Did the Russians drop out?

Executives at United Aircraft Corp. of Russia denied Monday that they planned to form a joint venture with a U.S. defense contractor to bid on a contract to supply a fleet of aerial refueling tankers to the U.S. Air Force.

On Friday, John Kirkland, a Los Angeles lawyer who said he represented an unidentified U.S. defense company that was in talks with UAC to form such a venture, told The Wall Street Journal that the Russian aerospace consortium would publicly announce the deal's signing by Monday morning.

On Monday, responding to reports about the expected deal, UAC President Alexey Fedorov said in a statement on the government-owned company's Web site that UAC "is not planning to take part in the tanker tender or set up a joint venture."

Mr. Kirkland's law firm, Luce, Forward, Hamilton & Scripps LLP, said in a statement Monday that the lawyer was "engaged" a few months ago to work on a joint venture between UAC and the U.S. company. It said Mr. Kirkland had numerous conversations with UAC officials and received documentation that "stated the joint venture was approved, and that an agreement would be executed shortly."

Neither Mr. Kirkland nor his firm would identify the client company.

Mr. Kirkland provided the Journal with letters he said he sent to Mr. Fedorov and other executives at UAC on two occasions in February about forming a joint venture to pursue a bid for the tanker job.

In a copy of a letter dated Feb. 8 from Mr. Kirkland to Mr. Fedorov, the name of the client company was redacted, but Mr. Kirkland identified it as a publicly traded U.S. aerospace defense company.

Mr. Kirkland didn't provide the Journal with any letters that purported to be from UAC to himself or his client. In support of his claims about negotiating the venture, he provided a letter that appeared to be on UAC letterhead, addressed to a third-party company that Mr. Kirkland said was also going to participate in the joint venture.

Mr. Fedorov and other officials from UAC couldn't be reached for comment.

Mr. Kirkland also showed the Journal a letter dated Sunday that he said he sent to UAC seeking clarification about the status of the venture. He told the Journal he didn't receive a response.

In the letter, Mr. Kirkland named several UAC officials with whom he said he had spoken as recently as Saturday.

"They all confirmed again that the agreement would be signed this Monday morning," Mr. Kirkland wrote in the letter to UAC, which he says he emailed to officials including Mr. Fedorov and Chairman Sergey Ivanov.

Mr. Fedorov's statement appeared on the UAC Web site hours after Mr. Kirkland says he sent his email.

The episode is the latest twist in the Air Force's long-running attempt to replace its aging fleet of flying gas stations, which date back to the Eisenhower era. The service has been trying since 2002 to settle on a replacement strategy for the planes. On March 8, Northrop Grumman Corp. said it wouldn't bid on the contract to supply 79 new tankers, which could be worth up to $40 billion

Last week, European Aeronautic Defence & Space Co., Northrop's erstwhile partner on the tanker bid, said it was considering submitting a bid of its own to compete against rival Boeing Co.'s offer, provided the Pentagon would extend the bidding deadline for 90 days. As of now, bids are due May 10.

http://online.wsj.com/article/SB10001424052748704841304575138011574666660.html&n...;

Editorial:


By Press-Register Editorial Board
May 28, 2010, 5:49AM


EITHER BOEING is getting desperate or we missed the European Union’s declaration of war on the United States.

Those are the only two possible conclusions we can draw from Boeing Corp.’s latest pitiful attempt to manipulate the Air Force tanker contest. Boeing is now claiming that EADS would put U.S. national security at risk if the Airbus parent’s North American affiliate wins the refueling tanker contract worth potentially $40 billion.

EADS, of course, stands for European Aeronautic Defence and Space Co. It is, as the name implies, based in Europe. Its ownership includes the governments of France, Spain, Great Britain and Germany.

The United States is not at war with any of these countries, let alone the European Union. Indeed, they are considered allies.

Yet Boeing tried to claim this week that if "foreign governments" disagreed with U.S. policy, they might withhold tankers and spare parts.

Using that illogic, the only safe place for U.S. defense airplane work is American-based Boeing Co. Every other country is a national security threat, and so is every foreign-based business, no matter how many jobs those businesses create for Americans.

Speaking of Americans, it seems necessary to remind Boeing that Mobile, Alabama, where the Airbus tanker would be assembled, is a member in good standing of the United States. There’s been no question about that since the Civil War.

It’s true that Chicago, where Boeing is headquartered, and Everett, Wash., where it does most of its airplane manufacturing, are both a long way from Mobile. But there are maps.

