Recapping the KC-X contest

With the expectation that the USAF is going to announce its tanker award this week, we’re going to forego our Odds and Ends kick-off and deal with the tanker.

We’re going to try and synopsize many of the issues that are “out there” in cyber-land, to try and make some sense out of what sometimes seems to be a senseless process.

In no particular order, here we go:

Who’s going to win?

The consensus is EADS has the upper hand this time. Boeing executives think they will lose and EADS is optimistic. One noted consultant told us he thinks it is too close to call. We want a split buy; the KC-767 is better for the European theatre and the KC-45 is better for the Pacific. Politically, we think this is the only answer that works. Isn’t this sad?

Split Buy or not

DOD and USAF have said “no,” but the RFP does have a provision to allow for it. Boeing and EADS have said this would be uneconomic, but depending on the split, if any, this may be rhetoric. DOD and the Navy said ”no” on the Littoral Combat Ship and wound up doing it. We’ll just have to wait and see.

Why should a foreign company be allowed to compete for an American contract?

The question should more appropriately be, “Why not?” Competition is good, and it has been in this case. The 2001 lease deal for the Boeing KC-767 demonstrated, if nothing else, what happens when a sole-source contract is arranged without competition. Boeing, at the behest of the late Sen. Ted Stevens, proposed leasing 100 tankers to the Air Force for $200m each, or $20bn. At the end of the term, the USAF owned nothing. Competition leading up to the 2008 contract called for 179 tankers to be purchased for $35bn, or nominally $195m each. Actual bids came in closer to $175m each. There is an expectation that bids this time may be 5%-10% less than that in 2008.

Additionally, the 2008 effort resulted in Boeing improving its airplane from the original offering, and from the International tanker program for Japan and Italy, to the KC-767 Advanced Tanker. While this plane was cleverly if unfairly dubbed the Frankentanker by critics, it unquestionably was better than those previous airplanes.

Since the 2008 competition, Airbus has benefitted by maturing its KC-30A being developed for the Australian Air Force, testing all the systems on that airplane, many of which are common to the USAF KC-45 proposal. A lot of the testing, therefore, comes at the expense of the RAAF and this reduces the risk for the USAF.

Boeing, meantime, developed the KC-767 NextGen, which doesn’t appear to be the same level of mix-and-match as the KC-767AT but which is nonetheless the Son of Frankentanker (said affectionately in this case). Most noteworthy is the addition of winglets in the conceptual artwork, which theoretically further reduces fuel burn by another 3.5% or so, but oddly Boeing doesn’t tout this additional savings in its PR and advertising. So are the winglets part of this offer or not? Boeing won’t definitively say, though it suggests that they are.

So: lower price, less risk, better airplanes. Competition is good.

More to the point, the EADS/Airbus nations are NATO allies and under US law, NATO allies who chose to bid on US defense projects must be considered as if they are US companies.

Even if Boeing wins, US taxpayers have EADS to thank for a lower price and a better airplane than would have been the case without competition.

What about jobs?

Partisans for Boeing say American jobs are at stake. Boeing will support 50,000 US jobs directly and indirectly vs. outsourcing jobs to a European company, they charge.

EADS says it will support 48,000 US jobs, and it plans to introduce a new study this week to further bolster its case. With the difference being only 2,000 jobs, we’re not talking about a great deal in the unemployment scheme regardless of who wins.

Combat ready on Day 1

Boeing has made a tag line about its plane being Combat ready on Day 1, but as good as this line is, it is meaningless. All airplanes submitted are supposed to be combat ready on Day 1. If they aren’t one presumes they would fail one or more of the mandatory pass-fail requirements.

Our plane is less thirsty than your plane

Boeing in 2008 and again in 2010 promoted its KC-767 as using 24% less fuel than the KC-30/KC-45, which would save taxpayers at least $25bn over 40 years. Northrop Grumman made a feeble attempt to refute this in 2008 and EADS was more aggressive last year. EADS concedes that on training and ferry missions, its larger KC-45 is at a disadvantage to the KC-767, but on fuel delivery missions it says the KC-45 is 15%-45% more efficient on a gallon-cost delivery basis depending on the distance, a fundamental data point in the IFARA analysis. Boeing notes the EADS analysis was done by EADS but otherwise doesn’t dispute the figures. Boeing paid two independent companies for its 24% figure, both of which relied upon commercial airline operating figures filed with the US Department of Transportation.

On a pure operating basis, Boeing is right, but this doesn’t take into account payload efficiency. In the absence of the IFARA data and Boeing rebuttal, EADS seems to have the upper hand on this one.

IFARA what?

This is the analytical tool USAF uses to score efficiency on several metrics. In 2008, the KC-30 scored 1.92 and the KC-767AT scored 1.72 (the higher the score the more efficient the airplane). The KC-135 was the baseline at 1.00. When the USAF accidentally sent Boeing the EADS IFARA score last year and EADS the Boeing IFARA score, it should have come as no surprise that the KC-45 scored better again (but we don’t know what the scores actually were, though we will at some point after the award is announced).

Size matters

But it depends on your point of view how it does. Boeing says its KC-767 is closer in size to the KC-135, requiring less military construction costs than the larger KC-45 and the ability to park more airplanes on the ramp than can fit the KC-45. EADS concedes the point.

