This article first appeared in Aerospace Daily & Defense Report.
The next U.S. president could move forward with a new competition to buy the Air Force’s much-needed aerial tanker replacements with an idea quietly crafted this fall at the Pentagon as a potential compromise.
But, for now, the idea has been dashed amid the political firestorm over the $35 billion program.
Pentagon acquisition chief John Young says his team discussed the notion of a new strategy to judge the existing KC-X proposals put forth by rivals Northrop Grumman/EADS North America and Boeing.
The new concept was proffered inside the Pentagon, but Defense Secretary Robert Gates eventually decided to shelve the tanker competition and declare a “cooling off” period before proceeding.
The new strategy would include two phases. In the first, both proposals which met all of the key requirements of the KC-X competition would be declared “technically compliant,” Young says. Both offers satisfied threshold requirements on fuel carriage, range and cargo and troop transport among others.
Second phase
But one complexity in the last competition was how to value nearly 800 smaller requirements that were not weighted prior to the outset of the source selection.
In the second phase, the Pentagon would then focus on value. The Defense Department would request a best and final offer from both bidders for the development and procurement of the first 68 (of 179) aircraft. The winner would be selected on the best total combined cost, he says.
Based on the previous competition, Northrop’s combined cost for development and first units was $12.5 billion compared to Boeing’s $15.4 billion. Boeing’s proposal was based on modifications to its 767–200 while Northrop’s was a version of the Airbus A330-200.
“If we went back for a best price proposal from both of those teams, we would get better prices,” Young says.
He notes that lifecycle cost would be too thorny because of fluctuations in areas outside the Pentagon’s control. For example, the price of oil recently dropped, dramatically reducing the lifecycle cost of both aircraft. However, fuel efficiency of the two bids were different, and given the challenge of projecting such costs in the future, Young says the simplest way of conducting a price competition is to focus solely on the up-front price associated with developing and buying the first aircraft.
Young asserts this strategy could be useful as the Pentagon embarks on other programs that build off of commercially available products. Still, some lawmakers are pushing the concept of buying both designs and splitting procurement between the two production lines.
‘Very bad decision’
Top Air Force officials have previously and repeatedly said the service’s budget cannot bear the cost of both developments. Furthermore, buying two designs at once would require the Pentagon to operate five tanker models simultaneously until one is retired. These would be the massive KC-135 fleet (which is the first to be replaced), the KC-130, KC-10 and the two new variants.
Read the rest of this story, see a hot shot of a post-IED medic, check out DARPA’s river rover and get a look at the USAF’s cyber gun from our Aviation Week friends exclusively at Military.com.
– Christian
{ 14 comments… read them below or add one }
OK, so let me get this straight:
We are NOW looking for a best price proposal from both vendors to procure 68 aircraft.
Uh, they consider this a new way of doing things? I mean, if I wanted to buy something that had to be manufactured. And I wanted to solicit bids from multiple vendors. Isn’t standard practice to create specifications and solicit bids based on those specifications and the quantity of whatever you are looking to purchase?
Regarding fuel efficiency as an example. I’m sure there is a minimum spec for fuel burn for the engines. So as long as you meet the spec (regardless of by how much) what does it matter? After all we have very qualified and talented engineers creating these specifications right? They should be able to quantify some minimum number based on need, technology availabe, future technology, and cost (among other variables).
Personally I think it is in the specifications / tech doc / bid doc creation section that things are getting screwed up. There is not enough manpower in this area or the oversight of these programs.
I’m stupified.
DC2
Scrap KC10 but use KC130 for Tac Ops, & downsize the KC135 with the oldest plane First to the newest? Then bring in the new Tanker model.
Very doable.
But retain of all the:
KC130 & the new variants.
Budgetwise doable
Of course Obama is going to select Boeing for his cronies, so the plan is mute. Never was about anything other than politics and jobs.
What does Obama have to do with anything?
Where is Boeing’s HQ? Who does Obama represent? Who does Obama want to help?
Don’t be naive. This program is not about selecting the best plane based on some objective merits, it is about other things, and not what is best for the war fighter.
Boeing has more Congressional support already, but Obama being in the WH only makes Boeing’s ‘win’ even more certain, for all those reasons.
If somehow, NOC/EADS does win outright, I will be shocked, and my faith in large ticket procurements will be restored.
The deal was rigged in favor of Boeing from the start, regardless of which president was in office. This deal is going to provide certain states with vital manufacturing jobs.
HPC,
I agree with you, so what’s your point?
Drake is right. We need manufacturing jobs here in America.
Maybe the more important question with regards to the KC-X is which Boeing airplane would be the best suited to the Air Force’s needs. It would seem to me the 777 or 787 is a better aircraft than the 767.
DC2
Young & Gates are STILL trying to pull a fast one.
The KC-30 DOES NOT MEET THE REQUIREMENTS – it was NOT “technically compliant” (that is not to say with more work it could not be). Read the GAO ruling on Boeing’s protest!
The 800+ requirements WERE weighted. They were weighted as general groups rather than individually. And guess what, the KC-767AT not only meet (& was found to be superior in) MORE requirements but (generally speeking) those which it was found to be superior in were in groups weighter HIGHER than those the KC-30 was found superior in…
I ask again, does the $15.4 billion include the over $5 billion that the KC-X source selection team INAPROPRIATELY added to Boeing’s bid?
Oh yeah, let’s ignor life cycle cost since the DIFFERENCE in total life cycle cost between the KC-767AT & the KC-30 could be as high as the total developement & procurements costs…Don’t give me this BS that calculating life cycle cost is too difficult, have they gotten ANY developement &/or procurement cost right for ANY major military program in the 21st century?
pfcem,
The answer to your last question would be yes. I do believe the SR-71 came in under time and under budget.
But alas, that was when “The Greatest Generation” was in charge. Now we have the me first baby boomers that are concerned about their corporate profits or trying to find a way to go from the military to civilian life as easily as possible.
Oh, and less government oversight and even less money to fund said oversight. But hey, we got our tax breaks from a smaller government.
The miners in the Crandal (sp) Mine are just as happy about the reduction in MSA oversight as well.
DC2
My bad, you said 21st century. Strike SR-71 and replace with “we’re screwed”.
DC2
Watch the Obama Administration try and buy BOTH planes. It will be a glaring example of Obama
OK, so Obama is going to buy the KC-30 because he is a Euro-France loving liberal. He is going to buy the KC-767 because of the powerful Boeing lobby in his homestate, apparently again because of his liberal genes. Now he will be buying both because he is a flip flopping, can’t make a black and white decision, liberal.
Interesting. Now I know why liberals can be both facist and communist at the same time.
DC2
If we are looking at this from a “We need manufacturing jobs in the US” point. You have to go with the KC-45. Boeing has more than enough work to do for the forseeable future (777 and 787 orders). the KC-45 would mean jobs in a new factory down south.
Does anyone else have a problem with buying foreign equipment for our defense when we make it here?
Obama will buy the Boeing plane because of the recession. There is no way they could justify a buying foreign plane and modifying it here.
The Boeing plane can be modified to meet the requirement which is done all the time. Id rather see the money go here than into pockets of those that caused this mess, at lease we get a plane.
Jobs=Votes