As interested parties and aviation geeks wait for EADS to make (likely not) and announce its decision (as soon as March 4) on whether to protest the USAF contract to Boeing on the KC-X aerial tanker, more updates have come in.
First is a new market share forecast by G2 Solutions of Kirkland (WA). Next is a new updated from one of our readers, who goes by the screen name OV-099. He previously provided a detailed analysis of where he thinks EADS and Boeing came out on pricing. He updates this with more Net Present Value analysis and other economic data.
Both new items are below the jump.
Update, 10:30 PST: Loren Thompson of the Lexington Institute, who has come in for our share of criticism for his unabashed bashing of Airbus and subsidies as it relates to the KC-X competition, has this very good essay on why Boeing won.
Here is a link to Richard Aboulafia’s commentary.
Original Post:
We are hearing from a variety of sources a growing concern that the Air Force hasn’t been as forthcoming as it should be in its debriefs with EADS.
But Reuters moved a story a short time ago that EADS won’t protest.
The Mobile Press-Register, in a rare front-page editorial, and the Alabama Congressional delegation are complaining that the Air Force has been as forthcoming as they believe it should about why Boeing won the tanker contract. Publicly, the Department of Defense said Boeing was the “clear” winner in what had become a price shoot out. DOD, EADS and Boeing will not reveal the pricing.
One of our readers, with the screen name OV-099, provided a comment on our Dewey Defeats Truman post calculating the possible prices on the KC-45 and the KC-767.
OV-099 has been a long-time poster and when the occasion arises, does in-depth analyses on financial terms. We’ve cross-checked his work with others and found his numbers-crunching to be pretty spot-on.
With that in mind, we asked OV-099 to take a final look at his original posting with the thought of elevating it to a primary post. He has slightly revised his numbers. What follows is his analysis of how much EADS and Boeing priced their KC-45 and KC-767 in the bids to the USAF. His analysis is below the jump.
Update, 1-:30 am: OV-099 has further refined his analysis; the update is below.
Our Odds and Ends this week:
Note: here is the link to the tanker transcript.
Podcast: Richard Aboulafia talks to Addison Schonland.
Richard Aboulafia of the Teal Group said it best: the upset Boeing win over EADS in the KC-X tanker contest is the “Dewey Defeats Truman” moment of this contest.
For those who don’t know this reference, see here.
Aboulafia predicted EADS would win. So did Michel Merluzeau of G2 Solutions in Kirkland (WA). And Loren Thompson, a paid Boeing consultant. We did, too. So did Daniel Tsang of Aspire Aviation and even the Boeing shills in Europe did.
Boeing officials thought they were going to lose and so did its supporters in Congress.
In a previous post, we opined that whoever lost the KC-X contract should accept the decision and let the Air Force move forward with the award without a protest.
We reiterate this view now.
Throughout the competition, EADS praised the USAF for its fair and open process, and its integrity, and when the Air Force inadvertently passed on company information to Boeing and EADS that belonged to each other, EADS praised the USAF for handling the mistake properly.
Boeing has been awarded the contract for 179 KC-X tankers.
What are the ramifications?
Is this contest over?
As we noted in a previous post, not necessarily. A protest can follow. EADS has said it won’t unless it finds something “egregious” in the process, which it has commended so far. But don’t consider it a given that EADS won’t find reason to protest. Still, we think it unlikely based on what we know today.
Why wouldn’t EADS protest?
EADS sorely wants the contract. It would be a huge boost toward its goal of reaching $10bn a year in Pentagon contracts, from $1.5bn today. But by competing for the KC-X contract at the Pentagon’s request to do so, it built up a lot of good will for future contracts. There would be little to gain from a protest.
Will Congress go along? There is a strong EADS contingent.
That’s all it is, a contingent. There aren’t enough EADS supporters to force a reversal. They still could block an award, but if EADS doesn’t put up a fight, it’s unlikely they will, either.
What’s next?
The timeline of what’s next is listed in this post. As the cliche goes, “it ain’t over until the fat lady sings.”
Update, 0930 PST: DOD has confirmed, the award will be announced at 5:10 PM EST and broadcast on The Pentagon Channel.
Original Post:
The Pentagon Channel will provide coverage, if the past is followed today. The time is 5pm EST. Update: A Tweet from AvTips says 4:45pm, without citing sources, so we suggest having everything ready by that time.
You can bet the media in Mobile (AL), Wichita (KS) and Seattle (WA) will also provide breaking news coverage. We know for sure that KIRO-TV plans to do so. We expect Twitter members will be ready to go, include Reuters Aerospace coverage.
It now appears the USAF will announce the tanker contract Thursday, Feb. 24, at 5pm EST. Expectations are that EADS will be awarded the contract, but there have been so many twists and turns that we’re not predicting the outcome.
The greater question will be, Will there be a protest? As we reported Monday, EADS says it won’t protest if it loses provided there is nothing egregious in the selection process. Boeing has clearly been laying the groundwork for a protest, but neither is it certain Boeing will do so if it loses.
Here is the timeline of what happens next:
With the expectation that the USAF is going to announce its tanker award this week, we’re going to forego our Odds and Ends kick-off and deal with the tanker.
We’re going to try and synopsize many of the issues that are “out there” in cyber-land, to try and make some sense out of what sometimes seems to be a senseless process.
In no particular order, here we go: