Boeing just posted its Best and Final Offer to the IAM in the contract negotiations, and it’s going to bypass the IAM leadership and take the offer directly to the IAM membership for approval. The vote is September 3.
Here is a 14-minute podcast with the aerospace reporter from The Seattle Times, Dominic Gates, completed just before noon PDT today, immediately prior to the Boeing offer being posted. His insights are particularly noteworthy.
Update, 06:40 AM PDT, Aug. 29: Here are early news stories, with some IAM reaction to Boeing’s “best-and-final” offer.”
First, from the local Puget Sound area press:
Seattle Times: Early reaction negative.
Seatt Post-Intelligencer: A good piece with an overview of the situation.
The Everett Herald, also with a recap.
From national media:
Business Week: 787 cost overruns of $2bn may have influenced Boeing’s offer to IAM.
Bloomberg News: IAM reviewing offer line-by-line.
The IAM’s first reaction–posted at 2 in the morning August 29–may be found on the IAM website here. A full IAM recap and recommendation appears to be coming Saturday. A summary is expected late Friday (today).
Update, 2:20 PM: The IAM response is here. They are less than impressed.
Update, 3:45PM: Here is a 13 minute podcast with Addison Schonland, Scott Hamilton and Michele Dunlop, the aerospace reporter for The Everett Herald, discussing the Boeing-IAM contract issues.
Update, 12:15 PDT, Aug. 27: We found this IAM video response to Boeing’s Tuesday offer.
Update, 135 PD PDT, Aug. 27: Innovation Analysis Group/AirInsight has a 16 minute podcast with an official of Boeing’s union, the International Association of Machinists. There is an open invitation to Boeing to participate in a podcast, which so far has been declined. Separately, Boeing plans to commence a radio and print advertising campaign beginning after submitting its “best and final” offer to the IAM either Thursday or Friday, for the period running up to a possible strike vote on September 3. If the IAM rejects the contract proposal by at least a 66.1% vote on the 3rd, the strike could begin at 12:01 am September.
Update, 8:00 PM PDT, Aug. 27: Columnist Bill Virgin of The Seattle Post-Intelligencer takes a serious if slightly irreverent look at the negotiations in this column. The IAM gives its own take on its counter-offer at its negotiation website. Boeing’s response will likely be forthcoming Thursday (the 28th) or Friday (the 29th).
Update, 6:15 AM PDT, Aug. 28: The Seattle Times reports that Boeing’s final offer will be made today.
The IAM negotiation website is here.
Boeing’s negotiation website is here.
Northrop Grumman’s opposition to granting Boeing’s request for a six month response time instead of 45-60 days for the re-bid on the KC-X competition is predictable and disappointing.
Boeing also threatened to no-bid the contract if it doesn’t get its way on the request.
As readers know, we have always felt the KC-30 was the more capable airplane for the KC-X than the KC-767 offered by Boeing. We’ve sided with Northrop on any number of issues during the competition. But not this one, as we opined on August 22.
Northrop believes that Boeing is stalling on the bet that the Democrats will increase their majorities in the House and the Senate in the November election, and that this will increase Boeing’s sympathy in Congress. We have no doubt this is part of the Boeing calculus. So what? EADS decided to locate the KC-30 production facility in Republican Alabama at a time when the Republicans controlled Congress. That was hardly a coincidence. Politics have permeated this process from the start and while there is plenty of reason to stop now, that’s not going to happen.
Boeing, in its political gambit, is taking a risk that falls into the “be careful what you ask for category,” however. While it seems certain Democrats will increase their majority in Congress, it’s hardly a sure bet today that they will win the White House. Sen. John McCain is giving Barak Obama a run for his money and if McCain wins, this won’t be good news for Boeing.
We see no harm in giving Boeing the six months. We think both sides will produce a better bid, and that’s good for taxpayers.
Meantime, Steve Trimble at Flight International has an interesting take on his blog about how the re-bid can flip-flop some of the suppliers.
