Pontifications: “The mother of the last pilot on the 707 tanker hasn’t been born yet”

Part 3 of the Boeing focus for the USAF Aerial Refueling Tanker

Jan. 31, 2022, © Leeham News: Following the 9/11 terrorist attacks in the United States, Boeing offered the US Air Force a lease deal for 100 aerial refueling tankers based on the 767-200.

By Scott Hamilton

The concept of leasing tankers had been floated before. Boeing at one point proposed creating a 747-based tanker and leasing it to the Air Force. The idea went nowhere, but this one gained traction.

The leasing concept formed just before Jim Albaugh arrived at IDS, but he was president as it progressed and through the subsequent competition, called KC-X, against Northrop Grumman-EADS (Airbus) after the lease deal was canceled.

“You go back in history, and it started out with the need for the Air force to replace the 707s which were their tanker fleet for a long time, and they were getting old,” recalls Albaugh, the CEO of Boeing’s Integrated Defense Systems unit at the time. IDS is now called Boeing Defense, Space and Security (BDS).

The mother of the last pilot hadn’t been born yet

“We like to joke that the mother of the last pilot on the 707 tanker hasn’t been born yet. It’s about how long those things were going to be in service. The Air Force was looking for a quick way to get a new fleet in place based on a new airframe and that’s where the lease thing started.

Jim Albaugh. Boeing photo.

“The government had never done anything like that before,” Albaugh said. “Quite frankly, we hadn’t either. We went back and forth, back and forth. Members of the government were concerned about whether or not this was the right way to go about redoing the fleet.”

Boeing and the Air Force agreed to a deal to lease 100 KC-767s for 20 years. But Sen. John McCain of Arizona, who sat on the Senate Armed Services Committee, challenged the costs of the deal and the propriety of some key players. Darleen Druyun, a civilian Air Force official who was key to the procurement, was later hired by Boeing by the chief financial officer, Mike Sears. Each was charged with a felony in the ensuing investigation and served prison time.

“It started just before I got to IDS, but I was in charge there. Senator McCain got involved. There was the Druyun and Sears issue. The Air Force decided that rather than try to push forward with a lease in light of the political opposition to it that doing a competition was the right thing to do. They put together an RFP and they sent it out and we responded to it as did Northrop and Airbus,” Albaugh said.

The KC-X competition

The competition became known as KC-X, which was the first of three planned recapitalization procurements to completely replace the hundreds of aging KC-135s in service. EADS, the name of Airbus Commercial’s parent at the time, teamed with Northrop Grumman to bid for the contract.

Boeing saw the RFP as calling for was a smaller plane. The 767 was larger than the KC-135, but the Airbus A330-200 was larger still. The specifications were based on NATO runways, how long the NATO runways were, and also how many planes you could park at a NATO airbase.

“Then there was a model they put together and it was really about the ability to fully deploy and to put hoses on airplanes,” Albaugh said. “In our estimation, modeling a smaller plane was much more effective in delivering gas than a large airplane was. If we really thought it was a large airplane they wanted, we had one. It’s called the 777, but in our mind, the airplane that best met the model and could offload more gas toward deployment was the 767.”

Northrop wins, Boeing shocked

The competition was bitter and political. But since Boeing was the incumbent supplier with the KC-135, everyone—including EADS—expected Boeing to win the contract. Thus, when the Air Force awarded the deal to Northrop-EADS, the shock waves flowed through Washington (DC) to the “other Washington,” where Boeing would assemble and militarize the 767 into tanker configuration.

Boeing received a debrief from the Air Force, a standard procedure. In the process, Boeing discovered that the Air Force awarded the A330 tanker proposal extra credit for longer range, extra loiter time, and extra fuel that could be delivered to the thirsty airplanes it was refueling. But the prospect of extra credits was not part of the RFP. Boeing protested to the Government Accountability Office (GAO), which upheld the protest. The procurement would have to be rerun once more.

“That’s the only protest I was ever involved in, in my career,” Albaugh recalled. “We were very shocked and surprised because clearly, the RFP in our estimation was all about a smaller airplane as opposed to our large one. Then of course when the GAO looked at it, the GAO concurred with us. The Air Force put out a new RFP.”

