foreign nations wanting to either buy versions of them or co-produce them for their use. It’s a two way door and if we snub our nose at our Allies when their stuff is actually better, as illustrated above we are just going to accelerate what many of you think you are protecting. There is a lot less “American” in stuff you call American than many of you want to accept. If Boeing can’t design and build the 787 here that should be the wake up call for some to look a little deeper into the situation rather than stick your head in the sand and scream “buy American”. Your screaming isn’t going to change anything at all with regard to this situation.

    • Read the Spectator piece a few days ago. Quin Hillyer is a good ol Southern boy doing his bit for his former town of Mobile Alabama by supporting the Airbus tanker (he worked for the Mobile newspaper). He hedges his bets promoting a dual purchase.

      Yet, we can note the piece is not well researched (the allegations against Airbus can be found by searching the internet). And, lastly, it seems Mr. Hillyer has some sort of psychological disorder, or maybe a complex as he vehemently attacks the Congressman’s grammar in a piece which should focus on the tanker argument… well,”focus” is tough in a fight below the belt… so we should be surprised he didn’t attack the Congressman’s stand on abortion or something.

      • You would have difficulty finding defense procurement
        in Europe or anywhere else on this world where involved
        politicians did not get their beak wetted by some
        wellmeaning US corporation. And if it is not money it
        is political “aiding” and pressuring.

        There is no pedestal of morality the US would fit on.

      • Yes, but American arms makers have no monopoly on selling weapons via political pressure. And, there is no “morality pedestal” on which any arms manufacturer can stand.

        As an example, when French President Sarkozy visited Brazil back in September, he left with an understanding Brazil would purchase the French Dassault Rafale fighter complete with technology transfer and all. Dassault wasn’t alone as Boeing, Lockheed and Saab of Sweden all paid visits (the agreement with Sarkozy, in the eye of Brazil’s politicians, turns out to be non-binding and rather moot).

        So, there is political arm twisting all over the place, especially using trade imbalances as a driving factor. The Russians have been big arms exporters, and still are, as are the Germans, Italians, Israelis, British to name the a few majors. Arms are big business, so in the race for net positive trade, everyone’s pushing weapons. It just turns out, US manufacturers have some of the most advanced, most attractive military technologies out there. For that, we should be proud.

        Is there a “proud pedestal?”

      • Proud, eh?

        I wouldn’t be “proud” of the absurdly large military, industrial and congressional complex which is seemingly out of control:

        Military Industrial Congressional Complex
        http://www.youtube.com/watch?v=8y06NSBBRtY&NR=1
        http://www.youtube.com/watch?v=qdrGKwkmxAU&feature=related

        Ike, in fact, was not proud of American weapons of war, but like most veterans, viewed weapons as a necessary evil. However, what he was “proud” of though, was American societal pre-eminence in the 1950s:

        Quote:

        “We now stand ten years past the midpoint of a century that has witnessed four major wars among great nations. Three of these involved our own country. Despite these holocausts America is today the strongest, the most influential and most productive nation in the world. Understandably proud of this pre-eminence, we yet realize that America’s leadership and prestige depend, not merely upon our unmatched material progress, riches and military strength, but on how we use our power in the interests of world peace and human betterment.”

        Eisenhower – Military/Industrial Complex Speech

        http://coursesa.matrix.msu.edu/~hst306/documents/indust.html

        http://www.youtube.com/watch?v=5pWAGgLSCSQ&feature=related
        http://www.youtube.com/watch?v=oACur8v1188&feature=related

        So, the issue at hand was the “proud” congressman from Boeing, not some obscure journalist’s former employer, nor the typical ad-hominem attacks made against him for revealing the true nature of a libel slinging member of the military, industrial and congressional complex.

      • Yes, OV-099 and many of us aren’t proud of “of the absurdly large military, industrial and congressional complex which is seemingly out of control,” Ike make so clear years ago. There’s considerable waste and corruption to go around sucking down the Treasury.

