Pontifications: A retrospective of the KC-X refueling tanker competition from Boeing’s perspective

Part 2 of the Boeing focus for the USAF Aerial Refueling Tanker

Jan. 24, 2022, © Leeham News: Jim Albaugh was president of Boeing Integrated Defense System (IDS), now known as Boeing Defense, Space and Security (BDS) during the competition for the US Air Force’s KC-X program.

By Scott Hamilton

After 9/11 (2001), Boeing was reeling as US airlines canceled or deferred orders in the aftermath of the terror attacks in New York City and Washington (DC). Terrorists hijacked four airplanes (all Boeing, as it turned out) operated by American and United airlines. Then, US carriers dominated the world market as customers for Boeing and Airbus. Boeing was disproportionately affected, as it was the USA’s two biggest airlines that were victims of the terror attacks.

Seeing an opportunity

Boeing, never one to look overlook an opportunity (this is not a criticism), saw one to help carry it through the post-9/11 crisis. The Air Force’s Boeing KC-135 tankers—based on the 707 airframe—were aging. The last tanker was delivered in 1965—36 years before. A replacement was needed. But the Air Force, along with the other Armed Services, now had a war to fight. President George W. Bush sent the troops to invade Afghanistan, where Osama bin Laden was holed up. Later, he expanded the war to Iraq on the theory Iraq was involved in 9/11 and developing weapons of mass destruction. Both theories later proved false.

The Air Force was pressed for money. So, Boeing offered to lease 100 tankers based on the 767-200ER for 20 years. The Air Force awarded the contract. But Sen. John McCain criticized the move as too costly to taxpayers. The investigation later revealed that the Air Force’s procurement officer improperly gave the contract to Boeing, and then went to work for the company. In the ensuing scandal, the officer and Boeing’s chief financial officer who gave her the job both went to jail. The lease deal was canceled.

A new procurement was launched. This time, EADS—the name of the Airbus Commercial parent at the time—joined with long-time defense contractor Northrop Grumman to bid against Boeing. Boeing offered a version of the KC-767. Northrop-EADS proposed a version of the A330-200 Multi-Role Tanker Transport.

As LNA’s series from the Airbus point of view reported, the competition was bitter. Both sides sharply criticized the other. Boeing and its surrogates and partisans weighed in heavily on (at the time) alleged illegal subsidies Airbus received, including for the A330.

Northrop wins, Boeing protests

In February 2008, the Air Force awarded the contract to Northrop-EADS, to the surprise of everyone; Boeing had been considered a shoo-in for the contract.

Albaugh, the IDS president, called this loss his biggest disappointment during his leadership at the defense unit.

In the debrief by the Air Force, Boeing learned for the first time the USAF had changed some of the parameters of the competition that gave Northrop the winning advantage. Boeing filed a protest with the Government Accountability Office (GAO). The GAO upheld the protest. The Pentagon had to re-run the competition.

By this time, Albaugh left in 2009 to become president of Boeing Commercial Airplanes. But Albaugh spent time with LNA to discuss the KC-X competition from Boeing’s point of view right through the Northrop win. He also provides observations about the coming KC-Y competition.

The details of this interview begin next week.


Air Wars, The Global Combat Between Airbus and Boeing

My new book, Air Wars, covers 35 years of global combat between Airbus and Boeing, including the KC-X competition. A listing or the chapters follows editorial reviews of the book.

Royal Aeronautical Society

Named to the Top 10 List of Aerospace Books for Christmas Choices, 2021

Puget Sound Business Journal

(Seattle area.) No. 1 on the Christmas list of aerospace books for 2021.

BookAuthority

No. 1 on its list of Best New Aerospace eBooks to read in 2022.

Chris Sloan, The Airchive

“A worthy successor to ‘The Sporty Game,’” the 1982 book by John Newhouse, considered at the time to be the definitive book about the competition between Boeing, McDonnell Douglas and the emerging Airbus.

Dan Catchpole, Aviation Writer

Air Wars is a tour de force look behind the curtain of Boeing and Airbus’ global competition and, in part, a biography of Airbus’ head salesman, John Leahy, the man who forced Boeing’s hand to re-engine the 737. Longtime aerospace analyst and journalist Scott Hamilton takes readers through the twists and turns of the decades long battle between the two companies.

Dan Reed, Aviation Writer

Using John Leahy’s long and monumental career as a vehicle for telling readers about the 51-year battle between Airbus and Boeing is both and interesting and inspired choice by the author.

