Here is a three page PDF of the slides from the Press Conference: EADS-NA Press Briefing Slides 3-04-11.
EADS today confirmed widely reported stories that it will not protest the USAF contract award of the KC-X tanker to Boeing.
Ralph Crosby, Chairman, and Sean O’Keefe, CEO of EADS North America present.
The following are all paraphrased quotations, not word-for-word direct quotes.
SOK: DOD altered from a modernization of tanker program decided to merely replace it. We competed knowing all KC-45 capabilities wouldn’t be considered. We understood what the parameters were. DOD said what it said it would do.
DOD straight-up on how it would evaluate proposal and did not deviate from it. We did not seek to change those rules.
We put our best effort into this.
RC: We decided not to protest. Boeing won this on price. We didn’t get a lot of questions answered from brief debrief.
In the end, we don’t believe the interests of the warfighter, the taxpayer or our company would be best served by a protest. It’s time to put the best interests of the warfighter first, so we are stepping aside.
Our analysis is that our financial analysis had KC-45 ahead of tanker; Boeing beat on price: Total evaluated, present value price for Boeing: $20.6bn, EADS: $22bn, after IFARA and fuel burn, or nearly 10%. Difference had to be within 1% for extra credit of the KC-45 to kick in. This equals $115m per airplane, present value, for Boeing, $122.9m per plane for EADS.
Boeing’s price was lower than we would have gone.
Total differential between fuel burn was $800m, far from $35bn tossed around leading up to this decision.
EADS saved taxpayer $16bn with the competition.
We don’t know what the details of the Boeing offering are. The first flight of their aircraft will be in 2015. It’s hard for me to rationalize how Boeing can have 18 aircraft operational in 2017.
We do know that risk has been allocated exclusively to the contractor.
There are no grounds for a protest.
I offer my congratulations to our competitor. We stand ready to stand in with a plane if they falter.
Under this acquisition methodology we (the USA) are willing to accept a lesser product for a lower price.
What our competitor offered might be viewed to keep Airbus out of the US.
SOK: This starts another chapter of EADS North America. Future of EADS North America is not hinged on this program alone. In this particular case, this particular opportunity looking to in-source work in the US aerospace at a time Boeing, like EADS, is a global company are outsourcing. Net-net, US jobs are about the same. We would have created a second aerospace cluster.
We have proved that we are competitive for any contract of any size.
It was…when you get right down to it, based on price.
SOK: We bid $3.5bn for EMD and they bid $4.4bn to produce four aircraft that meet the operational characteristics for the demonstrator aircraft.
There is no indication that EADS Congressional supporters will attempt to overturn this.
RC: IFARA disclosure had no affect.
We would have inducted the first aircraft for a cargo door this spring. We would have begun validation testing in 2013, two years or more ahead of Boeing. Our risk compared to what we had offered was minimal.