EADS says its airplane can deliver more fuel, carry more troops and deliver more cargo than the KC-767. Boeing concedes the point but says, “So what?” All the air force wants is a refueler and all the extra capability of the KC-45 is extra cost and no needed benefit. EADS doesn’t concede this point.

Mature workforce, mature plant vs. untrained workers and an open field

This is Boeing’s advantage, no question about it. EADS has to hire employees and train them to assemble the KC-45 at a plant it has yet to build in Mobile. Boeing has a workforce with decades of experience who have been building the commercial 767 from Day 1 at a plant that has been around since 1969. True, the assembly line switched in January from the out-dated one in place since 1980 to a “lean production” system, but this should be of little consequence.

It’s also true Airbus has the recent experience of creating a new assembly plant (in Tianjin, China) that came off without a hitch. But so-called “greenfield” plants and employees are risky—just say “Charleston”—and Boeing has the clear PR and experience advantage on this one. Other than one clever video and some occasional references, Boeing hasn’t talked much about this tremendous advantage. Much to our bafflement.

Decades of experience, Part 1

Well, yes and no. Until the highly troubled Japanese and Italian tankers were delivered in 2008 (two years late) and 2010 (five years late) Legacy Boeing hadn’t delivered a tanker since 1966 and McDonnell Douglas, now part of Boeing, hadn’t delivered one since 1986, and we suspect we’d be hard-pressed to find anyone still working at the companies then who are now who were involved in the tanker production. Promoting the history of the KC-135 tankers as if it were a current event, when the last one was delivered 45 years ago, or the KC-10 (25 years ago by another company at the time), is stretching it. It’s great for the historical record but as a talking point in another age, as a qualification it just doesn’t fly.

The KC-767J is a different version than that sought by the USAF and the Italian tanker—pretty similar to the USAF desires—was a highly troubled development, most notably with the wing pods.

Airbus delivered tankers (A310 conversions) from 2004-2007 to the German Luftwaffe; Canada also flies converted A310 tankers. These have wing pods developed by EADS; the refueling boom desired by the USAF comes with the KC-30A.

In terms of recent tanker experience, this is really a draw, including delays. Just as the KC-767 International program has, and continues to have, delays, Airbus’ KC-30A is now 27 months late and counting for Australia.

Decades of experience, Part 2

Where Boeing wins hands-down is its decades of experiences in tanker maintenance contracts for USAF. But the company doesn’t talk about this. Much to our bafflement. This is something EADS/Airbus cannot possibly match and it’s a real plus for Boeing. This is the talking point about tanker heritage we wish Boeing had used, for on this it is the undisputed leader.

WTO panel rulings

Don’t forget that for all the hubbub and rhetoric on both sides of the issue, the WTO technically hasn’t determined anything—only the WTO investigative panels have found Airbus and Boeing received illegal subsidies. The WTO’s governing body has yet to accept the panels’ findings. At this writing, the Airbus panel finding remains under appeal and the Boeing panel finding is still confidential, and hasn’t yet been subject to appeal.

Setting aside these little niceties, once the WTO governing board accepts the rulings, then remedies must be negotiated. Only after negotiations fail can sanctions be authorized and penalties imposed. This is years away.

Ah, yes, says Boeing, but military procurements are exempt from WTO rulings and Congress could do what it wants.

Now, isn’t this just a little bit of a double standard? On the one hand Boeing and its supporters want to use WTO rules to penalize EADS but on the other they don’t want to follow the rules governing when and how penalties can be imposed. Or they want to exempt the military procurement from WTO penalty rules yet use the panel findings to impose a penalty. We have a hard time following the fair-and-openness of this logic.

And how much should the penalty be? Boeing and its supporters use the figure of $5bn as the amount the A330-200 received (Airbus disputes this figure, saying the WTO panel ruling doesn’t have this figure in the report and the real number identified by the panel is a paltry $54m.) Boeing’s Congressional supporters in Washington State used a figure of $5m per airplane ($5bn divided by 1,000 orders and deliveries at the time of the panel report), a figure more than offset by the withdrawal of Northrop Grumman from the EADS team (see below). At December 31, the number of order and deliveries had risen to slightly more than 1,100, thus reducing the per-plane penalty. If you accept and use the Airbus interpretation, the per-plane penalty is less than $50,000 (fifty thousand), an inconsequential amount.

Furthermore, EADS notes the launch aid has been repaid with interest and Airbus is now paying royalties on the A330, something that has to be priced into its bid and something Boeing doesn’t have to do with the 767.

Lately EADS has pointed to NASA subsidies received in the development of the 767, but this wasn’t part of the European case against Boeing so as far as we are concerned, this is irrelevant.

So it will be interesting to see just how close the bid truly is. If it is $5m or less per plane, look for Boeing and its supporters to scream. If it is a much wider number, they may scream anyway but EADS and Airbus will be able to piously say inclusion of the penalty wouldn’t have made any difference—and we think they will have a valid point.

Are the WTO panel findings relevant? People with no skin in the game say no: Richard Aboulafia of the Teal Group, Michel Merluzeau of G2 Solutions, Jim McAleese of McAleese Assoc., all respected independent analysts, say no. So do we. At a panel a few months back, of five on the panel all five said no (including us and a consultant to Boeing). Loren Thompson, who was paid by Boeing to write a report about the illegal subsidies and the tanker competition, says yes. Boeing’s workforce and political backers say yes while EADS workers and political backers say no.