Update, 09:15 AM PDT Aug. 26: Innovation Analysis Group does a six minute podcoast with an Israeli reporter discussing Israel’s plan to update its aerial tanker fleet. The air force could use the KC-135/707 for another 20 years if necessary, but it really wants to buy the same aircraft used by the USAF.
Update, 2:30 PM PDT Aug. 26: So far, no final RFP has emerged from DOD; it was thought that it might be issued yesterday. We’re picking up rumblings that it may not come out this week.
Update, 350 PM PDT Aug. 26: Reuters now reports the final RFP may be issued next week.
Update, 12:00 PDT, Aug. 27: The St. Louis Post Dispatch has this piece looking at the strategic implications of the tanker competition.
(Updated 0730 AM PDT with references to EADS North America COO John Young and the “KC-35.”)
Giving Boeing six more months to come up with a revised bid is a prudent and reasonable thing to do. Here’s why.
Giving Boeing another six months will likely produce better pricing, perhaps a better plane and perhaps better life cycle costs. DOD should grant Boeing’s request.
Update, 2:00PM PDT: IAG has a new podcast with Boeing IDS spokesman Dan Beck on the Boeing request for six more months.
The Wall Street Journal just posted a story with a definitive statement from Boeing saying it may no-bid the tanker contract if it doesn’t get six months to prepare a new bid.
The Department of Defense is thinking about adding 15 days, for a total of 60, to its revised Request for Proposals, expected to be issued as early as Monday.
Northrop Grumman threatened to no-bid the original Round Two RFP if certain language was not changed that it considered favored Boeing and disadvantaged Northrop. The language was changed, Northrop remained in the bidding process and to the surprise of everyone–including Northrop–it won the contract, announced February 29.
The WSJ story confirms what was first reported by Amy Butler of Aviation Week magazine, and downplayed at the time by Boeing. Reuters earlier today had a reference to the possibility of a no-bid. The WSJ story quotes Boeing IDS president Jim Albaugh, as a solid a source as possible.
We think Boeing’s request for six months is prudent and reasonable.
We were one of many to receive an email about a near crash of a Lockheed P-3 Orion stationed at Whidbey Naval Air Station, north of Seattle. The text describes the in-flight incident; the photos illustrate the text.
There was a remarkable bit of piloting and luck on this one.
Text of email:
Tuesday, 22 Jul 2008, a P-3 Orion from VP-1 was flying an approach to NAS Whidbey Island with the #1 engine in a simulated failure mode. At 160 KIAS, the #2 engine started to surge, so they had to chop power to it. As all this was happening, they were still decelerating, so by the time they added power to #3 and #4, they were at 122 knots, and in the dry terms of investigators, “departed controlled flight.” The P-3 did FIVE rotations in a flat spin, dropping 5500 feet, finally recovering between 50 and 200 feet AGL (above ground level), pulling a whopping 7 positive G’s on the airframe after sustaining 2.4 negative G’s in the spin. The rolling pullout burst 45 rivets on one wing, physically RIPPED the main spar, and bent the entire airframe… the crew could see INSIDE the fuel tanks of the wing.
The P-3C that almost went into Puget Sound waters was from NAS Whidbey. It was a CPW-10 aircraft being operated by VP-1. Squadrons don’t own aircraft any more. The P-3 fleet has so deteriorated because of under-funding and over-use that there are less than 100 still flyable*. The P-3s belong to the wing and are “lent to the squadrons on an as-needed” basis.
The mission was a NATOPS pilot check, with a CPW-10 pilot (LT) aboard, a VP-1 LT and LTJG, plus VP-1 aircrewmen that included two flight engineers. The bird was landed back at NASW. Max damage was sustained by the aircraft, including almost tearing off a wing. Aircraft BuNo 161331.
