Countdown on KC-X tanker award
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EADS CEO Louis Gallois went public today in Europe with his prediction that the USAF will award a tanker contract next month. The best and final bid will be submitted this month.
We previously noted that the final bids were due this month and a contract award expected next month.
Meanwhile, here is an interesting story on the tanker from KING5 TV in Seattle, with this piece.
As readers know, the competition is a price shoot-out. As the KING story notes, Boeing continues to be worried about the benefit EADS has from subsidies found to be illegal by the WTO on the ability to under-price Boeing, but as we noted in this post last year, WTO may not have the effect Boeing fears; the withdrawal of Northrop Grumman as a partner to EADS has a much larger benefit to EADS’ ability to price the airplane.
Here are a couple of other key elements to ponder.
- This 16-page report from an outfit with no connection to EADS or Boeing (which we originally linked in October) reminds us all of key considerations for the tanker.
- Life-cycle costs are a key consideration for the KC-X, and Boeing has done a good job of messaging in its contention that the KC-767 has lower life-cycle costs than the EADS KC-45. Boeing produced two studies (in 2008 and in 2010) from third parties supporting its talking point. Only last October did EADS finally responded with its own, internal analysis that, it claimed, looked at operational mission cost vs Boeing’s analysis of US Department of Transportation reporting of fuel usage for commercial 767-200ERs and A330-200s. EADS conceded that on flight training, the KC-767 has the advantage but on fuel delivery, it contends the KC-45 wins the analysis.
- What has not gotten a lot of attention are critical elements to the EADS analysis that mirror war-gaming scenarios in the Quadrennial Defense Review (QDR), and this is the anti-access/access-denied (A2/AD in DOD parlance) efforts by China in any Pacific conflict. A2/AD assumes forward bases will not be available and tankers will have to retreat to Guam and Australian. (Even Guam could be problematic in an A2/AD scenario.) This means tankers have to have more fuel to carry themselves to a forward support area, and that tankage capability also needs to be greater to refuel airplanes. This gives the KC-45 an advantage over the KC-767. This also was, in fact, an element in the 2008 win by Northrop over Boeing that did not get much attention. Don’t underestimate this importance in this competition.
- Also part of the life-cycle consideration is future supply chain availability. The KC-X is a 40-year airplane; the airlines have pretty much ceased buying the commercial 767 while the A330 continues to sell very well. The USAF can rely on airlines for support in the future as back-up to its own maintenance and parts, and the supply chain itself is a consideration. Just as the supply chain support for the KC-135 shrinks with each passing year, so will it more quickly for the KC-767 than for the KC-45.
These are just some of the factors that haven’t gotten a lot of headlines that should not be overlooked when the contract is awarded.