Be careful what you ask for

After winning the protest in the 2008 competition, Boeing and its supporters all but demanded the USAF base the new round on price rather than best value. With the USAF having chosen the KC-30 in 2008 on “more, more, more,” Boeing and Co. felt the life cycle costs—asserted to be 24% less than the KC-45—would lock in a win for Boeing this time. Northrop Grumman, which had not yet dropped out of Round 3, complained that such a competition wouldn’t unfairly disadvantage its tanker. When the USAF stuck to its guns, Northrop dropped out. And Boeing was hoisted on its own petard because with Northrop’s cost-and-profit basis (estimated by some to be as much as 15% of the 2008 bid price) now eliminated, EADS had a lot more pricing flexibility, more than enough in our estimation to offset the penalties of the WTO case even should the USAF take them into account. Take the 15% (or even 10%) off the $175m bid price and the WTO penalties are more than offset.

Boeing may well have been sunk by the best value approach again, but once Northrop was gone, Boeing suddenly was faced with bidding a price that might not allow enough room for a profit.

Doubtful? Recall that early on, executives began warning that they would not bid a price that wasn’t profitable or which was detrimental to shareholders. This came was recently as a February 2 Excellence Hour presentation by BCA CEO Jim Albaugh to employees.

What else affects the price?

There are a couple of other important factors that affect the cost of the Airbus and Boeing airplanes and therefore the price bid and these are:

  • Development costs: Airbus Military has been lucky in one critical area as a result of the delay brought on by the 2008 protest and that is the additional R&D and testing time afforded Airbus for the KC-30A. This is the tanker for the Australian Air Force which Airbus says is 90% similar to the KC-45 offering for the USAF. This takes a lot of the cost and risk out of the Airbus/EADS pricing to the USAF.
  • Boeing has made a major improvement in its production costs with the shift in January from its 30 year old line to a new, lean manufacturing line for the 767. This shaves about 20% from production costs (but add back in cost increases in materials and labor), a significant number Boeing factored into its bid cost and price.
  • Airbus has a plane flying and in production and Boeing doesn’t. This is worth a lot, and the cost and risk to Boeing for the KC-767NG can only be guessed at by Boeing. It may be a very good guess, but it’s a guess nonetheless. Airbus has a much better handle on the costs and less risk in its pricing.
  • A viable commercial product. Airbus has a healthy backlog for the A330 and Boeing has an anemic one for the 767. Airbus plans to boost the production rate to 10 a month and Boeing plans to boost the rate to two. The higher the production rate, the lower the cost. Advantage to Airbus.
  • Life-cycle costs: Boeing and its supporters believed this would be a clear and clinching victory for the KC-767. The IFARA score, if 2008 is any guide, apparently suggests otherwise, as does the EADS delivery cost analysis. A net present value (NPV) analysis of future cost savings based on the delivery advantage of the KC-45 (per EADS, anyway) may well mean the insistence by Boeing and its supporters to include life-cycle costs might backfire. (Be careful what you ask for.)

These are all factors that have nothing to do with illegal subsidies and the advantage goes to EADS/Airbus.

Will there be another protest?

EADS says it won’t unless there is something especially egregious in the methods used, which to date it hasn’t seen. Boeing has obviously been laying the groundwork for a protest. But we certainly hope not. We’re tired of writing about the damn thing and the USAF needs a new airplane. Let’s get on with it.

When will the award be announced?

Expectations are Friday, Feb. 25, after the 4pm EST close of the stock market. It should be webcast on the Defense Department channel.

73 Comments on “Recapping the KC-X contest

  1. Possibly a few ‘ missed” points

    1) Israel has converted a few 767 to tankers if I recall correctly ?

    2) Weren’t IFRA ground rules regarding certain airports/airfields used as a baseline changed AFTER northrop dropped out, and wasn’t some extra time to bid provided ?

    3) Isn’t the majority of flight time over the last 50 years used for training ?

    4) Dont a majority of the combat missions return with excess fuel ?

    5) What happens when EADS employees outside of the U.S go on strike, and deliveries are delayed ? In the U.S, the workers can be forced to continue working ( although it is not that likely to happen )

    • 1) Israel did convert a or some 767’s the AF asked for new builds.

      2) … as I understand the base assumptions underpinning the IFARA score provide different access to airfields to different aircraft, possibly related to their operational characteristics?

      3) Yes, isn’t that a waste. Looking at more similar, less legacy systems (C-17?) the factor of training vs operational use is more… geared towards efficiency

      4) All combat missions should return with excess fuel, you never know when you need extra fuel in an emergency – the refuel capability of both competitors will reduce this waste

      5) In my corner of Europe, any strike needs to be allowed by a judge. They can and do forbid strikes when “the common good” is likely to be damaged overmuch – though it’s not likely to happen.
      Also, since ITAR regulations mandate all critical design and production information to be solidly in US hands, a strike in, let’s say France, would be a boon to the US – they will gat that work package and thus more work!

    • 5) What happens when EADS employees outside of the U.S go on strike, and deliveries are delayed ? In the U.S, the workers can be forced to continue working ( although it is not that likely to happen )

      The same thing that happens when Boeing subcontractors for the 767 go on strike in Britain, Japan, China, S. Korea, Australia, Italy etc. etc
      Try again.

