Tanker, 787, 747

Last week was quite active in aerospace and so were we, unable to post. So here’s a recap of some of the things that occurred and our thoughts.

More politics and the Tanker

For the past two years we have bemoaned the politicizing of the procurement process for the KC-X tanker, extending our criticism mostly on previous Boeing efforts with its Congressional supporters–most notably Sen. Patty Murray (D-Boeing/WA) and Reps. Norm Dicks (D-Boeing/WA) and Todd Tiahrt (R-Boeing/KS). Now comes Sen. Richard Shelby (R-Northrop/AL) who, in a display that represents all the worst of what’s wrong with Congress, placed a hold on 70 Obama Administration appointments in a fit over his displeasure of the KC-X Request for Proposals and his belief it disadvantages the Northrop Grumman KC-30.

We find the action repugnant.

We tend to side with Northrop in the belief that the Draft RFP favors Boeing’s smaller KC-767 since the extra capabilities of the larger KC-30 don’t get “extra credit.” We also believe this is a “price shoot-out” and not a “best value,” despite the DOD characterization to the contrary.

But Northrop’s 2007 bid was $12m-$15m less per plane than Boeing’s, so Northrop demonstrated it can under-price its competition. Northrop fears that because Boeing saw the cost-basis for the KC-30 in Boeing’s GAO protest of the 2008 award that this time Boeing has the advantage. Pentagon follower James McAleese believes this is a red-herring and the DOD says this RFP is changed enough from the 2007 competition that the cost-basis from that one is irrelevant to this one.

We think the greater threat is that this time Boeing will not offer a developmental airplane (the KC-767 Advanced Tanker), but an off-the-shelf KC-767 (we don’t believe the KC-777 developmental airplane will be offered, either). Also, Jim Albaugh, the former CEO of Boeing’s defense unit, now is CEO of the Commercial unit where the 767 is built and will be more aggressive on price than his predecessor was. Finally, Boeing is changing the 767 production line to a Lean manufacturing system which will shave double-digit costs from making the airplane.

The advantage and problem for Northrop has been that its airplane is fundamentally different than Boeing’s airplane. The KC-30, based on the Airbus A330-200, is bigger than the 767 which gives it more capability–if that’s what DOD wants. Even the USAF couldn’t decide, and that’s what caused the protest in 2008. Throughout that competition, Boeing said it was told the Air Force wanted one thing and decided mid-stream it wanted “more;” the GAO agreed and threw out the award to Northrop.

We have always felt that if DOD wanted “just” a tanker, the KC-767 is the better choice. If DOD wants a more flexible Multi-Role Tanker-Transport, the KC-30 is the better choice. We still advocate for a split buy for political and strategic reasons. Take some of the Stimulus money, double the procurement and split the order. But stop the politicizing of the process in the way the Congressional supporters have done.

787 Interior

One of the things that kept us busy last week was attending one of the aerospace events last week: Boeing showing off its #3 787 test airplane equipped with the new interior. The reviews were mixed by the media, especially for those of us who had seen the mock-up at the Customer Experience Center.

The test airplane had an interior that was equipped for…testing. As such, it wasn’t an interior for a customer. Boeing made this point prior to taking the media out to board the aircraft. Standard coach seating was installed throughout the aircraft rather than premium seating in front. While the mock-up has an entry that is grand by airline standards, test plane #3 had traditional galleys installed at the entry way. All this led some journalists to criticize. We thought this unfair.

The large windows with their ability to darken at the touch of a switch rather than use the traditional window shades was a big hit. The crew rest areas in the overhead areas, providing beds (no jokes here) for the crews on long flights were of great interest. The high-tech cockpit likewise were bit hits. The overhead bin design and mood lighting drew a lot of interest.

To be sure, Boeing’s design and what the airlines install may bear little resemblance. But we thought the interior represents a step up from what we’re used to on an airplane. Boeing did a good job.

Airplanes 3 and 4 fly this month; 5 and 6 may fly as early as next month or perhaps in April. The 787 program is moving forward after the 2 1/2 years of delays. Let’s hope the test program doesn’t reveal something that will set the program back yet again.

747-8 first flight

Today is Sunday; the 747-8s first flight is scheduled to launch tomorrow, a year late. The delay was driven in large part by the knock-on affect of the 787 delays, but also from some of its own. So be it.

The 747’s first flight won’t have the attention or the sex that followed the 787’s first flight. After all, the 747-8 is a cargo airplane and what’s sexy about that? It hasn’t sold well. Boeing didn’t bet the future or the company on it. But it’s a milestone just the same.

