May 23, 2023, © Leeham News: Decisions by the US Air Force in Washington (DC) on whether to require competition for its next round of aerial refueling tanker aircraft are still months away.
But so far, the USAF technical group at the Wright-Patterson Air Force Base in Dayton (OH) is proceeding as if there will be a competitive battle. At stake is an order for more than 160 tankers.
Boeing thinks this will be a sole-source, follow-on order for its KC-46A, based on the commercial 767-200ER. Lockheed Martin Co (LMCO), partnering with Airbus, wants to see a version of the Multi Role Tanker Transport (MRTT), based on the commercial A330-200.
So far, the secretary of the Air Force publicly said he is leaning toward a sole-source follow-on order.
I visited LMCO last month to talk about the tanker competition. We also talked about the C-130J and its new commercial model, as well as other defense programs.
The USAF tanker procurement to replace the ancient Boeing KC-135s has a sordid history. Following the 9/11, 2001, terrorist attacks using airliners in New York and Washington (DC) (and a failed effort that ended in Shanksville (PA)), Boeing’s airliner business was devasted. At the time, Boeing’s principal business was dominated by US airlines. A prolonged fall off in passenger travel decimated the carriers, and with it, Boeing’s airliner business.
Boeing proposed leasing 100 tankers based on the 767 to the Air Force for 20 years. The idea was not new, but it had never been done before. Boeing offered a price, terms, and conditions that drew fire from US Sen. John McCain. McCain, a member of the powerful Senate Armed Services Committee, uncovered misconduct by the lead USAF procurement officer and Boeing’s chief financial officer. Both went to jail and Boeing CEO Phil Condit—who was not implicated—resigned.
This contract was canceled, and a new procurement process began. Airbus Group (then known as EADS) teamed with Northrop Grumman to compete for the contract. In a surprise, the USAF awarded the deal to Northop. The Air Force’s debrief to Boeing revealed that during the procurement process, the USAF changed some of the requirements—but didn’t tell Boeing while telling Northrop. Boeing protested and won. A third round of procurement was undertaken. This time, Airbus went alone after Northrop decided to pass on the bidding process.
This time, the Air Force parameters required the Lowest Price, Technically Acceptable LPTA) procedure. If the bids came within one percent of each other, then the extra range, refueling, and cargo capabilities of the MRTT would be considered. Under pressure from US Rep. Norman Dicks of Washington State, Boeing dropped its price. Its bid was 10% below Airbus, and the KC-46A was the winner.
The contract for 179 tankers was a fixed price. Boeing’s very low bid eventually resulted, so far, in about $6bn in excess costs and charges. Deliveries were 18 months late, and the remote vision boom still doesn’t work right.
Meantime, Airbus sold its MRTT to every country seeking a tanker, except Japan and Italy, which had the first eight tankers designed for the 2001 Air Force procurement, and Israel, which politically remains close to the US. Airbus had its own issues initially with its refueling boom.
But the US market is the largest in the world for refueling tankers. And LMCO and Airbus are making another go at winning a portion of the business. A production line will be created at Airbus’ Mobile (AL) aerospace facility. Militarization of the airplane will take place at Lockheed facilities in Marietta, GA.
When it comes to the prospect of a new, competitive race between Boeing and LMCO in the coming procurement, requirements, cost, operating performance, and risk factors will be considered. But the first hurdle comes down to the sole source of competition.
Boeing makes the good case that commonality and fleet simplicity are critical factors. Lockheed, which is taking the lead while Airbus operates in the background, makes the case that with a large fleet size, commonality isn’t a critical factor. Having two fleet types also de-risks the risk factor. LMCO points to Boeing’s undeniably spotty performance in the KC-46A program.
LNA’s paywall yesterday detailed our interview with Lockheed.
Future articles will discuss the C-130J, the engineering shortage, and other issues.