        But, the question remains, is OV-099 just as disappointed with the technology as with the mighty Mil-Industrial Complex? We smell a red herring. So, maybe OV-099 thoughts deserved a new paragraph.

      • OV-099 is quite “impressed” with (i.e.) the F-22, but much less so with the JSF boondoggle. However, the word in question was not “impressed”, but “proud”. Of course, one can be impressed and awed by the firepower and the level of integration of state-of-the-art and high technology of modern military weapon systems. However, being “proud” of those systems is a particularly obscene trait as many of these high technology weapon systems have killed numerous innocent civilians over the years.

        Key words of Ike’s speech:

        “We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. ONLY AN ALERT AND KNOWLEDGEABLE CITIZENRY can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.”

        An alert and knowledgeable citizenry will, in all likelihood, never be “proud” of the weapon systems of their armed forces.

        As for the domestic deleterious effects of contemporary American Military Keynesianism, one can just look at the current economic situation.

        A couple of links:

        “The Military-Industrial Complex is Ruining the Economy”
        http://www.globalresearch.ca/index.php?context=va&aid=16887

        “Military spending erodes real national security”
        http://books.google.no/books?id=5AUAAAAAMBAJ&pg=PA36&lpg=PA36&dq=michael-de-oden+bulletin+atomic+scientists+1988&source=bl&ots=qbiLz6BjVQ&sig=h-Sp2eAxYjVMHXj1qZXzEjOqZEI&hl=no&ei=MrlpS72ZCpGE-QbQ8rTQCQ&sa=X&oi=book_result&ct=result&resnum=1&ved=0CAcQ6AEwAA#v=onepage&q=&f=false

  9. The “subsidies” arguments are a waste of time. Every country with a significant aero space industry publically supports that industry in one way or another because their products are so expensive to design, build and operate that they cannot exist otherwise. The reasons for this support are always the same: national security reasons (I note that just yesterday a German official was quoted as saying that the A400M will be built for European national security reasons, with the implication that the partner countries will pay EADS another 5-6 billion euros); and for good jobs.

    Ikkeman, John is right that all data indicate a need for tankers that are smaller than either the 330 or the 767. The 330 was never the better plane because it is too huge compared to the -135, with a fuel capacity far in excess of anything that is required now. I wonder, for example, could either plane use the central Asian bases which -135s now operate out of?

    My choice would be the 757-200. It is strikinglly similar in size to the -135, altho its MTOW is about 45,000 lbs less; and would be much cheaper to operate and could fly from lots more fields world wide.

    The real question is how the USAF originally went for a 767-sized plane at the time of the leases? I suspect the choice of the larger plane was part of the corruption of that process: Boeing wanted to keep the 767 going and get huge fees at the same time.

    Having said this, the process is I believe very fluid for several reasons: (1) The need for jobs and (2) the effect of UCAVs in large numbers on the USAF and Navys’ long range tanker needs. The latter may indicate the need for smaller rather than large tankers.

    A third factor, and the MOST IMPORTANT, is that our need for tankers, and what kind and how many, now depends on the reality that our world-wide empire is rapidly disapperaring, mainly because we face economic competiton thruout the world from powerful countries such as China, India an the EU. We are also collapsing because for the last decade, under completely incompetent neo-conservative policies, we have made to China the largest transfer of wealth and world-wide political power in history, and are broke.

    Every nation in the world will have to accomodate itself to China’s inevitable power in one way or another. This includes our closest allies, the Europeans and Japanese. Just yesterday, China demanded again that the the EU terminate its embargo on arms sales to China, something Spain and France already support. Imagine how powerful China will quickly become with an endless supply of high-tech European arms. Also, Germany and Russia, China’s strategic alley, have evolving economic relationships that will tie Germany and the EU more and more tightly to the Russo/Chinese strategic relationship.

    As for the Japanese, they are in the process of ending all of our basing rights on Okinawa. It is only a matter of time, during which the Chinese will convince the Japanese that they are no threat to them and will offer them signifcant access to China’s markets, until our forces in Japan will depart.