Boeing launched the 747 in the late 1960s, the first one entered service in 1970 and it remains the most recognizable airplane ever built after only the Lockheed Constellation, whose shark-like fuselage and triple tail still has a magic that has never been supplanted.

Boeing sold more than 1,400 747 “classics” over 35 years. We don’t believe the 747-8 will ever sell well and this model will be the last. We’re glad to see it get airborne.

15 Comments on “Tanker, 787, 747

  1. Leeham: “We find the action repugnant.”

    Politically speaking, I find the action beyond foolish and it smacks of desperation. Given that the Republicans seem to have momentum going into the mid-year elections, this action hands the Dems a heaven sent opportunity to bash Shelby (and by extension, the Republicans) on two fronts: pork barrel spending and jobs. Do not be surprised if Shelby gets little support from his own party and the Senate easily gets the 60 votes necessary to lift the hold(s). Another strong possibility is that Shelby succeeded in getting his 15 minutes of fame and he’ll lift the holds next week (after what I suspect will be some irate phone calls from his own party asking him if he’s taken leave of his senses!) It didn’t work for Maria Cantwell last year; it won’t work this time either.

  2. I find it refreshing that Sen Shelby has the temerity to stand up for the taxpayers, and the airmen who will be assigned the fly, and maintain the new tankers.

    Boeing’s track record of performance across the board is dismal. It is more so when they have been in an effective sole source situation. Just last week their lack of performance on the Virtual Fence came to light, and that was just an integration job. They previous attempts to violate the law, and screw the taxpayers through their ill conceived tanker lease deal gives great insight into how this company operates, and their lack of any discernable ethics.

    It seems that nobody cares when the Congressional delegations does shenanigans aimed at perpetuating more of the same on behalf of Boeing. In this case, Sen Shelby is actually taking a stand against right and wrong. I applaud his action.

    I find it more than curious that last February the contract was awarded to Northrop Grumman based on a specific airframe, and now as a result of a GAO protest, on what appeared to be minor procedural aspects, the USAF has now gone back to the drawing table, re-assessed their requirements and come up with entirely new criteria and specifications that are for all intents and purposes taken from the 767 design manual. Yet, that airframe was not selected last year, based on a more robust set of criteria.

    This is not about France -vs- US, it is about the ability of the USAF to conduct a fair and open competition based exclusively on their requirements. The evidence suggests that they are not up to that task, and they have sufficient “political” cover from on high to get away with this, and to stick it to the taxpayers once again.

    Without competition, the tanker program will be a disaster, and Boeing’s true to form performance will once again have an opportunity to do what it does best – cost growth. Moreover how can an airframe that is essentially at the end of its commercial viability be chosen for a critical infrastructure program that is expected to be in service for another 50 years? Does that make sense? Clearly there would be many compelling reasons to select a 1990’s design over a 1970’s design.

    What is lacking in oversight today is a cabinet level appointment for Secretary of Fraud, Waste & Abuse that has the authority to deal with situations like this. After all, this program has already produced two residents at Club Fed, one from senior leadership at Boeing, and the other from senior USAF leadership. Are we to take it on faith that there aren’t more?

    Why is the USAF so afraid of creating a truly fair and open competition? Competition is good, and usually accrues benefits to every aspect of the program, including the taxpayers. The procurement concept here, based largely on firm fixed price is a preordained disaster, and just the kind of disaster that Boeing is counting on to milk the system. It is time for someone to take control of this critical program away from the USAF and once again start over. All the while that the procurement lingers, Boeing is milking support of the existing airframes, so they win. Under the current guidelines and acquisition strategy, they win either way.

    I am not anti Boeing, and pro Northrop Grumman. I am a strong proponent for a fair and open competition to provide a solution for a well quantified need. Let capitalism do what it does best. But don’t stack the decks…. Once again, Thank you Sen. Shelby for having the temerity to force someone to look at this and see it for what it is. You have done an excellent job of representing your State, the airmen, and the TAXPAYERS.

  3. WRT, “the extra capabilities of the larger KC-30 don’t get “extra credit.” We also believe this is a “price shoot-out” and not a “best value,” ”

    When the requirement to meet the KC-135’s replacement under the first of the USAF’s programs (KC–X, KC–Y and KC–Z) includes the replacement of “similar” sized aircraft larger sized aircraft are naturally at a disadvantage. And, when shopping the western world’s in-production aircraft there may be none meeting an exact size replacement.

    The average industrial bid process includes, in summary, determination of requirements, creation of a Request for Proposal, issuance of the RFP, a Q and A period, receipt of proposals, then an analysis, selection and an announcement. In many occasions proposals do not exactly meet the stated requirements, so a rating system in implemented to determine a grade for each requirement section.

