X-Day, Part 2: and the Winner is: Boeing

Boeing has been awarded the contract for 179 KC-X tankers.

What are the ramifications?

Is this contest over?

As we noted in a previous post, not necessarily. A protest can follow. EADS has said it won’t unless it finds something “egregious” in the process, which it has commended so far. But don’t consider it a given that EADS won’t find reason to protest. Still, we think it unlikely based on what we know today.

Why wouldn’t EADS protest?

EADS sorely wants the contract. It would be a huge boost toward its goal of reaching $10bn a year in Pentagon contracts, from $1.5bn today. But by competing for the KC-X contract at the Pentagon’s request to do so, it built up a lot of good will for future contracts. There would be little to gain from a protest.

Will Congress go along? There is a strong EADS contingent.

That’s all it is, a contingent. There aren’t enough EADS supporters to force a reversal. They still could block an award, but if EADS doesn’t put up a fight, it’s unlikely they will, either.

What’s next?

The timeline of what’s next is listed in this post. As the cliche goes, “it ain’t over until the fat lady sings.”

17 Comments on “X-Day, Part 2: and the Winner is: Boeing

  1. Congratulations to Boeing. EADS should walk away now and concentrate on other things…

  2. Well, this explains the big jump in Boeing’s stock price today before the announcement. Kudos, DoD, for your very awesome secret-keeping abilities.

  3. Actually I got that wrong. The stock was heading down towards close. So I must have been looking at after market trading. So kudos, DoD, on keeping this secret.

  4. I think it’s time for the Europeans to create their own “free market”. Will they ever learn…

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  6. Congrats to Boeing and DoD. And congrats also to EADS: they were capable to compete without NG, offered a credible proposal and maintained suspense despite terms of this RFP being clearly in favor of the “smaller/cheaper” plane. By doing this they’ve put a lot of pressure on Boeing’s pricing. The taxpayer can only be grateful to EADS for entering this competition. Finally, good luck to the Everett boys. The hard job begins right now. This plane has to be delivered on time, an italian/ Japanese scenario would be terrible. The fixed price contract represents also quite a challenge

    • “By doing this they’ve put a lot of pressure on Boeing’s pricing”
      I think EADS got just about as much as they could out of this competition. Boeing had too much political backing to come anywhere near to winning this damn thing. EADS pushed the margins on this deal as low as possible. Since this is a price shoot out and apparently Boeing was a ‘clear winner’, I am guessing Boeing really went out to win this deal. EADS will continue to sell tankers to other nations, Boeing has apparently withdrawn from several recent competitions and may not take part in the future ones. I think EADS has a lot on its plate currently, they will be wise to not protest for the sake of protesting.

      • seems eads became

        the stalking horse

        good price for an entry ticket

        to the largest defense market

        congrats frankentanker

  7. Now if Boeing will keep the McDummy klan hands off both Posiden AND KC46 programs, they may work- on time and on budget.

  8. kdx125 :
    I think it’s time for the Europeans to create their own “free market”. Will they ever learn…

    They find it when they need to… A400M

  9. Congratulations to Boeing.

    I’d guess that the only “egregious” thing in the process that EADS can find may ironically be the unintentional IFARA “revelation” by the Air Force. Glossed over by most analysts, this may have helped Boeing more than it helped EADS, and may have “helped” Boeing to lower their bid price by a substantial amount — i.e. significantly more than they if they hadn’t seen the IFARA data — in order to beat out EADS (i.e. substantially more than the historical average for “final offers” in Pentagon acquisitions of the same magnitude).

  10. The EADS press release is quite low key. They want to understand how the USAF came to their decision, but there is no undertone of foulplay.
    Since EADS revised their offer down, it is fair to imagine that Boeing was even lower. The question for them now will be to develop a new ac for that amount of money. Let’s hope for them that the B787 miscalculations have helped to have right this time.
    Pity for Mobile but so is life.

  11. So much for the pundits again-they got it wrong.Boeing ,I think, played the game better overall-the lowered the price,made sure of the political backing ,and got the competition to be a shoot out on price-IFARA (hope got it right) not withstanding.Airbus did a great job-denying Boeing of additional profit margins ;but they depended too much on “more,more and more ” value proposition. I still believe, this had all along been a contract for B to lose.
    As a frequent flyer of both 767 and 330- both are great planes – 767 is closer to the size the Air Force wants in terms of operating costs.Finally B got it right.
    We only hope, Airbus now will duly “consider the interest of the war fighter ” and not make any protest, unless they see something seriously wrong in the math of the model.I can’t see the Air Force, making a big mistake again after the last round.
    Let us face it- B knows more of the flying gas station than A.
    Now it is for B to execute.Let us see what they do.
    sethuraman

  12. So who was the secret American partner that Airbus selected after L3 dropped out following Rep. Norm Dicks pressure?

  13. Good choice.

    Stage is now set for a split procurement.

    Does anyone believe this the final word?
    And FWIW I am a very strong Boeing partisan.
    But you dismiss EADS at your peril. And these are 2 very good products.

    Fat lady is still in the dressing room.

  14. Scott –
    Right on – let’s hope for the benefit of those folks who have to fly the tanker fleet and those who depend on it thatthis long overdue decision has now been made. Frankly the world as a whole will be better off for having two viable tanker options from the two major airframers left in the world. I would not want one of my kids to have to crew the KC-135 for another decade. The USAF and those services that depend on the USAF’s gas delivering capability will all be grateful that a decision has been made. Let’s move on.

  15. Sigh, I’m so relieved ! I was already fearing, Airbus would manage to win that contest and would have to deliver 179 aircraft to a nearly bankrupt US government.
    Congratulations to the great winner Boeing ! I hope you will never rue the day you won this competition …

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