Boeing is willing to slur its opponent and obfuscate the facts in order to divert attention from whether it can build a better tanker than EADS/Airbus. But the national security argument is pretty weak, even for Boeing.

As for its ridiculous allegation that EADS does business with Iran, that appears to refer to an EADS trip to an air show in Iran five years ago. The U.S. Department of Defense, which is sensitive about this sort of thing, says EADS North America is in good standing.

There’s only one possible conclusion: Boeing is getting desperate.

http://blog.al.com/press-register-commentary/2010/05/post_164.html

Jul 9, 2010




By Amy Butler

EADS North America is confident its Airbus A330-200-based KC-X proposal will win the long-running U.S. Air Force competition, but Ralph Crosby, chairman of the company’s board, says some statements about the highly charged duel from supporters of its competitor, Boeing, amount to a “bunch of crap.”

The company is submitting an 8,819-page, 17-volume proposal to replace 179 KC-135 tankers; bids are due July 9. EADS’s design is based largely on the configuration in development for the Royal Australian Air Force. Boeing is proposing a 767-based option, but it is deviating from the design made for Japan and Italy, and no known prototype exists.

The Air Force is expected to announce a winner of the procurement, worth about $35 billion, on Nov. 12. Crosby and other EADS executives announced their proposal submission during a July 8 roundtable with reporters.

Leading up to the proposal submissions, both companies have been locked in a public volley of discourse. Boeing supporters argue that a World Trade Organization (WTO) finding that Airbus received illegal subsidies to develop its commercial aircraft should be taken into consideration in the source selection. Rep. Todd Tiahrt (R-Kan.) is among a group of lawmakers proposing legislation that would call for the Pentagon to penalize the EADS offering because of the subsidies. He says that a $5 million per airplane penalty should be added to the EADS proposal price.

Pentagon officials say WTO rules prevent them from inflicting penalties, and any suggestion to the contrary is “patently inaccurate,” according to Allan McArtor, chairman of Airbus Americas. “I’d like to think of another word for B.S.” He adds that the $5 billion figure cited by Tiahrt and other lawmakers for launch aid is a “mythical number.”

The WTO announced its dispute resolution panel will delay until September issuing its findings on the case of the European Union against the United States that alleges Boeing received unfair subsidies from Washington. McArtor said the delay decision “stinks like last week’s fish,” and questioned whether the U.S. Trade Representative pressured the WTO for the shift to allow Boeing’s debut of the 787 at this month’s Farnborough Air Show to occur unfettered by news of the case.

EADS is opening up a new KC-X program management operation in Mobile, Ala., on Monday, July 12, to handle discussions with the Air Force following proposal submission, says Sean O’Keefe, chief executive officer for EADS North America. “We intend to proceed starting now as if we are going to win,” he says. Mobile was selected as the stateside site for A330-200 tanker and freighter final assembly when the company won the last KC-X competition in 2008, that time under the leadership of then prime contractor Northrop Grumman. That win was nullified after a Boeing protest turned up procurement missteps by the U.S. Air Force, and Northrop Grumman walked away as prime for the bid this spring. EADS announced in April it would proceed with its own prime contractor proposal.

O’Keefe says the first three of four development aircraft for the KC-X program would be built in Toulouse, France, with military modifications done in Spain at an Airbus Military facility. The fourth development aircraft would roll off the A330 line in Toulouse but be modified with mission systems in Mobile. Company officials declined to say when the first aircraft fully assembled and modified in America would be delivered from the Mobile line.

Crosby says that the establishment of the facility in Mobile would be an “economic magnet” for local economies struggling after the effects of the BP Gulf of Mexico oil spill wiped out tourism dollars for the summer season.

This, however, is not a factor in the Air Force’s source selection process. Each bidder must meet 372 mandatory requirements to qualify, and the winner will be chosen largely on low price. Price will be a tough point for the team because the Airbus model is bigger and heavier than its Boeing rival. “I feel good about the intersection of value and price,” Crosby says.

California-based U.S. Aerospace has filed papers with the U.S. Securities and Exchange Commission that indicate it will lead as prime contractor bids offering three Antonov models for the competition. This, however, is being viewed by KC-X competitors with skepticism (Aerospace DAILY, July 6).

The Pentagon says it is sticking to its 2 p.m. July 9 deadline for competitors to submit their KC-X proposals, despite the potential U.S. Aerospace bid. “The Department has received a request for information from U.S. Aerospace concerning the Air Force KC-X tanker replacement program RFP,” Pentagon spokeswoman Cheryl Irwin says. “We have consistently supported competition for the tanker program. The Department is committed to conducting a fair, open and transparent acquisition process. We also believe that any company that is interested and qualified to participate in this important program should do so.”