At Whidbey, P-3C 161331 was doing a Functional Check Flight. They could see the inside of the fuel tanks when they landed. SDRS recorded the flaps being raised and the landing gear being cycled down and then back up. Aircraft released all the fuel in tank #3 when it appears that the seam between planks 3 and 4 split. Tank #4 also lost its fuel load when plank #1 separated from rest of the aircraft wing.
Boeing and its International Association of Machinists union have entered intensive bargaining in the countdown to the September 1 contract expiration. The IAM has a strike vote scheduled for September 3; if 66.1% of the membership votes for a strike, they walk at 12:01am September 4. The last strike, in 2005, lasted a month. Here are several articles looking ahead at the next 10 days.
From Bloomberg News: Final Contracts Begin with 787 Scheduled at Stake.
Wall Street Journal: Big stakes riding in contract talks.
Everett Herald: Boeing, Machinists differ on progress in contract talks.
Everett Herald: IAM to Boeing: We’re willing to strike.
Flightblogger has some interesting art comparing the Boeing KC-767AT and a possible “KC-764” based on the 767-400 at its blog here. The art looks at the tail strike issue, a potential problem for the KC-764 discussed by Boeing at the Farnborough Air Show.
Update, 1:40 PM PDT: Reuters reports that the Final RFP is now expected next week. It was originally due Friday, then this week. There is a third meeting between Boeing and the USAF/DOD (Northrop is taking advantage of these meetings as well). Boeing is pushing its position that (1) the original RFP specifications should be the governing document in this re-bid or (2) if there are changes, the company needs more time to consider another airplane, such as a tanker based on the 777F or 767-400.
Internet chatter about the prospect of a tanker based on the C-17 seems to be just that. A Boeing spokesman tells us he knows nothing of a prospective KC-17.
Update, 2:15 PM PDT: With all this talk about Boeing potentially offering a KC-764 or KC-777 (or even a KC-17), the obvious question that nobody has apparently asked until now is whether Northrop/EADS might respond with a tanker based on the A330-300, a plane larger than the A330-200 on which Northrop’s KC-30 is based.
Well, we asked Northrop. The response:
“We are back in a competition so the last thing we are going to do is tip our hand as to our bid strategy. Nice try.”
Update, 3:45 PM PDT Aug. 21: Reuters has this update, looking at the prospect of a Boeing protest.
(Due to technical difficulties, our update on the Corporate Website was temporarily requiring a password to access this week’s Commentary. This was resolved at 0900 PDT.)
Our Corporate Website has been updated for the week of August 19. Today we talk about–what else, these days–the USAF KC-X program.
With all the talk about the prospect of Boeing offering a tanker based on the 767-400 or 777-200F, we pull together thoughts about this and a table comparing the KC-135, KC-767AT, KC-30, a “KC-764,” a KC-777 and the KC-10.
We also talk about the prospect of Boeing doing a “no-bid” in response to the Amended Draft RFP, or filing a protest against the Final RFP, which is expected this week. And there is more.
Byran Corliss of the business magazine Washington CEO (as in Washington State, not that “other Washington,” as we say here on the West Coast) has a short commentary that is inflammatory to locals but absolutely true. He writes that Boeing doesn’t need the tanker business. (Boeing has acknowledged that, financially, it would be small potatoes, but officials do want the business.) Corliss also comments on the current labor negotiations. Corliss used to cover Boeing for The Everett Herald before joining CEO.
It’s believed the Final Request for Proposals on Round Three of the KC-X tanker program will be forthcoming this week–it was due Friday, but another meeting with Boeing, Northrop, the USAF and DOD was held Saturday.
In the meantime, Innovation Analysis Group/AirInsight has produced another podcast on the subject. This one features Amy Butler, the senior Pentagon correspondent for Aviation Week magazine, Addison Schonland and Scott Hamilton. Butler gives her on-the-spot observations about the prospect Boeing could no-bid this competition; the potential for a Boeing offering with a KC-777 or a “KC-764” (767-400);commentary about the Draft RFP, and more. This podcast is 24 minutes.