A great analysis on the tanker deal from my old friend Loren Thompson of the Lexington Institute who’s name is “Mud” to pro-Boeing lawmakers…
If you want to understand how former allies end up going to war — or former lovers end up getting divorced — take a look at how Boeing and the Air Force are treating each other in their angry confrontation over the award of a next-generation tanker program to Northrop Grumman. Boeing expected to win the contract, and now finds itself facing the prospect of losing a 50-year aerial refueling franchise (and $100 billion in sales) while its main rival in the commercial airliner business sets up shop on Boeing’s home turf. Boeing is convinced it should have won, and is spending millions of dollars on lawyers and advertising to press its case in a formal complaint to the Government Accountability Office.
Air Force leaders, on the other hand, believe that Boeing is willfully mis-stating the facts in a bid to obscure the inferior performance of the plane it proposed. A marathon session of Air Force acquisition experts two weeks ago concluded that none of the 200 issues raised by Boeing in its complaint to GAO was likely to be upheld, and that whatever minor problems the accountability office might uncover would be far from sufficient to overturn a competitive outcome the service says was not close. Beyond the merits of Boeing’s case, Air Force officials are insulted by the tone of the company’s public statements, which have used phrases such as “deeply flawed” and “severely prejudiced” to describe the tanker selection process.
The deterioration of Boeing’s relationship with its biggest government customer hit a new low last week, when Air Force insiders began hinting darkly that the company had encouraged Missouri Senator Claire McCaskill to question the ethics of the service’s chief of staff in a letter concerning an unrelated contracting matter. The notion that Boeing would do such a thing seems exceedingly unlikely, since the chief was widely believed to favor Boeing’s tanker bid and the company’s relationship with McCaskill is lukewarm at best (even though its defense unit is headquartered in her state). But the tone of Boeing’s tanker campaign has led at least some service officials to believe the worst about the company, a feeling that is spreading far beyond tankers. For instance, the service has probably delayed announcing award of the GPS III satellite contract in part because it fears another Boeing protest.
What’s fascinating about this confrontation is that the two parties embrace completely contradictory views of reality, and yet the partisans on each side are absolutely convinced that their version of the facts is the only true account. If there’s anyone inside Boeing who thinks the tanker competition was rigorous and transparent, I can’t find them. And if there’s anyone inside the Air Force that thinks Boeing’s protest has any merit, they’re hiding from me. The stark difference in how the combatants see the same events seems more like a case study in Balkan politics than the button-down world of defense acquisition.
A sage observer of human nature commented in the Wall Street Journal some years ago that the great achievement of American capitalism was to channel impulses that led to rape and pillage during earlier civilizations into constructive forces for economic progress. That’s an important insight, but sometimes in the rough and tumble of competition we see hints of how recently mankind emerged from the jungle. When rival cultures begin hating each other, their behavior can easily spill beyond the bounds of rationality. So Boeing and the Air Force need to catch their breath, tone down their rhetoric, and realize that they both still need each other to succeed.
And Reuters reports the same day Boeing exec agrees to shave down the “sharp elbows.”
– Christian
AIRBUTT IS AN ILLEGALLY GOVERNMENT-SUBSIDIZED PIECE OF SHIT. EVERY OTHER CONSIDERATION IS MOOT !!!!!!!
EVERY PLANE THE PRODUCE ILLEGALLY BENEFITS FROM THESE PHRENCH AND EURO SUBSIDIES. BOEING HAS BEEN FIGHTING AGAINST THE SUBSIDIES FOR YEARS.
And Boeing receives no “subsidies” at all? Wouldn’t awarding the contract to Boeing BECAUSE IT IS AN AMERICAN COMPANY be de facto subsidization?
Last time I looked, Boeing didn’tseemed to be hurting in reporting huge profits.
Is that the same Kansas congressman who would gain a couple thousands jobs from the boeing deal? Because that is where the tankers are modified. But a smart american such as yourself already knew that, right?
yes, I am a smart American and sure he would be preventing a loss of jobs and an increase. But his arguements for lost revenues across the board are a pretty good assessment of how this affects our US economy. Read it on his website and evaluate it for yourself!
The actions of people close to us cut the deepest.…
The whole affair is pathetic. Boeing is not going to go bankrupt and the next time there is competition, maybe they will actually work at it.