  2. I think its fair to say that most A330’s(sans KC30’s) are delivered in a timely manner with very little impact over the years from industrial action.

    A very good analysis by the way Scott.

  3. I keep thinking that if I keep pointing out the fact that we don’t need a new tanker, it will register with the decision makers….

    Daniel Sterling Sample
    SPACE DESIGNS
    Los Angeles

    sample.daniel@gmail.com

    • Pffft.
      If EADS wins congress may find that mean streak in their soul and
      block money for the project.
      I am certain this will not happen if Boeing is to provide.

      My impression is that workforce management in the traditional US ( i.e. Boeing ) is done by the unions ( in an expensive kind of way ). On first blush US type managers are ineffective/destructive in a setup without intermediary. The GM daughter Opel was a very compelling example in this respect!
      Hobsons choice: nix the unions and run aground, use the unions and pay through the nose for a less than perfect result.

      How sucessfull has Boeing changed over to lean production for the 767 ? Producing one airframe every other month doesn’t really prove anything in this respect.

      What “very special” qualification would Tanker MX furnish? ( except knowing your way around military procurement and overcharging sucessfully 😉

  4. For US Government contracts, the labor costs are computered using union scale wages.

    This is a nearly complete summery, Leeham. You and your staff did a great job. But you only briefly touched on an important factor that is beyond the control of the USAF, the new budget cutting, get people back to work Congress. Boeing seems to have more support in this Congress, than even the last one, which it enjoyed an advantage over EADS. While it is true the employment numbers from each OEM differ by about 2000 jobs, Boeing has done a much better job identifing which states (and Congressional districts) will get how many direct and indirect jobs, and with which companies (think political contributions).

    If EADS wants to play this political football game, they need to understand the ground rules of the game. That is to show each Senator and Congressman what the benefit is for their states and districts (and most importantly, themselves).

    As far as the tanker maintenance contracts (of the past 50+ years) go, it does give Boeing a clear understanding of new and current employment for tankers by the USAF.

    EADS may well underestimate this because of not making a priority of writing the tecnical manuals for the RAAF in a timly manner. The USAF demands on these manuals is just as high as the RAAF demands. These manuals will include the operating manual, training manuals, various maintenance manuals, cargo loading manual, air refueling manual(s), etc. This was never an issue with the RAAF in Boeing finally delivering the Wedgetail to them.

    As you know, I have strongly supported buying the Boeing offer. But you also know this always has been my second choice for the USAF tanker fleet renewal. I still believe the USAF will save money by upgrading the KC-135Es that are in flyable storage. The USAF itself has said these tankers can easily fly beyond 2040, but they also have said PDM costs will skyrocket with the KC-135 fleet over the next several decades. Very few have challanged the USAF talking points on the stored KC-135s. The USAF has the ‘shinney new airplane disease’ and it is not going to put out information that will challange that position. In other words, the USAF is living outside of the economic reality.

    That must be a wonderful world to live in.

  5. It is refreshing to read a balanced account of the tanker competition, where both sides of the story are presented. A couple of points…

    “Boeing has a workforce with decades of experience who have been building the commercial 767 from Day 1 at a plant that has been around since 1969”
    Sorry, are you implying that the same work force has been working on the 767 plane since 1969?? I hope not. It is part of each companies business to train new people for the job. Can you provide statistics how many people have been trained on the 767 programme? That’s right, a lot!

    “at a plant it has yet to build in Mobile”
    How much of a risk does building a hanger present?

    “Boeing hasn’t talked much about this tremendous advantage”
    That’s because it is not that tremendous, in my opinion. Airbus had clearly demonstrated the ability to copy/paste FALs in Hamburg & Tianjin and to train new workforce. Is there any evidence that their processes have failed? The same goes for Boeing. They have continues training programme for all aircraft and locations.

    “The higher the production rate, the lower the cost. Advantage to Airbus.”
    Production of the tanker is not currently part of the industrial planning for the A330 line. A win would boost the rate further to 11 or 12 per month, decreasing the cost further.

    • Tianjin is, Hamburg is not a good example for extruding an FAL onto a field.
      Hamburg has a nearly unbroken history in airplanes: Blohm & Voss with a range of planes ( forex the BV141, BV138, BV222), Noratlas, Transall, HFB-320 Hansa Jet, merged via ERNO and some more stations to finally Airbus.
      A couple miles down the river the Stade Plant is involved in plastics industrialisation.
      After the political hohaw was finished, the A380 part of the FAL was completed very fast for a project of that size and the fact that the place was riverbed until recently. ( nitty detail: Airbus France paid the Ecos that held up the political process ;-?

      Tinajin has the advantage of very interested and intelligent people locally available. For the US a good reference is imho the (Euro/Jap.) car manufacturers that have set up brand new shops in the US (south?).
      What I heard is that US people are deemed educatable and you have to route carefully around US style unions, a real drag.
      To counter TopBoom: An Airbus FAL would be the perfect foreign aid item for
      an ailing nation 😉

  6. groooann ………” Sorry, are you implying that the same work force has been working on the 767 plane since 1969?? I hope not . . .”

    The first 767 flew in 1981-82, not 1969. 1969 was when the Everett plant was reasonably completed so as to build and fly the 747.