Part 4 of the Boeing perspective continues next week.

22 Comments on “Pontifications: “The mother of the last pilot on the 707 tanker hasn’t been born yet”

  1. With KMC/NIAR now offering a converted 777-300 — and LM touting the LMXT as a large-capacity strategic tanker that is a complement to the KC46 as opposed to a competitor — BA’s chances of winning the KC-Y competition are shrinking. Incumbent or not, the KC-46 is *still* not up to spec, and won’t be until at least 2024. The warning last week from the GAO won’t help to instill confidence in DC.

    “GAO Warns Air Force: Think Twice Before Owning KC-46 Tanker Fix”
    https://www.airforcemag.com/gao-warns-air-force-think-twice-before-owning-kc-46-tanker-fix/

    • You are repeating yourself.

      Certainly if the RFP calls for a larger aircraft the A330MRT is the only choice. We need to see the RFP. That has to be assessed on credits vs price. Boeing could choose not to bid. Then the politics kicks in.

      I have often said, they are not equal and one side or the other should not bid.
      If the RFP offers enough credits, then Boeing can win on a price shootout but the USAF does not get the bird they want if its more fuel (or the 3 credit areas). In theory you can adjust to even and wind up with what you don’t want. There is quite the logic busts involved in all that.

      The 777 minimal tanker does not fit any of the proposed requirements. It might fit the add hoc service requirements for in US contracted tankers (and that a huge if, that a costly package to develop)

      • “The 777 minimal tanker does not fit any of the proposed requirements”

        Let’s leave that to the USAF, shall we?
        They can always give you a call if they need some extra guidance 😏

  2. Boeing received a debrief from the Air Force, a standard procedure. In the process, Boeing discovered that the Air Force awarded the A330 tanker proposal extra credit for longer range, extra loiter time, and extra fuel that could be delivered to the thirsty airplanes it was refueling. But the prospect of extra credits was not part of the RFP. Boeing protested to the Government Accountability Office (GAO), which upheld the protest. The procurement would have to be rerun once more.

    Well, I seem to recall that the decision to protest the 2008 award of the KC-X contract to NG/EADS, was taken by Jim Albaugh and Boeing — claiming that they were only protesting “with the best interests of our customer and the warfighter in mind.”

    At least, Jim Albaugh should now come clean and admit that the 2008 decision to protest was taken with the best interest of Boeing in mind, and not that of the USAF and the DOD. Anything less is disingenuous.

    Of course, this puts the whole short-sighted RFP process in a nutshell. RFPs are buying tactics often specifically designed to separate value from price. This environment favours the bottom feeders and worst providers in the industry — the ones who don’t have great quality or service — but who are willing and able to provide it for dirt cheap pricing. The customer — i.e. in this instance the USAF and the DOD — is losing over the long term because the game is rigged towards bottom feeders, attracts lower quality and will often drive the best suppliers away.

    In the case of tanker procurement, any sane customer would of course want longer range, extra loiter time, and extra fuel that can be delivered to thirsty airplanes that are being refueled, for marginally higher costs.

    “Then there was a model they put together and it was really about the ability to fully deploy and to put hoses on airplanes,” Albaugh said. “In our estimation, modeling a smaller plane was much more effective in delivering gas than a large airplane was. If we really thought it was a large airplane they wanted, we had one. It’s called the 777, but in our mind, the airplane that best met the model and could offload more gas toward deployment was the 767.”

    .

    IMJ, Jim Albaugh is again completely disingenuous about this. The fact of the matter is that a much heavier 777-derived tanker would not have been able to compete on price with the much lighter A330 MRTT. So, Boeing didn’t really have another airplane than the 767 that they could realistically offer. Therefore, Boeing went all out trying to portray the A330 MRTT as too big and having no extra value to the warfighter — and at the same time managing to cook up this nonsense that “in our estimation, modeling a smaller plane was much more effective in delivering gas than a large airplane was.”

    • OV-O99:

      10% lower straight up front costs are not trivial.

      Nor is the lifetime fuel use of the fleet being lower for the KC-46A.

      You are totally distorting the reality that the bid was focused on a KC-135R replacement. That meant a the smallest viable air frame. That is the 767 not the A330.