Boeing plans to turn in its offer July 9.

Credit: EADS North America

http://www.aviationweek.com/aw/generic/story.jsp?id=news/asd/2010/07/09/01.xml&h...

Oct 6, 2010
By Guy Norris

LOS ANGELES — Aerospace workers as well as city and state officials rallied Oct. 5 in Southern California as part of nationwide moves by EADS North America aimed at showcasing the proposed KC-45 tanker for the U.S. Air Force contest — and the jobs they say it will support across the country.

The rally, one of several orchestrated in a parallel operation countering a similar series of meetings held by competitor Boeing, was hosted in Irvine by Parker Aerospace. Parker would be a major supplier on both the KC-45 and Boeing’s proposed KC-767 program.

Parker was part of the original team with EADS and Northrop Grumman on the previous Airbus A330-200 multi-role tanker transport proposal, and under the succeeding KC-45 bid is set to provide flight controls; hydraulic, fuel and engine components and systems; and aerial refueling equipment.

Parker, which expected to have several hundred employees at the rally, says the KC-45 would support more than 1,900 workers at three facilities in California, plus 975 at first-tier suppliers throughout the state. The EADS tanker work also would support around 2,700 jobs tied to other Parker Aerospace products at suppliers and production sites in Florida, Georgia, Michigan, Ohio, Texas and Utah, it adds. The total economic impact is estimated at more than $500 million, of which $328 million would be associated with Parker’s KC-45-related spending in California alone.

The rally comes amid continuing claims and counterclaims by the competing teams at tanker events. Boeing Commercial Airplanes President and CEO Jim Albaugh told a rally in Everett, Wash., last week that its KC-767 would be able to operate from twice as many airfields as the KC-45. Washington Rep. Norm Dicks (D), a powerful appropriator, noted fuel savings over the A330 derivative would total $25-30 billion over 40 years.

EADS, releasing details of internal studies through aerospace analysts Leeham and Co., says that based on requirements and criteria in the USAF request for proposals, the KC-45 would actually use 3% less fuel per gallon delivered on refueling missions than the KC-767 on 500-nm. trips, and 31% less on 2,500-nm. missions. Using USAF criteria, EADS says on a 2,500-nm. mission with 250 sorties, the KC-45 would save $25.8 million in one day alone, based on assumed Defense Department fuel-per-gallon pricing.

http://www.aviationweek.com/aw/generic/story.jsp?id=news/asd/2010/10/06/05.xml&h...

Washington Rep. Norm Dicks (D), a powerful appropriator, noted fuel savings over the A330 derivative would total $25-30 billion over 40 years.

EADS, releasing details of internal studies through aerospace analysts Leeham and Co., says that based on requirements and criteria in the USAF request for proposals, the KC-45 would actually use 3% less fuel per gallon delivered on refueling missions than the KC-767 on 500-nm. trips, and 31% less on 2,500-nm. missions.

Using USAF criteria

, EADS says on a 2,500-nm. mission with 250 sorties, the KC-45 would save $25.8 million in one day alone, based on assumed Defense Department fuel-per-gallon pricing.

Senate panel to look into tanker data mixup
By Jim Wolf

WASHINGTON | Thu Dec 23, 2010 2:40am EST

WASHINGTON (Reuters) - The Senate Armed Services Committee will hold hearings next month into an Air Force document bungle roiling a transAtlantic rematch for a potential $50 billion aerial-refueling plane contract.

Senate Armed Services Chairman Carl Levin said Wednesday he was prepared to launch an investigation into "the release of proprietary data" from rival tanker bidders Boeing Co and Europe's EADS.

At issue is what the Air Force calls "a clerical error" that sent Boeing and EADS computerized records in November with sensitive data on each other's bid for the contract.

"I also intend to hold one or more hearings by February 1 to consider these issues and to review the propriety of the procurement process of the KC-X tanker competition as it relates to this issue," said Levin, a Michigan Democrat.

KC-X is the codename for the Air Force's plan to buy 179 tankers to start replacing its 50-year-old Boeing KC-135 refueling fleet, a deal worth up to $50 billion.

The current contest marks the Air Force's third try to buy new tankers, which are used to refuel fighters and other planes in mid-air. The mixup could lead to a fourth round, for instance if it spurred a successful protest by the loser.

Levin was responding to a push for hearings from Senator Maria Cantwell, a Democrat from Washington state, where Boeing would manufacture tankers based on its 767 wide-bodied jetliner if it won the deal.