    As an example, when a requirement states size “10,” but proposal responses include only “14” and “18,” the former is usually graded higher than the latter. And, neither receives the highest possible grade for meeting the requirement of “10.”

    Stating “bigger is better” or the larger of the two tankers should receive “extra credit” reveals a subjugation to the human physiological condition for overindulgence. American’s insatiable appetite for SUV’s in the past is a case in point. Yes, they may have meet buyer’s requirements, but we can argue, the determination process was flawed by the human condition.

    Finally, in the same vain, a “price shoot-out,” and “best value” suggest “more” for less money. Government financial assistance aside, initial purchase cost pale in comparison to on-going expense (“total life cycle costs,” or “total cost of ownership “TCO”), and most large industrial capitalized purchases are relatively more costly than smaller scaled ones in the same time frame.

    The KC-30, by size, may be better suited size-wise for the KC-Y or -Z replacement of the KC-10’s, if required by the USAF.

    From a size perspective the A310-MRTT (or a remake by shortening a A330), would have been less controversial. Was the A310 line closed just a few years too early?

  4. “787 windows”

    It will be interesting to see if electrochromic glass panes provide the same utllity that movable shades do. ( afaiu the transmissiveness changes over the whole pane. A shade can be adjusted to not be blinded by the sun or other reflexes. The remaining view is unobstructed.

  5. You state “The 747’s first flight won’t have the attention or the sex that followed the 787’s first flight. ”

    i did not know the 787 flt involved sex… exciting to be sure, but “sex”, wow.

  6. Our recent op-ed in Aviation Week, http://trade.forerunnerfoundation.org, argued that hijinks on Capitol Hill over tanker do great disservice to taxpayers and war-fighters. If Northrop has a legitimate beef with the upcoming RFP, they should pursue legal action under the Weapons System Acquisition Reform Act (“WSARA”), which passed Congress unanimously last year. No one in the blogosphere or the real world has challenged our conclusion. We welcome comments, pro and con, on our blog.

    • Jerry Cox lacks objectivity.

      He also shows his weakness in basic background research in ,”KC-135 tankers in service today were built during the Eisenhower administration,” and “Commercial airlines long ago stopped flying the Boeing 707, on which the current KC-135 refueling tanker is based.”

      Who is Jerry Cox anyway?

      In fact, new KC-135 tankers were delivered throughout the period 1957-1965, the Eisenhower, Kennedy and Johnson administrations. And, the KC-135 is not based on the Boeing 707; rather, it’s based on the Boeing 367-80 (aka the “dash-80”) which spawned the KC-135 and the larger 707 (the 707’s fuselage diameter is larger than the -80/KC-135). Matter-of-fact, the 707 first flew months later then the KC-135.

      Yet, his points are well understood: the KC-135 is old. And, more interestingly, we discover he’s bias favoring the Northrop-Grumman/EADS KC-30 tanker.

      In his August 15, 2008 Seattle-PI op-ed piece, “Tanker Choice in Mathematical Terms,” he describes how a “1st grader” could decide the tanker competition by performing simple math, concluding, “The “aircraft fuel efficiency” ratio works out solidly in Northrop’s favor, so why must the military retake the quiz?” He concluded with, “A tanker’s capability to deliver fuel efficiently is not the only yardstick, but nothing can be more important.” Really? Nothing? How about total life-cycle costs?

      He co-authored another piece, “Reforming Defense Procurement – No fiscal responsibility without tackling military expenditures,” Feb 25, 2009, The Washington Times. They promote reform in DoD procurement any liberal would love in, “more bang for the buck.” But, since his kids calculated the bigger plane delivers fuel most efficiently, and nothing is more important, we should ignore procurement and OpEx costs. Or, should we?

      Yet, the article’s prime purpose it to promote Sen McCain to the head of the Senate Arms Services Committee. He has, “the confidence of military personnel,” they state, because, “70 percent… voted” for him for president. Then, “Unfortunately, a congressional agency faulted how the bids were evaluated and the process degenerated into exactly the sort of pork-barrel politics the president and Mr. McCain both railed against during the campaign.”

      What would Mr Cox write about Sen Sessions’ and Shelby’s recent political actions? Isn’t blocking administration nominee appointments for an Alabama FBI lab and getting extra credit for a bigger than required tanker that very same,”sort of pork-barrel politics” that just wastes time and money?

      Mr Cox masquerades as a DC reformist, but he’s really a lobbyist. In his own words, “He has lobbied into law statutory language that makes it possible for his clients to bid on government contracts, compete for new commercial opportunities,…” Yes, opportunities for the likes of Northrop-Grumman and EADS, quite objectively. His calls for DoD procurement reform is simply cover for “bigger and more is better.” Lobbyists are the true purveyors of DC pork.