    There is probably 30 to 50 percent of the current workforce on 767 that have at least 10 years of experience building/assembling the 767 and variations.

    The point about mobile has to do with training of the workforce. To date, many 787 problems have been the result of a partially trained workforce at various of the subcontractors. Take the Vought issue. In texas, the workforce has been building airplanes for many decades, and 747 dc-10 dc-11, etc since day one of those old airplanes. They build/built the horiz stab for DC-10/11, aft sections for 747 most all mkodels, etc. Yet when they opened a new plant in another state- eg mobile, they fell flat on their keister on the 787 body sections. Part design, but largely untrained workforce brought in form other vendors to finish properly earlier screwups.

    It takes a few years starting from scratch to train ALL the necessary workforce, especially when very few have ever done aircraft assembly/fabrication type work. And then there is the clerical, management, logistics support, buyers, truckers, forklift operators, crane people, tooling fabrication and maintainence, etc. Many new types of jobs and job skills needed in a previously low aerospace employment area.

    • “There is probably 30 to 50 percent of the current workforce on 767 that have at least 10 years of experience building/assembling the 767 and variations.”
      How many new recruits had been trained and successfully work on the 767 programme since 1981-82?

      “they fell flat on their keister on the 787 body sections. Part design, but largely untrained workforce brought in form other vendors to finish properly earlier screwups.”
      Apples to oranges. 787 is a new programme bringing a whole load of other issues into the equation. Can you provide a similar example from the Airbus experience so far?

      “It takes a few years starting from scratch”
      Has anybody said it will be done overnight?

  7. . . .”Apples to oranges. 787 is a new programme bringing a whole load of other issues into the equation. Can you provide a similar example from the Airbus experience so far? . .

    well there was the little issue of two major subcontractors using two different design systems for the electrical systems on the 380 . . . which was not discovered until assembly . . .

    • “two major subcontractors”
      Who were the subcontractors?

      “two different design systems”
      Yes, different versions of Catia…

      “which was not discovered until assembly”
      What has your example got to do with building a hanger and training assembly staff for the FAL of the programme that has been running for nearly 20 years?
      ====

      Talking of assemblers…

      “As we step up our production rates on the 737, 747 and 777, we’ve been hiring new aircraft technicians and assemblers,” Boeing Commercial Airplanes marketing chief Randy Tinseth
      http://blog.seattlepi.com/aerospace/2011/02/21/boeing-launches-facebook-jobs-page/

      Well what do you know, an aircraft manufacturer is hiring new assemblers, now there is something strange.

  8. On the EADS FAL in MOB, have they completed the EIS, yet? They need to do that, and a SWPPP before they begin construction. This is not like slapping up a building in China.

    • “This is not like slapping up a building in China.”
      Is it like slapping a building in Charleston?

      • Additionally, NG/EADS, we preparing to break ground on the new assembly plant in June 2008, before USAF put a ‘stop work’ order. So all the preparatory work must have been done by then. KC, do you have evidence that it hadn’t?

  9. “787 is a new programme bringing a whole load of other issues into the equation. Can you provide a similar example from the Airbus experience so far?”

    Ever hear about the A-400M?

    • Ahhh yes your fav topic. Please re read the thread to see that i am deliberately avoiding new programmes examples, in the context of FALs and personnel training.

      • Anyway, the A400 did not have obvious production or industrialisation issues.
        ( the last “prototype” fuselage delivered recently from Bremen comforms to final production standars.

  10. UKair :That it isn’t a show stopper some are making it out to be.

    Well, the opening of the FAL is critical to EADS, as all tankers built before the opening will be totally built in the EU, not the US. EADS has said the tanke would be assembled in the US if they win. So, if it takes 5 years to complete the EIS, SWPPP, build it, and hire/train a work force, fully 25%, or more, of the tankers will be European built.

    • Airbus did say that the first batch will be assembled in TLS. I don’t see why they cannot build a FAL in MOB in less than 2 years if they start in Q2 this year.

    • isn’t the first 3 years or so intended to be SDD?
      Leeham, can you provide the factual answer?

  11. if capacity is what you want

    the kc-10 is already there

    so is adding extra tanks to the kc767

    up to engine load capacity

    • which is 200klbs – 767 requires additional fuel bladders to achieve the minimum requirement in the rfp.

      • and the KC-10 uses most of the added fuel to fuel itself for the mission.
        45% more capacity does not translate into a similar gain in offload capability.

      • the kc767 meets all the requirements

        the kc330 meets also the requirements

        but at a higher price

        so airbus advertises the bigness of the kc330

      • Rene Abad,
        read leehams analysis above. EADS might even be cheaper or within 1% of the Boeing price…

  12. KC135TopBoom :
    This is not like slapping up a building in China.

    are you seriously suggesting China and EADS are risking the reputation of the global aerospace industry by building and operating an sub-par assembly line? Do you think that FAL does not meet any of the required standards for aircraft construction?
    would you claim that Airbus knowingly and willingly puts human lives at risk by haphazardly putting together what many say is the only real cash-cow they have?

    If so, that does lower my estimation of the value of your comments. Nothing personal intended, but anyone that thinks either (or any) aircraft manufacturer would ever knowingly lower the safety standards in the industry should have some serious evidence to back up that statement.