Chicago-based Boeing welcomed the planned spotlight on the issue.

"We're prepared to answer any questions from the Senate Armed Services Committee, in hearings or otherwise, that may result from the commitment Senator Cantwell received from Senator Levin to examine the recent release of our proprietary information to EADS/Airbus," said Dan Beck, a Boeing spokesman.

EADS, Airbus's corporate parent, was deferring comment to the Air Force, said James Darcy, a spokesman for EADS' North American arm.

The Air Force had no immediate comment.

Beck in an email said Boeing remained concerned about "the implications of the release of our proprietary information and we feel some unresolved questions remain."

"Until we're satisfied we have a complete picture, we're keeping our options open for how we go forward," he said.

The Air Force disclosed on November 19 that it had inadvertently provided the bidders "a limited amount" of each other's confidential information. It said at the same time it was delaying the awarding of a contract until early next year, from this fall, because evaluating the competition was taking longer than had been expected.

A tanker contract would give EADS, headquartered in Paris and Munich, an important beachhead in the United States, the world's most lucrative arms market.

http://www.reuters.com/article/idUSTRE6BM0RG20101223

Wichita Business Journal

While the U.S. Air Force hasn’t yet had the opportunity to evaluate tanker bids from Boeing and EADS, the fight continues to be played out publicly in the pages of industry publications such as Aviation Week and Space Technology.

The Air Force is expected to make a decision in February.

Consider the Jan. 10 Aviation Week issue, which includes a two-page ad from Boeing, complete with American flags and closeups of two crew members, contending that the 767-based tanker offering is “For tanker crews, the most capable tanker.”

The EADS North America single-page ad goes to the heart of the matter: Which aircraft will cost less?

“Do the math” says that ad, contending that the EADS KC-45, based on Airbus’ A330 twin jet, will deliver a gallon of jet fuel for 24 percent less on a 1,500 mile mission.

As aerospace analyst Scott Hamilton points out in a blog post Wednesday, these are complex computations.

While Boeing’s smaller 767-based tanker might seem inherently cheaper, Boeing still has to absorb the cost of developing the “NewGen” version it’s promising the Air Force, while Airbus’ version is already ready.

Boeing boosters continue to be frustrated that the Air Force isn’t paying attention to a World Trade Organization ruling that the A330 was built with European subsidies illegal under WTO rules. Sen. Patty Murray, for instance, has contended that the subsidies will help Airbus ratchet down its price, compared to Boeing’s.

The larger Airbus plane will be inherently more expensive to operate, and will require some adjustment of facilities used to supporting the current Boeing 707 tankers.

But Hamilton suggests the EADs aircraft’s larger fuel capacity may be seen as a benefit by Air Force planners worried that geopolitical changes will curtail U.S. use of bases closer areas of conflict. If tankers have to fly further they need more fuel to keep themselves in the air, in order to deliver the fuel where it’s needed, he said.

In addition, Hamilton suggests that the fact that the EADS plane is based on a newer A330 airframe, which continues to sell well, may make it easier to keep operational as the tanker fleet ages than Boeing’s older 767.

Currently Boeing has only 50 model 767s on order, versus Airbus’ 372 orders for various A330 versions.

The current KC 135 tankers are based on the Boeing 707, which was built by Boeing until 1991.

Boeing says its tanker program would mean 7,500 new jobs in Kansas, including many at its defense facility in Wichita.

http://www.bizjournals.com/wichita/news/2011/01/13/boeing-eads-tanker-debate-pla...

Quote:

And seeing all 3 up close, the B767 wheels are closer to the KC-135's wheels but  just a little bigger, while the A330 has larger wider wheels to distribute the weight more evenly.

There has been nothing confirmed about the A340's center gear on the A330 MRTT. The original prototype built for the USAF was normal gear configuration, just like the Australians plane.

Jan 20, 2011

By Robert Wall wall@aviationweek.com
PARIS

An Airbus Military KC-30A tanker in testing for the Royal Australian Air Force was involved in an incident with a Portugese air force F-16 during a refueling exercise Jan. 20.

More than a dozen refuelings had taken place when the incident occurred. Both aircraft sustained damage.

Details of what transpired are still under review, but the incident caused the refueling boom on the Airbus A330-based tanker to break off and fall into the Atlantic. Both aircraft returned safely to their respective bases.

Spanish authorities will lead the incident investigation, with Australian officials involved.

