Leeham News and Comment

ST. LOUIS, May 7 /PRNewswire-FirstCall/ — The KC-767 Advanced Tanker developed by Boeing (NYSE: BA – News) was sized to meet the aerial refueling requirements of the U.S. Air Force’s mission and exceeded performance requirements to replace the aging, yet storied fleet of KC-135 medium tankers.Despite the fact that the stated parameters for evaluating the aircraft said no extra credit would be assigned for exceeding certain requirement objectives, the Northrop Grumman and European Aeronautic Defence and Space Company (EADS) team received such credit. As a result, the oversized Airbus A330-based KC-30 was selected. Boeing has protested the decision to the U.S. Government Accountability Office.

According to the Statement of Objectives for the KC-X program, the primary mission of the new tanker would be aerial refueling rather than hauling cargo or transporting passengers. In order to meet the documented mission requirements, Boeing offered the KC-767, which efficiently fulfills the vital mission of a mid-sized aerial refueling fleet while also exceeding the highest requirements for airlift, passenger and aeromedical evacuation capabilities.

“Tanker flight crews are asked to bring the right amount of fuel to the fight in the most efficient, reliable manner, and the KC-767 meets that fundamental requirement,” said Mark McGraw, vice president, Boeing Tanker Programs. “Asking these aircrews to fly longer missions in larger, less survivable planes with more fuel capacity than needed and vast amounts of unused cargo and passenger space just doesn’t add up.

“The Boeing KC-767 exceeded the requirements in a manner that still kept the plane right-sized and efficient,” McGraw said. “Our competition likes to talk about offering more, more, more — but in reality, the KC-30 will cost more to operate, more to maintain, and more to house, with the U.S. taxpayer footing the bill.”

A larger plane — like the KC-30 tanker offered by Northrop Grumman and EADS — simply results in wasted capacity, wasted efficiency and wasted taxpayer dollars.

The contrasts between the KC-767 and the KC-30 are notable and worth considering in determining the appropriate tanker for the mission:

    -- Fuel Capacity -- The historical average offload on a tanker mission is
       60,000 to 70,000 pounds of fuel. The Air Force fuel offload requirement
       was set at 94,000 pounds of fuel at 1,000 nautical miles, comfortably
       above the historical average. The KC-767 exceeded the 94,000-pound
       requirement by 20 percent while remaining within the optimum size for
       medium tanker operations. The KC-30 fuel capacity exceeded that
       requirement by 50 percent -- meaning more than half of its fuel load
       would be unused during an average mission. The result: a large tanker
       that burns more fuel and requires significantly higher costs in
       maintenance and support.
    -- Cargo/Passenger Capacity -- In 2006, the Air Force moved less than
       1 percent of its cargo and passengers in tankers. The KC-767 does offer
       significantly more cargo and passenger capacity than the KC-135, but
       not at the expense of airplane size or efficiency. Again, the KC-30
       carries more passengers and slightly more cargo based on weight, but
       with a bigger, less survivable and more costly plane.
    -- Aeromedical Evacuation -- The Air Force Request for Proposals set an
       objective requirement of being able to carry 24 litters and 26
       ambulatory patients. The KC-767 carries 30 litters and 67 ambulatory
       patients, far exceeding the highest requirement. The Air Force praised
       the KC-767's superior aeromedical crew stations, its ability to
       generate oxygen onboard, and the power provided for aeromedical crew
       systems. The KC-30 again offered more quantity with less quality and
       less survivability.

Setting The Record Straight On Northrop Grumman’s Tanker

Today’s Boeing ad in The Washington Post, “The Tanker Decision. Oversized Aircraft, Oversized Costs. It Doesn’t Add Up” raises a fundamental question: Who should decide the capabilities of the KC-45 refueling aircraft, and how it should be used, the Air Force, or Boeing? Moreover, Boeing continues to make up facts to suit its arguments.

In its request to the Government Accountability Office to throw out Boeing’s contract challenge, the Air Force noted that “Boeing’s protest misconstrues the solicitation evaluation terms for aerial refueling, and its interpretation creates a patent ambiguity” regarding what the Air Force wanted.

The Air Force stated in its proposal request that it sought a versatile, multi-role tanker that would meet or exceed its requirements for both refueling and airlift. Boeing argues that its tanker is good enough for refueling – and, based on past operations, additional capability was not needed. But the Air Force made clear it saw great value in Northrop Grumman’s KC-45 because it could carry more fuel, operate from more bases, and transport more materiel, troops and cargo – and evacuate more wounded soldiers from the battle theater. While Boeing’s offer was looking at the past, the Air Force’s selection of Northrop Grumman is all about the future.

The Air Force was abundantly clear about its desire for a versatile tanker throughout the bidding process. In December 2007, Defense Daily interviewed TRANSCOM Combatant Commander Gen. Norton Schwarz and wrote, “The bottom line, Schwartz told Defense Daily, is that unlike tankers of old, the KC-X aircraft will be multi-mission machines. ‘We need, for the benefit of the joint team, to get as much out of that as we can.'” The Air Force also made this clear in the RFP, and in the entire military did the same in a White Paper published a month later. Boeing disparages this recommendation, arguing it knows better than the Air Force what will be needed. Why does Boeing keep trying to redefine the requirement?

Boeing continues to distort the truth even though the company has the real data, claiming that Northrop Grumman’s KC-45 will burn $30 billion more in fuel. To reach that number, they made up their own assumptions and their own formulas. The fact is, the Air Force concluded – in a document provided to both companies – that the KC-45 is actually 6 percent more fuel efficient than Boeing’s proposed aircraft and the life cycle costs of both aircraft was about the same. Who should we believe – the United States Air Force or Boeing?

Boeing also claims that its proposed aircraft would have $19 billion less in infrastructure and maintenance costs. In fact, the Air Force determined that the life cycle cost of both aircraft, which includes these factors, was about the same. Who should we believe—the Air Force or Boeing?

Boeing then claims its can provide more aircraft to battle theaters – conveniently ignoring an important factor in the Air Force’s decision:

Northrop Grumman’s larger, more versatile aircraft can complete the entire host of combat scenarios using fewer aircraft than Boeing – something the Air Force found was a significant value to taxpayers AND battle commanders.

Finally, Boeing tries to bolster its faulty arguments by selectively pointing to criteria included in a 2002 tanker decision. Not only is that document outdated, but it relates to a contracting scandal that led to the contract being competitively bid. Relying on that outdated document, Boeing claims that the Air Force “and taxpayer get an oversized aircraft with oversized costs.”

In fact, the Air Force made clear in the document explaining its selection that “Northrop Grumman’s offer was clearly superior to that of Boeing’s for…aerial refueling and airlift. Additionally, Northrop Grumman’s…superior aerial refueling capability enables it to execute…with 22 fewer aircraft…an efficiency of significant value of the government.”