Snapshot: EADS press conference, mainly on Tanker and USAF faux pas

We attended a press conference today in Washington (DC) with Sean O’Keefe, CEO of EADS North America, that covered a variety of issues but focused mainly on the KC-X tanker competition and most particularly the news last week that the USAF had sent proprietary information about the Boeing and EADS tanker bids to the wrong company.

First, O’Keefe remains in the neck collar from his near-fatal airplane accident in Alaska August 9 in which former Sen. Ted Stevens (R-AK) and three others were killed. Sean and his teenage son, Kevin, were about five survivors. O’Keefe’s spirits are good and he expressed that the random nature of those killed and who survived is proof that divine intervention is “real.”

Having interviewed O’Keefe on previous occasions, we are gratified to see his recovery progressing and him back at work.

Here is a quick snaphshot of O’Keefe’s remarks:

  • O’Keefe accepts the USAF word that the delivery of the proprietary materials to the wrong recipients was an inadvertant error. Although he would not definitively rule out a protest over the matter, neither did he see any reason to file one.
  • As the former director of NASA and Secretary of the Navy, O’Keefe said he’s seen similar events. The government has established procedures to handle such circumstances and the USAF–EADS and as far as he knows, Boeing–followed these procedures meticulously.
  • EADS (and presumably Boeing) only last week received another “pile” of questions, called Evaluation Notices, from the Air Force that need to be answered. This is a routine part of the process.
  • The USAF said the new contract award date will slip to early next year; O’Keefe said the detailed process, pre-dating the faux pas revealed last week, had already led him to that conclusion.
  • The date for the best-final-offer submission has not been set by USAF.
  • O’Keefe has no reason to believe, at this time, a split buy will result from the USAF mix-up. A spokesman followed up witth, “There have been a number of acquisition scenarios put forward over the last several years, split buy being one approach that is appealing to some.  The bottom line is that acquisition policy is up to the Department of Defense.  We’re focused on the current competition and remain confident in our offering.”

We’ll have more from the press conference later this week.

The buzz among the defense writers preceding the conference is that heads are going to roll at USAF over this mix-up.

9 Comments on “Snapshot: EADS press conference, mainly on Tanker and USAF faux pas

  1. I still believe this USAF “faux pas” is the death nail in the KC-X v. 2010 compitition.

  2. heads will roll ? No doubt- but they will NOT be the heads that matter. there will be a few – low level clerks and their immediate supervisors who will be transferred to the ‘ statistical sampling survey ” depart in charge of evaluation of the size of snowflakes at elmendorf and greenland airbases.

    The real problem is the absence of checks and balances on ANY information that leaves the limited distribution area for any reason, or a simple two person verification of any/all computerized data that is transmitted by any means.

    IOW a failure of a ‘ security plan ” approved by mid or high level managers.

  3. Taking a cue from Heidi Woods, she of Morgan Stanley fame, the “vagueness of O’Keefe’s comments alerts us”.

  4. Scott, Did Mr. O’Keefe indicate whether or not EADS would accept a split buy, or the circumstances? It seems to me that some sort of split, or compensation for the region that loses if there is not asplit buy, is the only may the politcal hurdles will be overcome.

    • EADS (and Northrop before it) had and continue to take the position that it will accept a split buy if that’s what the customer wants.

      Boeing has also said as much, though early in the 2008 competition that wasn’t Boeing’s position.

  5. I am neutral on the split buy option but does anybod know if any sort of study has been done to see if the extra costs of procuring 2 different aircraft would be offset by the increasing costs of this competition as well as the spiralling costs of keeping the existing fleet in service?
    I would not be surprised if such a study were to show that it might be cheaper, or at least not near as expensive, in the long run, to split the procurement.

    Or is it a matter of money that is not available now and will (hopefully) be available later? Sort of like the scenario that started this whole circus over 9 years ago.

  6. A competitive split buy has often saved money rewarding the manufacturing team most on time and on dollar the largest percentage of future contracts. This system would provide tankers quicker than any other method, would end the appeals, and start to create 98,000 solid manufacturing jobs all over the country. Why is this not being done now so that Obama has some non-highway jobs to show when his election comes up in 23 months? There are so many reasons to support a split buy. The Air Force can clearly use both types of tankers….short range and longer range birds. The military doesnt control the labor unions and one strike at Boeing could delay tankers into the next decade.

  7. peterhoward :
    A competitive split buy —- There are so many reasons to support a split buy. The Air Force can clearly use both types of tankers….short range and longer range birds. The military doesnt control the labor unions and one strike at Boeing could delay tankers into the next decade.

    I would guess that the U.S labor unions would agree to maintain military work, but strike commercial work. However, the french and Italian unions are more likely to strike on almost any issue at any time.

    I commented several years ago that given the size differences, a split buy would make sense. But that was before EADS moved to build a plant in the U.S with indirect funding by U.S taxpayers to compete with Boeing on the commercial side. And keep in mind the open competition that was used for the A-400M Eurotanker… U.S need not apply !

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