So far, Airbus Military does not expect any affect on the first delivery of the tanker to the Royal Australian Air Force. That handover is already behind schedule, although Airbus CEO Tom Enders said this week the milestone was imminent.

EADS
http://www.aviationweek.com/aw/generic/story.jsp?id=news/awx/2011/01/20/awx_01_2...

It was hardly the 18 1/2 -minute gap of Watergate lore.

But a Senate committee on Thursday delved into the forensics of whether a confidential data file related to a $35 billion Air Force contract was opened for 15 seconds or 3 minutes, and what did the service know about it and when did it know it.

The file was opened last November by a manager for one of the bidders, the European Aeronautic Defense and Space Company, or EADS. That set off a furor because it contained data about the Air Force evaluation of a bid by Boeing, a rival, to supply aerial refueling tankers.

The Air Force has acknowledged that it accidentally sent each company data about the other’s bids. And once it found out that the EADS worker had briefly opened some of the data, but Boeing had not, it resent the discs to both companies to make sure the playing field was level.

But as the Air Force prepares to seek final bids, the Senate Armed Services Committee, prodded by Boeing’s supporters, demanded the investigative files and held the hearing to examine how the service could have been so sloppy, especially given that two previous efforts to award the contract had collapsed.

Steven Shirley, the executive director of the Defense Department’s cybercrime center, said an examination of an EADS computer and other records supported the company’s contention that the manager had looked at the file only briefly before realizing it involved Boeing’s data.

Pentagon officials described the document as a one-page spreadsheet with 10 lines of preliminary data about how the service scored the Boeing jet’s efficiency in sample refueling missions.

EADS executives said the employee had closed the file in less than 15 seconds and began trying to reach company security officers for help in locking up the disc. At one point, Mr. Shirley said he “roughly” agreed with that estimate. But he later said investigators had told him the file remained open for about three minutes, presumably while the employee was seeking the help.

Still, he said, “what we found on the computer was consistent” with EADS’s assertions that it had quickly reported the mistake to the Air Force.

A report from the forensics lab said that EADS had not saved or copied the data. EADS has said that it immediately took the employee off the program and allowed him to rejoin it only after the Air Force resent the data to both companies and authorized his return.

The investigative reports, released by the committee, also shed new light on how the mix-up occurred.

One report said separate groups within the Air Force wrote the transmittal letters and prepared the discs, and that instructions for packaging them were misconstrued.

The Air Force reassigned two officials involved in the mistake. But Senator Claire McCaskill, a Democrat from Missouri, where Boeing has its defense division headquarters, suggested they should have been punished more severely.

“This is a case study of incompetence in contract competition, this whole debacle, from the beginning to this very moment,” she said.

The Air Force’s first effort to replace its Eisenhower-era tankers collapsed after corruption charges involving a leasing proposal with Boeing. EADS, the parent of Airbus, was part of a team that won the competition in 2008, only to have the government block the award after Boeing protested.

The battle is also highly political, with thousands of jobs for Washington State and Kansas if Boeing wins or for Alabama if EADS does.

Senator Jeff Sessions, a Republican from Alabama, said Boeing could have filed a protest if it was harmed by the mistake.


http://www.nytimes.com/2011/01/28/business/28tanker.html?_r=1&src=busln
 

Boeing is irresponsibly trying to ensure that, if it doesn’t win the U.S. Air Force’s $35 billion aerial refueling tanker competition, nobody does, a competing executive charged Wednesday.

“I believe there’s a substantive difference if you look at the campaigns that have been waged by either side,” EADS North America Chairman Ralph Crosby Jr. said Wednesday. “Our campaign has been based on enabling the understanding of the superior capabilities and value of our system under the rules that are established. And what I see in terms of advertisement and sort of third-party and paid surrogate statements is that, well, whatever (Boeing executives) do, they may or may not win, but they sure want to keep us from winning and, frankly, from my perspective, if that’s anybody’s approach then I think it’s irresponsible to the warfighters.”

So does that mean EADS North America wouldn’t protest if it lost?

“Unless there is some egregious process error, I wouldn’t expect that we would protest,” Crosby said.

Responding Wednesday, Boeing tanker spokesman Bill Barksdale said: “Rather than take shots at our European competitor, the Boeing Company continues to focus on being ready to build tankers if we’re honored with a selection and contract award.

“The selfless men and women of America’s Air Force deserve no less.”

Boeing’s 767-based NewGen Tanker is competing against EADS North America’s Airbus A330-based KC-45 tanker for the contract to replace Eisenhower-era KC-135 tankers. Both companies submitted their final revised proposals Thursday, a day ahead of the Air Force’s deadline.