      If the credits for fuel offload and cargo were high enough then Boeing would have bid a 777. The assessment was they were not remotely close.

      And Boeing has a right to protest as did and does Airbus (or any other bidder)

      Arguing the A330 is lighter than the 777 is purely silly. My F-250 is lighter than all of it, but it sure is not the relevant factor for this bid.

      Albaughs job was to represent Boeing, its the USAF that is (at least supposed to) represent national security. As he noted, it was a bid review they determined the RFP had been violated.

      That is why we have an independent GAO.

      In a rare move they Recommended a re-bid based on the violations being of such magnitude as to totally void the bid.

      • @Transworld

        Yes, Boeing received a $35 billion contract for 179 KC-46 tankers in 2011. Now, 10% of that is $3.5 billion, so the EADS bid came in at approximately $38.5 billion.

        The problem is, of course, that KC-46 cost overruns have exceeded $10 billion ($4.9 billion covered by the DOD and an additional $5.5 billion from Boeing itself).

        Because Boeing in this instance was willing to operate as a bottom feeder and go for a dirt cheap pricing, the KC-46 is now a loss-making programme and the USAF is getting a flawed tanker. Hence, both Boeing and the customer are now losing over the long, and with total programme costs ,now far exceeding the 2011 $38.5 billion offer from EADS. Hence, the KC-46 win was nothing but a Pyrrhic victory for Boeing.

        Now, the 777 (i.e. 77E, 77F, 77L, 77W, 777X) was and still is a significantly more expensive aircraft than the A330 — no matter how you are trying to spin things.

        Finally — as usual — you don’t seem to know what you’re talking about. The KC-X programme was based on the RAND Corporation’s Analysis of Alternatives for Recapitalizing the Air Force’s KC-135 Aerial Refueling Tanker * from 2006. There was nothing in that report that said anything about the DOD had to go for the “smallest viable air frame.”

        That’s probably something you heard, though, through the grapevine up there in Fairbanks……

        * https://www.rand.org/content/dam/rand/pubs/research_briefs/2006/RAND_RB201.pdf

    • Your claims don’t have basis in the RFP process. If the government specifies a car and a company bids a car, it is improper if they lose because another bidder supplied a more expensive SUV that could hold more people or go off-road. Bigger is certainly not a given benefit unless size is a listed criteria. And there are numerous benefits of KC-46 as a kc-135 replacement. Boeings point is if size was a consideration they would have went forward with a 777 based tanker which would be bigger still.

  3. Another laughable anti-LMXT article from a BA crony:

    “Airbus is Opening Airplane Service Factory in China, So Why Would Biden Admin. Contemplate A Contract?”

    Savor this paranoia:
    “If the U.S. gives Airbus another contract, the work may be done in China. It’s not clear which aircraft will get sustainment support at this location, but China has A330s. It would be logical for the A330 to be among them.”

    And what about this gem?
    “It makes no sense to contract for our defense with a problematic foreign corporation beholden to left-leaning European countries including France and the Netherlands when we have our own American companies with a better record. The five top defense contractors in the world are American companies.”

    Better record? Sure! Just look at gems like the KC46, F35, and the Littoral and Zumwalt ships 😉

    Grand finale:
    “The Pentagon would be rewarding Airbus’s illegal and unethical behavior. The plant in China should have been the final straw. Is there something going on behind the scenes that we don’t know about? Corporations can do what they want, but when they use taxpayer dollars, they open themselves up for scrutiny.”

    https://townhall.com/columnists/rachelalexander/2022/01/31/airbus-is-opening-an-airplane-service-factory-in-china–so-why-is-the-biden-administration-contemplating-awarding-it-another-billion-dollar-contract-n2602579

      • Indeed.
        And on the subject of “illegal and unethical behavior”, we won’t mention the 737MAX, for example.

    • @Bryce

      Well, she’s just another ignorant and totally uninformed paid shill.

      Apparently, she’s the founder and editor of “Intellectual Conservative”…….* ROTFL!

      I highly doubt that she even knows the meaning of the word intellectual, as her confused and incoherent anti-Airbus rambling is showing anything else but an intellectual mind.