They got complacent with all of the paid off Air Force personnel, and congressman. They thought they had it in the bag, so they did not really try.
To admit that to themselves, they would have to admit they screwed up, and that they didn’t earn their pay.
So they blame the Air Force. Who did not stay bought.
American SHOULD SUPPORT ITS OWN DEFENSE INDUSTRY.
How do you expect your military industry, research and development to progress if your own military forces do not support it.
There is definately no substitute to it and its military content and development stay within its own border. Not only the military retain the industry, the people and nation will benefit from it.
Stay American and BUY AMERICAN.
So you guys do not want our military to have the best equipment you just want them to accept any P.O.S as long as it is built in the USA. Competition boys and girls. Boeing needs to step and stop taking our military for granted. If they had offered what the USAF had wanted they would have won the contract.
Christian,
We share your respect for Dr. Thompson’s work but if you really want to know why some people have issues with his briefs on the tanker issue please read our post at: http://tankerblog.blogspot.com/2008/04/thanks-for-clarification.html
Or just stop by wwww.tankerwarblog.com
I’m just a working Joe, and have no inside information but I do read the papers. I read that Jim Albaugh CEO of Boeing felt the 767 tanker was the best bet because the 767 clearly met the requirements of what the Air force Tanker program, requested in it’s first bid. The 767 (as reported by Albaugh and his VP of Mark McGraw), that the 767 had great advantages in fuel savings, as it was lighter than the Northrop Gruman much larger A330 tanker. Plus the Air Bus would be made partly in Europe. In a real-world scenario the Boing tankers would use less space than the block buster size at the Air Buss, that transposed into the fact that the large A330 would have to use more bases overseas. Yes size does matter
because in war terms, fewer bases available for figher/bombers and other aircraft would cause a bottle neck! I am a Army Viet Nam Vet and don’t know much about Air Tanker’s but when the chips were down on the ground it was a good feeling to see those fast movers Up there above for close air support. I feel Boeing did not get a fair hearing as yet. Hey! who knows how long this debate will go on? How long will this new delay take and how will this efect current war efforts?
I’m wondering what the Borg (Boeing) are up to behind the scenes, and I suspect Loren Thompson has some insight beyond what he’s revealed so far (protect your sources y’know). It is interesting how some people will dismiss an argument based upon the source as a way of not addressing the argument or issue.
Back to Boeing’s game plan now. Have they decided their scorched earth approach was counter-productive?…or are they just catching their breath? I’m waiting for the other shoe to drop before the GAO rules on the protest.
Irregardless of the Spat between Boeing and The USAF, I think we need to look at the broader picture here. FRANCE has not supported the US in Iraq Yet here we are Rewarding them with millions of dollars and jobs that mostly will benifit Airbus and France. What is wrong with this picture?? OUR elected officials have not a clue what they are doing!
THEY ARE SELLING OUT AMERICA AND FORCING NATIONAL DEFENSE TO BE RELIANT ON FOREIGN EQUIPMENT AND PARTS.
Boeing designed, and perfected Aerial Refueling NOT AIRBUS. But to me the main issue is SELLING OUT AMERICA and American jobs to foreign countries. I do work for a major defense contractor and its scary to see the foreign part we have to deal with. I say BUY BOEING and Screw France and Airbus! I am also a USAF Vietnam Veteran!
I was saving this for my blog, but all this talk of ‘French’ KC-45 content by the newbies is too sweet to pass up.
I estimate that the current Boeing KC-135R has a far higher ‘French’ content with the CFM-56 engines (50% ‘French’) than the KC-45.
How does all this xenophobia for the KC-45 square with the ‘Foreign’ content of thr B767? –Especially as it applies to the Chinese vertical stabilizer?
Good point about the French stepping up on the NATO commitment. I was surprised to read there are French fighters flying ADIZ patrols out of Iceland. (A yeoman’s job performed most admirably by the 57FIS for decades, and of course done best when I was there in 80–82.;-)
Boeing-McDonnell Douglas has a history of telling their customers what they will build; not what the customer wants and they result has been numerous losses. They never seem to learn. Ask John McCain.
so why is it that none of the bork the french faction answer the question about the european subsidies?
again, why is it a problem if europe pays for a part of the tanler fleet.
as far as the loss of american expertise if boeing doesn’t get the contract, if b. needs more experience building their old 767, thn it’s a lost cause anyway.
and why does boeing think that it and not another american manufacturer should get the contract? afaik b. is not building a new factory for the contract. ng/eads (eads, not airbus) is.