  13. that’s true

    still you already have the kc10’s

    to fulfill the pacific theater

    as airbus wants to do

    then just wait for the kc777

    to replace the kc10

    Uwe :
    and the KC-10 uses most of the added fuel to fuel itself for the mission.
    45% more capacity does not translate into a similar gain in offload capability.

  14. Rene Abad :
    the kc767 meets all the requirements
    the kc330 meets also the requirements
    but at a higher price
    so airbus advertises the bigness of the kc330

    Source for the KC-30’S higher price??

  15. just compare

    the list price

    of the two aircrafy

    UKair :
    Do you want to share the pricing information with us?

    • List price and actual price are very different things. In commercial arena, the higher list price of the A330 reflects the greater revenue potential for the airline. In the tanker contest i would expect the price to be extremely close and EADS to trumpet the extra capability. Wouldn’t you do the same?

      • true – list and actual price

        questionable – revenue potential

        more of production cost of a bigger plane

        the 330 tanker price will reflect airbus’ eagerness

        to enter the u.s. market

      • Why is the revenue potential questionable if the A330 carries more cargo and pax than the 767? The production costs are not higher if the volumes are greater, Scott touched on that topic in the article above. EADS have from the very start been open about breaking into the US market, is there anything wrong with that?

  16. questionable is revenue potential as the price driver

    size is more indicator of costs thus price

    production volume will to a degree lower the costs

    nothing wrong with eads objective

    just saying it will price its tanker

    to do this

    • Wouldn’t you price something that can do more, higher then something that can do less?

      ‘size is more indicator of costs thus price’
      Not necessarily in this case. I would argue the costs associated with building the two airframes aren’t that far apart. If you compare 767 to A380 or 747 or even 77W, no question the costs are far higher. I would also argue that it would cost more to ramp up the 767 line than the 330.

      ‘just saying it will price its tanker to do this’
      Fundamental law of business. If you are a new kid on the block, match the requirements and offer a lower price. Is there another strategy EADS could have chosen?

      • The aquisition is to be a package priced thing, right?
        Number of frames per offer in these packages is IFARA dependent?
        i.e. more 767 would have to be delivered than a330?

  17. UKair :Additionally, NG/EADS, we preparing to break ground on the new assembly plant in June 2008, before USAF put a ‘stop work’ order. So all the preparatory work must have been done by then. KC, do you have evidence that it hadn’t?

    A new EIS would need to be done because, I believe that 2006 EIS was prepared for NG, not EADS. I don’t think NG can sell or give away an approved EIS. Also many enviornmental laws have changed since 2008. The same holds true for the SWPPP (storm water pollution prevention plan), which is a major enviornmental problem for coastal facilities like at MOB.

    ikkeman :which is 200klbs – 767 requires additional fuel bladders to achieve the minimum requirement in the rfp.

    For 2011, Boeing has not released what the MTOW of the KC-767NG is. In 2008, IIRC, the MTOW of the KC-767AT design was some 412,000 lbs. BTW, the MTOW for the heaviest version of the B-767-200ER airliner is about 395,000 lbs.

    Uwe :and the KC-10 uses most of the added fuel to fuel itself for the mission.45% more capacity does not translate into a similar gain in offload capability.

    You are correct, Uwe. Tht also means the A-330MRTT’s 20% fuel capacity advantage does not translate into a 20% increase gain in fuel off-load capability.

    • Frankentanker was to have the wing ( + wingbox?) of the -300F variant, ergo 412000lb MTOW

      capacity, sfc, offload
      You are missing out on the math imvolved. bad sfc hurts squared.
      Lets see if I get this right:
      Take a 767 mission were you offload 50% (80klb) of loadable fuel (160klb).
      take an a330 with +35% loadable fuel (245klb) and +8%fc ( forget the Boeing numbers)
      with the 767/100% as base the 330 will take 54% (86klb) fuel for the mission
      and deliver 135% – 54% = 81% ~= 129klb i.e. +63% . That is nothing to sneer at.
      As an alterntive you can use 40++klb for loitering or going further out.

      Better sfc makes loitering and range extension “cheaper”.

      Are there fuel numbers around for the KC10 ?

    • commercial 767’s carry 160klbf fuel in it’s wing tanks (max). Unless Boeing put bigger (777?) wings on the 767 fuselage, fuel bladders are required on any KC767 to achieve the 200klbf required offload.

    • on the fuel offload, it depends on the fuel burn delta.
      If the fuel burn delta is less than the max fuel delta, the benefit will increase over range. if the burn delta is greater than the max fuel delta, the benefit will decrease over range.

  18. Does the proposed KC-767NG have ‘bad’ SFC? If the mission you discribed needs a take off fuel load of 160,000 lbs on the KC-767, why did you put a 245,000 lbs on the A-330? The max fuel load of te KC-767NG is 200,000 + lbs? The difference in max fuel loads of the A-330 and KC-767 is 20%.

    You also did not include the mission distance, or lotier time at the ARCP.

    But, in the mission you discribed at about 1000 nm from base (2.5 hours to and from the refueling area, plus 1 hour of lotier time, total time about 6 hours), the KC-767 can do the mission on 160,000 lbs of fuel off-loading 80,000 lbs. The same mission on the A-330MRTT would need 180,000 lbs to off-load 80,000 lbs. Add about 8,000 to 10,000 lbs to each tanker if non-optimum altitudes are flown enroute in both directions.