    The cause for these seismic changes
    is Chinese money, most of which they have gotten from us in unequal trading relationships advocated by neo-conservatives, and access to Chinese markets. Both the Europeans and the Japanese will in the end follow the money.

    This why I said above that the real question in this tanker battle is what solution will serve ours and the EU’s strategic relational interests between one another. How much do we need each other, or do we want to go our seperate ways. If we need each other, and I believe, then a holistic approach is needed. One such solution is R. Aboulafia’s suggestion that we buy 330s made in Europe, and the Europeans buy C-130s and C-17s made here, or some variation of this including A400Ms. This way, we all would avoid the cost of new production lines, and increase jobs all around.

    • With respect to the suggestion that the 757-200 is a good choice for a tanker, we are aware of a submission in the 2007 tanker competition of a proposal to convert 757-200s to tankers. This was never revealed by the USAF, which has a policy that all submissions are confidential and only to be disclosed by the submitting company.

      As long-time readers are aware, Omega proposed converting DC-10s; it has converted 707s (and provides some refueling to the US Navy under contract with them). This was disclosed by Omega.

      The company that submitted a KC757 proposal never disclosed its bid, then or to this day. We were aware of it through our own resources but learned of it on a confidential basis and could not disclose it then. We cannot disclose the name of the company now.

      But the USAF simply wasn’t interested in a conversion program. It wanted new tankers and that was that.

  10. “The cause for these seismic changes
    is Chinese money, ..”
    Money is the enabler but not the cause.
    US foreign policy means have in essence
    been destructive in the last two decades.
    The middle and far eastern conflicts all target
    European energy supply and partners in commerce.

    This is irritating. No carrot and too much stick.

    If there are no synergies available nations take
    their trade elsewhere. The US will be bypassed
    loosing first exports then capabilities in the years to
    come ( as has already happened for some years ).

  11. Uwe – Sadly for my country, I agree. I would be interested in you further thoughts either on this blog or to my email.

    • It is not the perfect topic for this blog.
      post to uwe at klein dash habertwedt dot de

  12. Uwe,

    I’m not sure I would agree with you on your trade analogy. Although I think the Neo-Con foreign policy of individuals like Dick Cheney has greatly dimissioned US standing in the world. A more correct analogy is that the current global trade system works because the US acts as the buyer of last resorts. As an example I would hold up the auto industry, Globally we currently have the capacity to produce 90 million vehicles a year but a market for only 60 million. South Korea can produce 5 million plus autos per year for a market of less than 1 million vehicles, and many other countries in Asia and even Europe have similar overcapicity issues. The global market works because, South Korea can sell those excess cars to the US. But what happens when the US is no longer willing to buy all those South Korean autos, or German autos and Japanese Austos, and Chinese goods?

    EADS is fighting so hard for this tanker contract because the defense market in Europe is not big enough to support it’s programs. Without a US order for the KC-30 the project is a waste of time, the market in Europe and export sales aren’t big enough to justify the program. The same can be said of the A400M, with rumors of EADS trying to ink a deal with Lockeed to market the A400M in the US. Without a US sale the A400M will never make money. So while US influence is definitely shrinking, it also means the US acting as a market where foreign manufacturues can sell their excess products is also ending, this is a very different economic situation than what has existed since the end of WWII, and while I don’t know what effect it will have on the US in the long run it is not good for export reliant countries like Japan and Germany and not good for EADS who relies so strongly on exports to support it’s defense expertise.

    • An EADS marketing deal with Lockheed for the A400M in the US is interesting and curious. Knowing their strategy would be interesting.

      Somewhere I read, the procurement of EU military hardware is, by US procurement law, equivalent to US based. When true, EADS really doesn’t need Lockheed, but, akin to the Northrop-Grumman/EADS KC-30 relationship, would Lockheed be used for political efficaciousness?

      If the USAF needs a transport between the C-130 and C-17, wouldn’t Lockheed want to build and produce one on their own? (we’ve seen renderings of the C-130XL). Does the USAF have requirements for a transport this size? If Congress swings back with more Republicans will Georgia’s delegation push for the A400M, or, for that matter, involve themselves with the tanker procurement mid-stream? How would the sole source OCCAR contract for the A400M affect a DoD contest? Would Pratt and Whitney Canada turbo-prop engines make the A400M more “American?”