Air Wars is available in paperback and eBook form at Amazon and in paperback at Barnes & Noble.

Chapters

1 THE MULTI-BILLION DOLLAR GAMBLE

2 FLYING CARGO

3 PIPER

4 EARLY YEARS AT AIRBUS

5 HIGH RISK, HIGH REWARD

6 FACING OFF

7 THE DEATH OF McDONNELL DOUGLAS

8 WAKE-UP CALL

9 LAUNCHING THE A380

10 MOONSHOT

11 TROUBLE IN TOULOUSE

12 TRY, TRY AGAIN

13 FALLING APART

14 LABOR WARS

15 UPSTART AND DISRUPTOR

16 CREATING NEO

17 LAUNCHING MAX

18 GROUNDING

19 THE X-FACTOR

20 SMASHING A BUG WITH A SLEDGEHAMMER

21 THE BOEING-EMBRAER JOINT VENTURE

22 LAST GASP

23 THE ALPHABET AIRPLANE

24 GROUNDING

25 SCANDALS

26 CORONAVIRUS

27 RETIREMENT

37 Comments on “Pontifications: A retrospective of the KC-X refueling tanker competition from Boeing’s perspective

  1. Very interesting that this LNA article lays a link with 9/11.
    Then as now, BA was on its knees (much more so now), and “something had to be done” to throw it a lifeline.
    This helps explain the GAO reversal during the last tanker contest.

    On the subject of that same GAO, an interesting Forbes article about how the organization is somewhat “out of touch” on defense matters:
    “Five Ways GAO Fails To Understand Defense Industry Independent R&D”

    https://www.forbes.com/sites/lorenthompson/2020/09/24/five-ways-gao-fails-to-understand-defense-industry-independent-rd/?sh=5ce9ffee48fe

    And another link (from a professor at Georgetown University) that calls into question the GAO’s “independence”. Note, in particular: “it works at the behest of the legislative branch and is beholden to them”.

    https://homafiles.info/2020/01/20/about-the-gao-ruling/#:~:text=The%20GAO%20is%20not%20%E2%80%9Cindependent%E2%80%9D.%20It%20works%20at,over-ridden%20by%20the%20courts%20and%20are%20generally%20ignored.

    • Loren Thomson is a “mouthpiece”, a lobbyist cloaked as a think tank researcher. (are there others in that domain?)
      i.e. what you see is what some paying customer wants to push onto the public.

      • Even if the piece was written by Mickey Mouse, you can still look at the argumentation employed and decide whether it seems sound or not.
        If Loren Thomson says that “The Earth orbits the Sun”, are we to automatically discount that statement merely because it was made by Loren Thomson?

        • yes, we are to automatically discount such a statement… in truth the earth orbits the center of gravity of the earth/sun system with minor purturbations due to the moon, other planets and asteroids.

          nothing is as simple as it seems.

          • And, seeing as the referenced center of gravity is located within the envelope of the sun, the original statement is true: the Earth does indeed orbit the Sun.

            Things don’t have to be as complicated as some people (try to) make them.

          • @bryce – the point is – the fine print matters.

            people like Loren Thompson make their money by spouting “facts” that are “true-ish” that deliberately mislead.

        • if people like Thomson are worth their money you will have to “knee deeper” into the pamphlet to find the squishy bits.

        • @Bryce

          The credibility of the not so good “doktor” is nil.

          Here are two examples:

          The following is from Robert Block, Vice President of Communications for SpaceX in response to this post from contributor Loren Thompson.

          One of the oldest tactics in Washington is repeating a falsehood in a voice of deep conviction often enough that it eventually becomes the conventional wisdom. Loren Thompson, who masquerades as an independent, disinterested party, apparently believes in this approach.