    • but you’d be daft to fly an 767 optimized mission using an a330… you’d organize the mission to fit your gear, i.e. the a330. Thus when using the a330 you’d allow for greater time on station and/or greater offload. This would reduce the number of aircraft needed in theater, the number of return trips to make (wasted fuel) and the number of personnel required.
      what if you need 90klbf/6hrs at 1000nm you’d need 2 767’s on station burning much more fuel than the single a330 that could do the same mission solo.
      of course the opposite is true when you reduce the amount of fuel required or reduce the distance from base…

      don’t worry, IFARA comprehensively takes these considerations into account. including space at the bases, fuel delivery available at the bases and many more things I don’t understand.

      • yes

        ifara changed from a kc135 replacement scenario

        that’s bang on for a kc767

    • I took data from the wrong line. Sorry.
      This changes quantity but not quality of the result.
      If you get into the math you will understand that the way i set up
      the comparison the distance and loitertime drops out of the equation.

  19. What is all this numbers crap again, both tankers meet the requirements. This is a price shootout and Big B asked for it when they overturned the last win by NG, the best sustainable price wins.

  20. How much time, energy, lobbying fees, and contentious, defensive, blogging bloviation we all would have saved if DOD had allowed a split buy after B’s successful appeal of the first award. I have just ground thru all 44 of your comments above. Most are well written, but nearly all stubbornly hold to their pro AB or B support without really acknowledging and addressing the legitimate strengths and weaknesses of their favorite. Instead, you rely to maintain your rigid positions of numbers relating to production costs, aircraft performance, etc. which you treat as certain but which are in fact anything but because they are future predictions; you also I suspect manipiulate those figures as needed.

    This contest has long since gone beyond what tanker needs we have. This is really a contest to see if the US and EU will increase defense integration, something Ashton Carter recently championed. If we cut the EU out of this, they may go elsewhere with their tankers, like China, which is pressing the EU to lift its arms sale embargo. We need to see this issue as part of our overall re-setting of our strategic relationships in light of the brave new world we live in.

    I do not understand why Gates did not see this, altho I blame Obama the most. He could have built support in Congress for a Southern wide body line by presenting in as a jobs/export enhancement issue, and also increased his political support there, while giving B enough of the tankers to keep its 767 line going for a few years. He could have lead the country and Congress to this win/win position, something as a community organizer he presumably favors. Sadly, it is not to be, so we all can look forward to many more years of blogging over who should have gotten the contract, nitpicking at numbers, arguing over the appeal was fair, whetner the GAO overstepped its powers, etc. adnauseam.

    • It is not on us to decide. So we have to continue bitching 😉

      Obama started out to be reasonable in discourse and expected
      a reasonable opposition . This has not happened. Quite the contrary.
      ( IMHO it was absolutely naive to expect that. Conservatives will
      never stand in for their failures going for partisan advantages before
      standing in for a working system)
      Just like the US in the outside world Obama is entangled in (political)
      terrorism in his realm. Without cataclysmic change this will stay
      the way it is only running into exhaustion of the overall system
      over the years.

  21. ikkeman :but you’d be daft to fly an 767 optimized mission using an a330… you’d organize the mission to fit your gear, i.e. the a330. Thus when using the a330 you’d allow for greater time on station and/or greater offload. This would reduce the number of aircraft needed in theater, the number of return trips to make (wasted fuel) and the number of personnel required.what if you need 90klbf/6hrs at 1000nm you’d need 2 767′s on station burning much more fuel than the single a330 that could do the same mission solo.of course the opposite is true when you reduce the amount of fuel required or reduce the distance from base…
    don’t worry, IFARA comprehensively takes these considerations into account. including space at the bases, fuel delivery available at the bases and many more things I don’t understand.

    I wonder how much the IFARA reflects real world usage of USAF tankers? The only senerios I have seen arte those mentioned in the RFP. The IFARA senerios can be written by the USAF to support one proposal over the other, but I have no evidence this is what happened.

    But operational refueling missions are based on the receiver aircraft mission requirements, not the tanker. The USAF adds or reduces the number of tankers needed to support XX number of receivers and types and the required offload. Training missions, OTOH, can be based on the tanker aircraft if the refueling only requires a token offload for the receiver just to assure reliablity of the tanker and receiver capability to transfer fuel.

    But to achieve a 90,000 lb offload on a 6 hour mission at 1000 nm, all you need to do is add fuel to the tanker, which one KC-767 can still do.

    Jay :What is all this numbers crap again, both tankers meet the requirements. This is a price shootout and Big B asked for it when they overturned the last win by NG, the best sustainable price wins.

    Buying any new weapons system, including tankers, always boils down to a numbers game.

    Uwe :I took data from the wrong line. Sorry.This changes quantity but not quality of the result.If you get into the math you will understand that the way i set upthe comparison the distance and loitertime drops out of the equation.

    Not a problem. We all occasionally look at the wrong line, I have done it too.

  22. Hmmm- does the AF send out just ONE tanker with two or three ” hoses/boom” on a mission? to fuel two or more fighters, etc

    or does the number of available ” hoses” take precedence so that more than two or three can be refueled in a short time ?

    I assume the IFRA included some ‘ worst case’ and training case scenarios ?