      “Juan” and “Maria” should ask, who funds this non-profit Forerunner Foundation? “Non-profit” can mean, “pay us just enough to cover our salaries and expenses and no more.” But, what are are lobbyists’ salaries and expenses? Surely another simple objective math problem for his 1st graders.


      http://www.forerunnerfoundation.org/hot-topics-modernization_armp.html
      http://members.cox.net/potomac.strategy.associates/coxexp4.003.htm
      http://members.cox.net/potomac.strategy.associates/coxbiowebpage2.003.htm

      • Who is the organization that poses as “XYZ123,” anyway? They’ve obviously taken more than a casual interest in everything the Forerunner Foundation has written for major newspapers and magazines. They quote from our commentaries on the tanker procurement, but yank words out of context and misrepresent a perspective that professional news and editorial leaders found sufficiently refreshing and insightful to publish to millions of their subscribers. We at Forerunner are grateful to you, “XYZ123,” because people who missed those earlier commentaries will now look them up and see what a hatchet-job you’ve done. No wonder you are “He Whose Name Cannot Be Spoken.” While you’re at it, please do the same on our video issue brief, posted at http://trade.forerunnerfoundation.org, on the Boeing/Airbus trade dispute. It would be good for a few hundred more policy-makers to see that average Joes and Janes, not just your company, also have a big stake.

      • Jerry Cox’s video is also quite interesting and amusing —

        http://www.youtube.com/watch?v=mQZvOGfdFGM&feature=player_embedded

        It attempts to balance a modern day complaint at the WTO against Airbus government airplane launch aid with an “in-depth study” of Boeing’s launch aid history from ~1917 to pre-WWII. The video shows how Boeing received government funding for military and mail carrying aircraft and turned those profits into commercially viable ventures.

        We (I use Jerry’s assumption I’m a pro-Boeing organization, wow, I must be good!) studied these “dusty history books” too. Boeing’s first airplane, called the “B&W,” was not government funded, and, in fact, it was a flop. And, their second plane, called the, “Model C,” was designed fully with Boeing money and a Chinese engineer in anticipation of WWI orders. The US Navy commissioned 50 only after a flying demonstration in Florida.

        After WWI, plane orders drop to nothing, so Boeing built speedboats and furniture. We see no indication Boeing received launch aid for this endeavor.

        And, there’s no mention of the B-1, targeted to sports flying enthusiast, and the disappointing GA-1 armored Army biplane (2 built), and the litany of fighter, trainer and other aircraft developed from 1923-1945. Now, since the Douglas company is essentially now part of Boeing, should we consider the DC-3 success in military (C-47) & civilian transport due to government launch aid? No less, it out-built the Boeing 247 by about 16,000 airframes.

        Granted a it’s hard to jam an old company’s entire history here nor in a 1.5min video, but I’m, oops, we’re wondering if the WTO will actually look to the first half of the last century at propeller aircraft to counter the claims. A better comparison, would follow Boeing’s developments post WWII, especially their 377 Stratocruiser’s use of B-29 technology, etc and then into the jet age where Boeing risked two thirds of their net worth developing the “dash-80,” which spawned the KC-135 and the larger B707 (the success of which itself spawned European envy). Then we can argue if the USAF’s request for a large transport resulted in the highly successful B747 or not. Just ask its designer, Joe Sutter. He’ll say only the engines survived.

        Yes, the video is interesting and amusing. Interesting in purpose, and amusing in the juxtaposition of new golden coins with old black and white photos of propeller airplanes from pre-WWII.

    • Many knowledgeable and fair-minded people find Forerunner’s video issue brief on launch aid to be not only interesting and amusing, but also informative. The last quality is hard to find in a blogosphere dominated by people too ashamed to reveal their names. We’re happy to publish serious comments opposed to our views on the Forerunner TRADE blog, http://trade.forerunnerfoundation.org/node/2, but only from people willing to disclose their identity. You can join our conversation there, Mr. “XYZ123,” but only if you’ll come out from under the bedsheets and the pointy hat.

    • Scott, My apologies if I had crossed the line. The “dash-80″/B707/KC135 anachronism sparked my curiosity and I couldn’t help added research. And, Jerry is due his opinion, even anonymously.

    • We concur. Forward-thinking public policy needs to be based on a civil discussion of the facts among knowledgable people. Anonymous blog posts are the e-quivalent of someone shouting from the back of a mob. Accordingly, we do not allow them on the Forerunner site. However, we welcome and strongly encourage responsible criticism of our commentaries from people willing to identify themselves, including “Mr. X.”

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