      Hummm, why would Lockheed sign up?

      • EADS doesn’t need Lockheed but there are certain aspects of US law such as the buy America Act that requires 51 percent or greater US content. In order for the A400M to reach this you’d have to do a lot more than just assemble it in the US. Given the four Europrops you’d need to build most of the structural components in the US to meet the law. As far as what Lockheed might get, maybe a euro-JSF. After the Eurofighter ends production, is there a European 5th generation stealth fighter follow-on? Given the cost to develop the F-22 and F-35 I don’t see Europe funding an equivalent fighter type. In return EADS might participate in the JSF program and try to sell the JSF it’s European clients.

        As far as the significance goes we won’t know for quite a while. The USAF won’t purchase a new transport type until the Army settles on it’s next generation ground combat vehicle which shouldn’t happen until 2017 or so. The A400M was correctly sized for the Future Combat Systems vehicle which started at 27 tons. However ,the GSV will be heavier, likely closer to a German Puma and the A400M might not be such a great match for it. We’ll need to wait quite a while to see if the A400M is even a technically acceptable solution for the USAF not to mention such facts as US law and the political acceptability of ordering large numbers of A400M. However, if German and France adopted the JSF as their next generation fighter it might be doable.

      • John, Interesting thoughts.

        And, isn’t the Puma IFV high on the list of items Germany wished to carry in the A400M, if the plane met initial specs? Isn’t payload capacity at the crux of the current discussions among OCCAR, and then with EADS, just about even with cost?

        And, if history repeats itself, France will keep Dassault at the technology forefront by going alone building a next generation follow-on to the Rafael, unless, of course, Dassault is given the lead on a follow-on to the EuroFighter (recall they didn’t dropped out when they didn’t get the lead that time). Frankly, I don’t see France taking only a participating role in anything.

      • 123xyz,

        France may or may not go it alone in building a 5th generation fighter just as the US may or may not go it alone in building a Hercules follow-on. The US has studied the ATT or advanced tactical transport for years. In general the requirement was for a 40 ton capability (2x the capactity of the Hercules), a little to north side of the current A400M and much shorter landing field capabilities. Boeing proposed an aircraft for the ATT (the Super Frog) that could land with 40 tons in 200 meters and take off with a lesser payload in that same distance. However, the US may not have the money to fund it’s dream ATT, just as France may not be able to fund an advanced 5th generation fighter. There may be some room for cooperation here. However, without some give on both sides such as the idea that the US would purchse the A330 MRTT in exchange for Europe cancelling the A400M and buying the C-17 and C-130 I don’t see much hope for a US A400M purchase. So far we’ve tried the US prime, European subcontractor formula twice with the VH-71 (August Westland AW-101) and now the KC-30. The political and military results of both projects have not been encouraging. I don’t see the US continuing down this route without some sort of quid pro quo from Germany, France and Spain.

        BTW, the A400M can only carry the stripped down basic version of the PUMA. The fully uparmored PUMA weighs in at around 41 tons and can’t be carried by the A400M, which is similar to a C-130 carrying a US Army Stryker, the C-130 can do it, but only without it’s add-on armor. Ideally, the US will want something in the 40 ton range if the GSV uparmored version weighs as much as the PUMA much better short field performance than the A400M has, and stealth if Special Forces have their way. However, for the right deal the US Army and USAF might settle for the A400M.

      • John, we await the actual A400M payload capacity, but surely Airbus Mil’s publicly stated payload goal of 37 t (81,571 lb) is an attempt to satisfy the German military’s goal to carry the Puma, albeit w/o full armor. Ah, yes, as per PSM-Spz, “Weight, protection level A (air-transportable by A400M): 31.45 t, Protection level C (rail, road, sea): 41.00 t.”