    • you’re right

      for the world power usaf

      more hoses

      is better

      than more offload

      at the kc767

      kc135 replacement

      level

      if you need more offload

      just use the bigger now available kc10

  23. The WARP drogue equipped USAF tankers will not refuel more than 2 receivers at one time, even though the centerline drogue is available. The WARP refueling rate is only about 400 GPM, the centerline drogue refueling raste is about 600 GPM, the KC-X Boom will be 1200 GPM.

  24. Do you really think the Euro consortium would let a US product win a competition
    for a tanker over there? Come on! How about spelling out what would happen in that case? Let’s be honest, this is a one way street for EADS. There will be no qiid peo quo.

    • Correct, no quid pro quo. They shut out the C-17 competing for their startegic airlifter and are now left with the A-400.

      Back on this side of the pond, will Obama help out his union buddies, or his European buddies? We may know by this time tomorrow.

      • Just to refresh your memory a bit the prerun leading to the A400m was a joint EU/US project (FIMA), Lockheed left this project ( to do a warm up Herc).
        Echoes of the MBT-70 which finally led to Abrams and Leopard2.

    • freeman tilden :
      Do you really think the Euro consortium would let a US product win a competition
      for a tanker over there?

      France operates KC-135s, and Italy ordered the KC-767 to replace its 707 tankers.

  25. ikeman :

    freeman tilden :Do you really think the Euro consortium would let a US product win a competitionfor a tanker over there?

    France operates KC-135s, and Italy ordered the KC-767 to replace its 707 tankers.

    France ordered those KC-135Fs in 1962, 49 years ago. The last French military order was, I believe, the E-3F AWACS they ordered in 1991, 20 years ago.

  26. KC135TopBoom :

    ikeman :

    freeman tilden :Do you really think the Euro consortium would let a US product win a competitionfor a tanker over there?

    France operates KC-135s, and Italy ordered the KC-767 to replace its 707 tankers.

    France ordered those KC-135Fs in 1962, 49 years ago. The last French military order was, I believe, the E-3F AWACS they ordered in 1991, 20 years ago.

    So when was the last time the US purchased tankers from Europe ?

    N E V E R ! ! ! ! ! !
    N E V E R ! ! ! ! ! !
    N E V E R ! ! ! ! ! !

    You have examples of 707/KC-135 tankers, as well as the KC-767 in Europe. Also numerous US built transports, utility, and fighters over the years.

    It is all okay for them to purchase US equipment, fight wars along side the US, let the US have bases on the soil, as long as the US can be protectionists and not buy their equipment.

    Absolute hypocrisy.

    • Was the Italian tanker decission merit based or a handshake between Bush and Boscone (er Berlusconi) to warm the alliance of the willing?

      The way the project has run is not the best advertising for BuyBoeing, is it?
      Looks like JSF buyers run into similar issues. Expensive, underperforming, late.

      An even playingfield without political pressure as logged in cablegate would leave the US out of most foreign procurement ( imho and all that jazz )

    • When the USAF bought the KC-135 (1955-1964)**, how many tankers were available from Europe? NONE

      When the USAF bought the KC-10 (1982-1988) how many tankers were available from Europe? Two, the VC-10 and Victor tankers, both were conversions of exsiting airplanes, and airliner and a bomber. Neither had the capability of the KC-10 (DC-10-30CF), or the aircraft that competed against it in the ATCA program, the KC-747-200F.

      ** The original order for the KC-135A was for 29 “interium” tankers until Lockheed could build and test their competing design, which they could not do. Douglas offered a tanker version of the DC-8 they were then working on, again they could not complete building and testing the tanker in time. Boeing went on to build 703 more KC-135As, for a total of 732. So, even in the mid to late 1950s, building a tanker proved to be a major engineering efford to two of the (then) three major aircraft manufactuers in the world.

      The only European manufactuers capable of building jet aircraft in the 1950s was De Havilland with their Comet Mk.1 (also proposed as a bomber the DH-111 Comet Bomber), Vickers, with their Valiant Bomber, Avro with their Vulcan Bomber, and Handley Page with their Victor Bomber (the 3 “V-Bombers”). All three “V-Bombers entered service in the mid to late 1950s.

  27. UHHH UWE ?? The fat lady just sang !

    Now the question will be how long till EADS protest.

    The price delta was greater than 1 percent

    • Should I borrow a TopBoomBoy suit, repaint it in EU colors and complement
      the less than savory commmentary from a group of posters in your general
      vicinity ?

      I guess not.

      For now it is congrats to Boeing!

  28. Dshuper :UHHH UWE ?? The fat lady just sang !
    Now the question will be how long till EADS protest.
    The price delta was greater than 1 percent

    Well, the USAF has 10 days to brief EADS, then the clock starts. EADS has 10 days to file a protest with the GAO, and the GAO has 100 days to make a decision.

  29. congratulations to boeing with its successful kc767

    usaf made a good decision

    1. requirements met

    2. more hoses on the sky

    3. more american tanker

    4. jobs preserved

    5. right price

    kc10 can cover the needed extra gas and range capabilities

    looking forward to selling more commercial 767

    by leveraging the kc767 enhancements

    into commercial versions

    eads made a stalking horse

    the entry fee to the u.s. market?

    this should prevent them protesting

    as to the south

    they already have the 787 assembly line

  30. Pingback: Wrong forecasts | The Blog by Javier

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