Actually, delivery of EADS’ proposal to Wright-Patterson Air Force Base, in Dayton, Ohio, didn’t go as smoothly as planned, Crosby said.

“We started out with a great plan for delivery of our final proposal revision. We had commercial airline reservations, we had a dedicated charter aircraft and we had a van,” he said. “And, by the time we got there about 4 o’clock on Thursday afternoon, an airplane had broken (down), another airplane had tried to leave without the proper documentation and our employee in Dayton who was going to meet the airplane fell ill and passed out three times before we got there.”

The final price is lower than EADS North America’s original bid, and company executives think it’s below Boeing’s price, Crosby said. He declined to say how much EADS cut its price, quipping: “Just enough to win.”

The Air Force’s criteria would award the contract to the aircraft with the lowest price, after adjustments for required modifications to air bases, fuel costs and mission performance factors, assuming one bid is more than 1 percent lower than the other and both aircraft meet the mandatory requirements. If the bids are within 1 percent, the Air Force will consider additional, non-mandatory factors.

“We believe we don’t win until we get a bid that’s more than 1 percent below Boeing’s total evaluated price,” Crosby said. “We can’t assume that our non-mandatory score would be greater than Boeing’s.”

Northrop Grumman, EADS’ former lead tanker partner, dropped out of the competition in March, saying the criteria favored Boeing’s smaller offering.

The departure of Northrop and its need to also make a profit on the tanker is one reason EADS North America can offer a lower price, Crosby said Wednesday. He added that Airbus is producing A330s at a higher rate than Boeing is building 767s, lowering costs, and existing A330-based tankers and refueling systems are closer to KC-45 than existing 767-based tankers and systems are to NewGen.

“We are so much farther down the development, test, manufacture of our system that we have much, much greater confidence and, consequently, in this competition are able to have what we think is a lower development price for the airplane,” he said.

“After four years (Boeing appears) to be delivering tankers to the Italian Air Force that can’t do tanking,” he added. “By my understanding, at least, their (refueling) probe and drogue system is not yet certified.”

Responding Wednesday, Barksdale said: “Our tanker features the most advanced refueling technology ever created but at a low risk since it will be built by an American team that has been delivering this nation’s tankers for nearly 60 years.”

Crosby acknowledged that KC-45 would bear a somewhat higher cost for modification of air bases because it’s larger, but said this is “not a key determinant of an outcome.” He also questioned Boeing’s claims about fuel cost savings of the NewGen tanker.

“I find it hard to comprehend how our competitor says that there will be a $30 (billion) to $40 billion savings by operating the 767 as a tanker over the KC-45,” he said. “Indeed, by our math that looks like it could be as large as a billion to a billion and a half dollars.”

Barksdale responded by saying: “The NewGen Tanker is 24 percent more fuel efficient than the A330 and will save taxpayers billions over the life of this new tanker fleet.”

The larger EADS tanker had about a 6 percent advantage in the “IFARA” mission performance evaluation in the previous tanker competition, which it won, Crosby said. Defense Secretary Robert Gates threw out that award after congressional auditors found major flaws in the process.

KC-45 might have an even bigger IFARA edge in this competition, Crosby said. He hinted that this is the real motivation behind moves by Boeing’s congressional supporters to throw out this part of the evaluation in the wake of the Air Force’s mistaken release of IFARA evaluations to the competing companies.

“This is the one place where the EADS North America KC-45 offering has the opportunity to substantially speak to the advantages of a larger and more modern aircraft refueling system,” he said.

Crosby objected to the push to throw out IFARA and similar moves to force the Air Force to account in the competition for illegal subsidies a World Trade Organization panel found that European nations gave to Airbus programs, including the A330.

“Our competitor continually wants to introduce changes into the evaluation criteria. It’s a little bit like the ninth inning of a baseball game where you’ve played by the rules, you appear to be in jeopardy of losing, so you try to introduce new rules and, if they don’t take, put together reasons that the game may be canceled and start all over again,” he said.

Speaking of subsidies, Crosby noted that a separate WTO panel found that Boeing also got illegal subsidies and pointed to 1982 Senate testimony by H.W. Withington, former vice president of Engineering at Boeing, that “NASA participated in significant portions of the research leading to the development of propulsion, structural, flight deck, avionics and aerodynamics advancements in” the 767 and 757.

“I can’t find a better source,” Crosby said. “Development of the 767 was, in fact, substantially underwritten by NASA.”