SMSgt Mac,
Hopefully the anti-Boeing/KC-767 pro-NG/EADS/KC-30 crowd will listen to you about how they should not “dismiss an argument based upon the source as a way of not addressing the argument or issue”.
Everyone seems to forget that Boeing already had the tanker deal sewed up until someone discovered that the tax payers were being taken for a ride that would cost them and fatten the pockets of Boeing. Lest we forget just a few short years before a certain company got caught with their hands in the cookie jar on the KC-135 heavy maintenance contract. It cost 2 Vp’s and 1 CEO there jobs. Also a little jail time for the VP’s.
Both companies have parts from overseas but both would also have final assembly in the US.
Boeing needs to be honest with their statements and get out of the grey areas that turn to little white mistruths. When the exectutive part of Boeing gets caught it is always the lower workers in the company that suffer by having to go thru ethics training over and over again.
Boeing had a chanced to offer up the 777 but elected not to do so. The Air Force needs something that can compare to the KC-10 in cargo and offload flexibility. Instead of having three 767’s to do one mission you can have 1 A330. To me that means more fuel savings and more ramp space, also fewer flight crew and maintenance support people.
I predict that the next President will cancel this contract for the new tankers.
andy,
Nobody is forgetting that Boeing already had the tanker deal sewed up but just HOW were tax payers being taken for a ride that would cost them and fatten the pockets of Boeing? Some enlightenment for those you continue to bee fooled by this BS claim.
May 23, 2003
Under Secretary of Defense for Acquisition, Technology and Logistics Edward C. “Pete” Aldridge
“
The agreement provides for leasing 100 KC-767 aircraft from the Boeing Co. for six years starting in 2006, at a cost of $131 million lease price plus an additional $7 million in lease-unique costs per aircraft. The total cost will be less than $16 billion. The initiative also includes a provision to purchase the aircraft for about $4 billion at the end of the lease 2017.
“
So that would have been a total cost of ~$20 billion for 100 tankers with Boeing taking on all developement risk & cost. That translates to ~$200 million per tanker. Compare that to the “current” deal of ~$35–40 billion for 179 tankers & you get ~$195.5–223.5 million per tanker. With the previous deal (assuming it stayed on schedule) we would have 100 tankers by 2014, with the current deal we won’t even get the 1st tanker until 2013. Include the cost savings from not having to maintain 136 KC-135E the previous deal would replace 10 years sooner PLUS extensive maintenance & logistical support from Boeing at substantially reduced costs & the cost per tanker of the previous drops even lower compared to the “current” deal. AND with a significant portion of the previous deal cost NOT having to come from the USAF procurement budget & the previous deal begins to look like steal FOR THE USAF!
But since there were those who just could not get the lease deal it was modified to leasing 20 (with, as before, the option to purchase at the end of the lease) [$2.4 billion] & purchase 80 [$14.8 billion] which increased up-front costs but was to have saved ~$4 billion over the life of the aircraft.
The USAF DOES NOT NEED something that can compare to the KC-10 in cargo and offload flexibility (although it will eventually when it looks to replace its KC-10’s). What it NEEDS (according to its own studies) is a KC-135R equivalent. Of course the USAF has increased its requirements since its 2000 studies. The requirement for which Boeing won the previous tanker deal was BAICALLY for a tanker with fuel offload capabilities at least equal to the KC-135R but with the ability to operate from 8000′ runways with a full load of fuel.
Part of the problem with the KC-X requirement is that while it adds greater emphasis on cargo capability than the USAF has previously required OR REQUESTED, it does not indicate specifics as to what/how much cargo capability.
Boeing elected not to offer a KC-777 because the USAF told them they did not want a KC-777.
What dream are you living in where 1 KC-330 can do the one mission of 3 KC-767?
A friend, Lee Trenholm, who is a retired 767 captain said that with a Boeing you can slip (cross-control) the plane for a crosswind landing, which the Airbus computer won’t allow. I’ve only seen this mentioned occasionally, but appears to be a gripe of Airbus captains, like Lee’s son.
The way things are going now, today, with the
There is a very good reason all the recent Boeing contract awards have been contested by other firms.
It is straight from Military Procurement 101,