      The question then is, of course, why Boeing seems to be unable to recruit competent lobbyists — you know, people who actually know what they are talking about and who are not making a fool of themselves — in order to better make the case for Boeing on why the company deserves to be awarded the KC-Y contract.

      * https://stream.org/author/rachelalexander/

      • Most amusing/interesting take from this (and similar such articles in recent weeks) is that BA evidently doesn’t feel confident that it can win the tanker contest on the basis of *merits* of the actual tanker itself; instead, a following of acolites tries to use smear tricks to rig the cards in BA’s favor.

        Then again, the company is desperate for cash…and desperate times call for desperate measures.

  4. Great to have people like Jim Albaugh give their (very informed) views and even more so opinions on (past) developments! Hopefully many to follow.

  5. having been to _many_ overseas bases, ramp space for large aircraft is very much at a premium at most bases and there often are physical constraints that would absolutely prevent either increasing ramp space or even widening taxiways for greater wing clearance.

    one base in particular where I spent a lot of time was so constrained that anything larger than a C-141 could not even leave the run-up pad at the end of the runway, shutting down the whole base until the big plane left.. even the -141s required wing walkers on the taxiway down to the main ramp because of wingtip clearance issues.

    the argument that a physically smaller tanker is better in those situations is hard to refute. it isn’t always as easy as “build a bigger ramp”. in Europe, basically Mildenhall and Ramstein are the only remaining US bases where large aircraft are not seriously hindered in terms of ramp space and access. in Japan Yokota has good ramp access, but no land to build more ramps so a smaller tanker is valuable in conserving ramp space.

    when your primary metric is “how many booms/drogues can I fit at base X” and you can fit 5 kc-46 or 4 LMXTs ( 157′ wingspan vs 200′) or the base in question has physical constraints, smaller is better.

    • In that case, BA should just offer a modified P8 with a boom and (staggered) drogues — nice and small, and already equipped with the USAF’s “special features”. If necessary, LEAP engines can be hung on it to improve performance.

      Ramp space is king!

      • Bryce:

        I hate to break the news to you but the P-8 is a United States Navy aircraft. You know, the service that mostly runs floaty things? Well a number of sinky things to.

        The RFP was based on the KC-135R, you know, 4 engines and 100,000 pound of fuel offload. A 737 nor an A321 would begin to come close.

        The ramp spacing is a specification for combat base ops. Its not a we can pack more aircraft into this space. If one aircraft blows up (or is blown up) the adjacent one does not get blown up as a result of Boom 1 (it may get blown up as a result of say a Mortar that blew up Bird 1)

        Spacing can be wavered, but its is a specification and was part of the RFP

        If you move to waiver the specification you have to publish it in the RFP (otherwise its a debit on a bid).

        • Ramp space is now the new buzz term: the new tanker will have to be as small as possible…even the KC46 is too big! Doesn’t work, either 😏
          The navy can just take an elevator at the Pentagon: sharing is caring 👍

        • If you do separation under blastradius considerations ( further apart than physical dimensions would allow ) the size of each single item is less important.

          Any other moot points you could think of?

  6. Unbelievable! Bloomberg is now reporting a FURTHER 2 year delay before the KC46 RVS is ready — now expected in 2026 instead of 2024.

    “The U.S. Air Force’s latest schedule shows that work to fix, verify and install a remote vision system used to guide in-air refueling won’t be completed before 2026, 15 years after the Chicago-based planemaker won the contract.”

    https://www.bnnbloomberg.ca/lockheed-airbus-take-on-boeing-with-made-in-usa-aerial-tanker-1.1716160

  7. I suppose the RFP system protects against even bigger shenanigans, but it has its own problems.

    Manipulating the RFP to make sure your own product is the only one that meets the spec is the first one. Supposedly independent companies produce the RFP and everyone touching it is not allowed to bid, but we all know where the expertise is.

    Then there is the issue that you have to take the lowest bid that meets the RFP, even if it is clearly not the best choice. e.g. someone with questionable experience makes a low bid but meets the terms.

    Unfortunately, after creating an RFP you are committed to it, even if the research done by the bidders shows you a better way, or if circumstances have changed during the long process of creating the RFP and getting bids on it.

    I’m afraid we are probably stuck with this for Government procurement, but I rarely see an equivalent process in successful businesses.

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