And EADS North America can offer a lower price on the tanker because of the factors like its production rate and aircraft maturity, not subsidies, he said. “There seems to be the view that this WTO issue is the enabler for us to win. … It has nothing to do with that.”

Crosby also addressed Boeing’s contention that its tanker would supporting more American jobs and that EADS’ claim of KC-45 supporting 48,000 U.S. jobs was overblown.

“I promise you some new and substantial news on that next week. We’ve gotten a bit tired of the last, best liar wins, so we’ve commissioned an independent study on jobs that takes it down to the individual district where jobs are done,” he said. “What I’m talking about more than substantiates 48,000 that we’ve said in the past.”

Finally, Crosby responded to questions about the failure and partial loss of a boom on an A330 tanker for the Royal Australian Air Force in January.

“The investigation activity continues and we ought to have a release on that fairly quickly,” he said, adding that EADS has the only boom in flight test with more than 1,500 aircraft contacts.

Crosby declined to confirm the details in or respond to a new Australian Aviation report (pdf courtesy of Leeham News) that, according to preliminary findings, the boom’s probe snapped off near the receptacle of an F-16 receiving aircraft, “causing the boom to spring up and strike the underside of the tanker, snapping off one of its two guiding fins and causing the boom to oscillate wildly until it detached from its supporting mast and fell to the ocean below.”

Airbus Military said in the report that it hopes the incident will not further delay first delivery of the Australian tankers, which has been pushed from an original plan of late 2008 to the end of 2010 to a current target of around March.

http://blog.seattlepi.com/aerospace/2011/02/16/eads-boeings-being-irresponsible-...

MOBILE, Ala. -- The U.S. Air Force on Thursday selected Boeing Co. to build its next-generation fleet of refueling tankers, saying the Chicago-based company was “the clear winner” in a competition with the European Aeronautic Defence and Space Co. for the potential $40 billion contract.

The news was met with jubilation in Washington state and Kansas, where Boeing is proposing to assemble its KC-767 jets, and bitter disappointment in Mobile, where EADS had laid ambitious plans for a $600 million aircraft production plant.

The decision confounded industry analysts and elected officials close to the competition, who boldly declared EADS as the favorite in the days leading up to the announcement. Those predictions vanished in a blink on Thursday afternoon, followed swiftly by the cancellation of arrangements for a ceremonial groundbreaking Monday at the Brookley Aeroplex.

“It hurts. I think we all felt great confidence because we truly believed that EADS had the better plane,” said Mobile Mayor Sam Jones. “But we went into this competition knowing that it could go either way. So we’ve just got to regroup and go after the next opportunity.”



Backers of Boeing, meanwhile, confessed surprise at a victory that few saw coming. U.S. Sen. Patty Murray, D-Wash., said she spent a sleepless night worrying how best to respond to a Boeing loss; U.S. Rep. Jay Inslee, D-Wash., fired off an e-mail bearing the phrase “Decision will not stand” in its subject line. The message was quickly retracted.

“We knew that Boeing had the best airplane. But we just didn’t know what the Air Force was going to do,” Inslee spokesman Robert Kellar told the Seattle Times. “We were just assuming the worst.”

With the selection made, the Pentagon’s next task is to make it stick. The Air Force has failed in two previous attempts to award a contract for new tankers, and the decade-long effort to replace the aging KC-135 fleet has been marked by delays, ineptitude and political infighting.

A 2001 deal to lease 100 tankers from Boeing collapsed in a corruption scandal, and a 2008 decision to buy 179 tankers from EADS was rescinded after it was challenged by Boeing. This time, according to top U.S. Department of Defense officials, the contest should hold up to scrutiny.

“We structured a competition that was fair, and Boeing was the clear winner of that process,” said Deputy Defense Secretary William Lynn.

“We will stand behind this work,” said Air Force Secretary Michael Donley.


EADS, the parent company of Airbus, said it would wait to hear details of the Air Force’s selection process before deciding whether it would protest the award. That meeting could occur as early as next week. EADS said prior to the announcement that it did not anticipate a challenge unless it saw “egregious” errors by the Air Force.

"This is certainly a disappointing turn of events, and we look forward to discussing with the Air Force how it arrived at this conclusion,” said Ralph D. Crosby Jr., chairman of EADS North America. “With a program of such complexity, our review of (Thursday’s) decision will take some time.”

Boeing, which built the Air Force’s fleet of more than 400 KC-135 Stratotankers, hailed the decision as a win for American aerospace workers. The initial phase of the contract calls for the delivery of 18 tankers to the Air Force by 2017 for a price of $3.5 billion. The Air Force said the new aircraft would be designated as the KC-46A.