        Then, with respect to the Euro 5th gen fighter, it will be interesting to watch, as France’s political/nationalistic stance vis-a-vis their industries’ are much more ingrained making it difficult to equate to American industry. We can ponder the willingness of Congress to fund joint Euro-American projects considering past experiences (as mentioned, the VH-71, KC-X), but it’s countered by the recent Supreme Court ruling in, Citizens United vs. the Federal Election Commission, allowing lobbyists representing, say EADS or Lockheed, to essentially to fund elections of supporters.

        Thanks for the thoughts,

    • Hi John,

      The surplus cars you mention are explicitly produced
      for export. The decission factor may well be the
      US _ability_ to buy imports. In recent decades cars
      produced in the US by “indigenious” manufacturers
      never generated significant exports. Completely
      under par in tech, quality, performance.

      Thus the car industry may not be the perfect example.

      Military stuff usually is low production rate high yield.
      A goldmine. To refer to another posting there is
      not much reason for proudness in this respect.
      Value for money in this realm is very low. The “hightech”
      in mil stuff is the result of excessive amounts of money
      and not the result of much intelectual brilliance.
      Other nations can develope to similar or higher demands
      but often wont spend the money.

      • Uwe,

        I wasn’t using the automotive sector as an example of competion, only supply and demand. The main point was that many exporting nations since WWII have built industries far in excess of what their domestic or natural markets can absorb. They have done this on the expectation that they could always sell the excess to the US in particular or to European countries or another advanced economy. The point was what happens when the US doesn’t want to be the market of last resort? What happens to Chinese industry when Europe says we’ve had enough we aren’t going to accept ever growing quatities of exports. This just kind of plays with Christopher’s comment on the changing roles in the world.

        Few people really think much about it but for the US unilateral free trade has gone hand in hand with a unilateral foreign policy. You take away the unilateral foreign policy so reviled by most of the world yet so central to the Neo-Cons and then the question is why does the US support free trade anymore? Afterall until WWII we were the fastest growing economy in the world and also the most protectionist. There are a lot of big shifts comming in foreign relations and policy, and free trade as we currently know it could be one of the casulties.

        The question is how does this play out with EADS current situation. Well both the A400M and KC-30 have something in common, EADS domestic market isn’t big enough to generate a profit off of either of them. In order to make money EADS has to export these products to the US, the market in the rest of the world simply isn’t big enough. EADS is in essence expeting the US to play the market of last resort to get out of it’s current delima. The real question regarding both of these products, is why does the US want to play this role? What’s in it for the US to open it’s market ot these products and make these programs profitable for EADS.

  13. To: John on February 1, 2010 at 10:55 am

    Hi John,

    KC-30 and VH-71 seem to be role models
    for missmanaging procurement and project
    management, and in a completely local
    US setting at that.

    Is it lack of interest or capability or just
    pork and jigoism running wild?

    • What’s so wrong with the KC-30, other than it’s the wrong aircraft for the USAF? No one has been that critical of it’s overall capability, only that the US does not need it and issues such as RLI and the fact that this is a really KC-135 replacement contract need to be considered. Trying to fit the square KC-30 into the round KC-X requirements is the real the problem. It will be a while before anyone wants to repeat the pain of this process by fronting for EADS as NG has done, that’s the only point about this one. VH-71 has 3 stories on what went wrong 1) Lockheed Augusta – NAVAIR changed the requirements; 2) NAVAIR – No we did not, it’s Lockheed/Agusta’s fault. 3) Sikorsky – Lockheed doesn’t build helicopters and no idea how much their proposed electronic systems would through off the weight and balance of the aircract. Either way who’s at fault doesn’t matter much, success breeds more success and people will naturally avoid that which has failed. The fact is you’ve had the two highest profile Euro aircraft projects fail in a spectacular fashion is what matters not who is at fault. This will naturally make major US defense contractors hesitant about fronting for any more such projects.

      The same is true of the A400M and some other European cooperative projects such as Galileo. If the A320 and A330 encouraged more projects based on their incredable success, the later European projects such as the A400M, A380 and Galileo will discourage further cooperation because of their delays and cost overruns. It’s not a political statement, it’s just reality this is how people operate, people don’t like failure percieved or real.