          Repeating the distortions, innuendo and outright lies from his first blog post, Thompson — a paid consultant for big aerospace companies — is trying to sow doubt about SpaceX’s Falcon 9 launch vehicle and Dragon spacecraft to make it seem that NASA is somehow betting the farm on an unproven company. However, while SpaceX is currently the provider furthest along in the NASA effort to develop cargo and crew capabilities to serve the International Space Station (ISS), there are many others. NASA has a diversified portfolio of players, including the Boeing Co. and Orbital Sciences Corp. And in fact, SpaceX supports competition, which we believe is good for the entire industry, the taxpayer and the country.

          https://www.forbes.com/sites/beltway/2011/06/03/spacex-loren-thompsons-deceit/?sh=2e8bdc68740a

          Keith’s note: The core thrust of Thompson’s paid whining is either Blame Obama or its so hard to build a big rocket (even though companies that Boeing bought did it half a century ago).

          http://nasawatch.com/archives/2018/10/boeinglockheedm.html

        • Bryce said : “Even if the piece was written by Mickey Mouse, you can still >> look at the argumentation employed << and decide whether it seems sound or not.. "

          Novel concept. I fully agree; in this dark time
          when information that does not conform to
          The (ruling-class) Narrative is labeled "mis/disinformation", to be censored for our Security™ and Protection™..

          Who will watch over our Watchers (this is a very old question) ?

      • > ..a lobbyist cloaked as a think tank researcher. (are there others in that domain?) <

        Heh, this is the Exceptional Nation you're talkin' about – everything is just as squeaky-clean as you
        might imagine.. imagine imagine imagine imagine

        The Alaskan correspondent has a different take downthread- please don't miss it. 😉

    • “This helps explain the GAO reversal during the last tanker contest.”
      In fairness – the reversal of the award to NG/EADS can be explained by the fact that criteria were somewhat changed without Boeing being aware of it.

      Now, why those criteria were again changed to favour Boeing’s offer in the last round is a different matter.

      • Scott and other analysts have already belabored this point before. They did not change the criteria to favor Boeing rather they re-evaluated the proposals to not award extra points to the NG/EADS that were not originally specified in the RFP as things they could receive extra consideration of.

        • In other words, they were not allowed to favour a company if they made a better product.

          • About 6 other areas where the contract award for Northrop Airbus was deficient apart from the bonus points awarded for exceeding the fuel – range offload requirement.
            the ones that stood out for me were – ‘giving feed back’ to Airbus on deficiencies so they could alter their response but not treating Boeing equally and no response from Airbus ( even when reminded) on what was their plan to have a full maintenance system in operation around 2 years after firts planes delivery. None at all.

        • How’s that there KC-46A doin’ now, *twelve years* after award of contract ? “Almost ready” for limited service, or ?

          Hint: we don’t need it- or its successor; if we did, those aircraft would be in service *now*.

          The rich get richer, and ..

      • It was: that’s why I referred to the text segment as “amusing”.
        But it’s always interesting to harvest opinions. This particular one at least highlights the “no-win” pickle that BA got itself into, and also points out the “irony” of the fact that the losing bid in the US has become quite a successful bid elsewhere.

  2. Scott:

    “Both theories later proved false.”

    That is factually wrong for Afghanistan. Ben Laden was holed up there as well as planned the attack and launched them from there. The info shows it a 99.99% certainty he was at the battle of or at Tora Bora.

    Iraq, yea, that was a classic smoke job.

  3. Scott:

    Again I will challenge the term “USAF Changed” the terms.

    They did not. The only way to change the terms is to publish them and let the bidders know what they were and to comment on those changes.

    As this did not happen, it was not a change. It was a violation or corruption by EADS with the USAF. McCaine fingers were all over that.

    • Wow…so now we have a conspiracy theory in which the USAF is in collusion with EADS…fascinating…

      • You have to consider corruption when USAF Generals move to defense companies automatically after they (ahem) retire and the illegal moves that were made would work right into the Airbus Bribe scheme.

    • > As this did not happen, it was not a change. It was a violation or corruption by EADS with the USAF. McCaine fingers were all over that. <

      Can someone parse the above sentence?

      Also: who's McCaine (and for that matter, "Ben Laden") ?

  4. As I’ve noted previously, if BA can’t get at least a 15% pretax return on the KC-Y, just walk away. Let LM and AB “win”. I’m counting on them (producers of the F35 and A400M, respectively) to “screw up”, and both be sandbagged! (Money in the bank! LOL)

      • I’m not fully sure on Maxes (we’ll probably have some better idea once 2022 passes—assuming a post-Covid, return to normality) but I’m pretty damn sure BA shareholders would like some BA financial discipline and relief, after taking a colossal BILLIONS of dollars in losses on the KC-X!

    • Cue: Programm Accounting:
      Simply offer the existing KC-X design for the same price per item plus inflation and then some.
      Then just continue production and laugh all the way to the stockexchange.

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