      • IMHO you are running into the trap of
        prepared information.
        Both projects I have mentioned have run
        aground due to the inablility on the US side
        to define clear targets and work towards
        solving those ( in the KC-30 case stating
        requirements based on the actual physical world
        and not the realm of pork and jingoism, in the
        VH-71 case doing requirements and realisation
        in a form that can actually fit the selected aircraft)
        Though KC-30 and VH-71 essentially appear as
        “Euro sourced” the tainting is applied locally in the US.
        This could be seen as a deliberate act of sabotaging
        the competition. On the other hand there is a long running
        list of local based projects that are ensnared in problems
        of some kind or other: Osprey, various n’th gen fighters,
        787, 747-8 Ares I/V, SOFIA, …. ( and I would judge
        Boeings troubles with the 787 as much more aggravating
        and systemic than either A380 or A400M show for Airbus.)

        No denying that the EU ( via various affiliations in member
        nations ) is a lot more susceptible to US influencing than
        the the other way round. Galileo got quite a lot of disruptive
        pressure.

        My initial question is still open:
        Is it lack of interest or capability or just
        pork and jingoism running wild?

  14. I really don’t get what you mean by boxed in? It’s certainly not like this entire contest has been logically clear in any such fashion as to box someone in? And I certainly fail to see how your statements have lead me to say something that is logically contradictory.

    As far as your inital question goes, “Is it lack of interest or capability or just pork and jingoism running wild?” it really comes down to what answer do you want? Everyone has their own sense of justice and fairness. To US eyes European industrial policy is horrible and anti-American and aimed at taking US jobs and destroying are hard earned industrial base, to Europe it’s necessary, good and it preserves Europe’s defense base. Who’s right? It depends on where you stand.

    As far as the KC-30 goes it ultimately came down to one issue. The KC-30 really failed because it lacked the necessary support in Congress. The last contest was certainly flawed and couldn’t be allowed to stand, but had there been sufficient support for the KC-30, the Pentagon would have rerun the contest like they wanted at the time with the suggested GAO fixes, selected the KC-30 and Congress would have funded it. Congress didn’t agree and the second round was allowed to die.

    If you want to know why Congress flinched consider Palmerson’s famous quote, “Nations have no permanent friends only permant interest”. Well most American Bloggers you’ve read have been pretty vehamently anti-KC30. It doesn’t really have anything to do with jingoism any more than the A400M has anything to do with European jingoism. If you listened to what they were saying, it’s essentially the KC-30 is not in our best interest, untimately the US Congress felt the same way and the project failed.

    This time around the old Pentagon Generals that wanted a larger plane are gone. So even if Congress was willing the Generals are not. The window of opportunity closed at the end of the last contest. As far as the future goes I pointed out, which you rejected, that in order for a major EADS project to be purchased by the US they must make it appear sufficiently in our interest that it could gain support beyond 1/50th of the US Senate (the 2 senators from Alabama). That means either a you scratch my back (France and Germany buys JSF) and I scratch yours (US buys a dollar equivalent value of A400Ms). The other way is to include the US from the get-go in joint development projects, the way many European governments signed up for the JSF or the MEADS air defense system.

    When you make the statement that EADS will just buy more US congressmen and go about using it’s preferred method of entry into the US market, I payoff someone to represent me like NG, and in return I get to bid as a US major, well in this case EADS can except the same response in the future they are going to get this time. We will humor you but don’t expect us to actually buy your airplane.

    You can take or leave the explaination, but if EADS want’s another shot at a US contract similar in scope to the KC-X they are going to have to offer a lot more than an assembly plant in Alabama. Alabama loved the idea, but the other 49 states could have cared less.

    As far as the VH-71 goes, the program was just a cokcup. NAVAIR didn’t define its requirements right and the contracting team mismanaged the entire project. There’s plenty of blame to go around on that on, but the program definitely deserved to die no matter who’s fault it was.

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