“We’re honored to be given the opportunity to build the Air Force’s next tanker and provide a vital capability to the men and women of our armed forces,” said Boeing Chairman and Chief Executive Jim McNerney.

Boeing, the nation’s largest exporter, spent millions on a marketing campaign that effectively painted EADS as a threat to U.S. jobs. According to the Center for Responsive Politics, Boeing spent $17.8 million lobbying Congress in 2010, compared to $3.2 million for EADS.

On Thursday, Boeing’s political supporters said they were eager to begin production. The average KC-135 is nearly 50 years old, and replacing the flying gas stations is the Air Force’s top priority.

“I hope EADS will step down now. We need to get going,” said Washington Gov. Christine Gregoire. “They got a shot at it ... they were good competitors. And I hope now they will step down and not appeal.”

Defense experts, however, said a challenge was likely. Under federal law, EADS will have 10 calendar days from its briefing with the Air Force to decide whether to appeal the award to the Government Accountability Office. If that happens, the watchdog agency would have 100 days to rule on the complaint.

“I have no doubt” that EADS will contest the award, said Richard Aboulafia, an aerospace analyst for the Teal Group in Arlington, Va. “Even if EADS didn’t want to file a protest, their political allies would insist on it. This is by no means the end of the contract.”

Alabama elected leaders said they were not ready to concede defeat.

“Unfortunately, the best tanker for our military was not selected. I intend to demand a full accounting as to why,” said U.S. Rep. Jo Bonner, R-Mobile. “This competition has been challenged before and it’s not unlikely it will be challenged again.”

U.S. Sen. Richard Shelby, R-Tuscaloosa, took aim at the White House, suggesting that Boeing’s ties to President Barack Obama may have tipped the decision its way. Boeing labor unions were major supporters of Obama’s 2008 presidential run, and Obama shares the same Chicago hometown as the aerospace giant.

“I’m disappointed, but not surprised,” Shelby said. “Only Chicago politics could tip the scales in favor of Boeing’s inferior plane. EADS clearly offers the more capable aircraft. If this decision stands, our warfighters will not get the superior equipment they deserve.”

U.S. Sen. Jeff Sessions, R-Mobile, said his hometown remained a prime location for the aerospace industry.

EADS had announced plans to expand the tanker plant to include production of Airbus A330 freighters for the commercial market, and state officials said the freighter plant could still be viable at Brookley, a former Air Force base with prized access to interstates, rail lines and the Port of Mobile.

“EADS would not have chosen Alabama if they did not firmly believe that our state was a great place to do business in the global economy,” Sessions said.

Gov. Robert Bentley said he intended to discuss the Airbus project with EADS. On Thursday, however, the former doctor was busy comforting a crowd of stunned observers who’d gathered at the Arthur R. Outlaw Mobile Convention Center to watch the Air Force’s announcement.

“We’re all disappointed. I think everybody in that room believed we were going to win,” Bentley said. “But there’s sunshine behind every cloud. I know we will reap dividends from the hard work that went into this effort.”

http://blog.al.com/live/2011/02/air_force_tanker_contract_eads.html

By CHRISTOPHER DREW

When a European company offered a larger tanker than Boeing for a lower price in 2008, the Air Force grabbed what seemed like a bargain.

But aviation analysts say Boeing won a rematch this week because the government’s preference had shifted to a plane with fewer bells and whistles but one that could be much cheaper to operate in the next few decades.

The changes in the bidding rules for one of the Pentagon’s richest contracts were relatively subtle, making the $35 billion award to Boeing on Thursday a surprise for the company’s executives.

In the end, the proposed size of the aerial fueling plane offered by Boeing’s rival, the European Aeronautic Defense and Space Company, or EADS, seemed to work against it. And Boeing may have won, several analysts said, because its jet could save billions of dollars more in flying costs than any discounts EADS might have offered on its sticker price.

Perhaps the most decisive advantage occurred through a change advocated by one of Boeing’s biggest supporters, Representative Norm Dicks, Democrat of Washington. Mr. Dicks said that after the earlier bidding collapsed, he persuaded the Pentagon to alter a crucial rule to better reflect the long-term cost of the planes.

Under the change, the Air Force agreed to project the cost of the fuel used to power the tankers over a 40-year period, rather than 25 years. Air Force officials have said that the lengthier projections made sense, given that many of its tankers have already been operating for 50 years.

Mr. Dicks promoted the change publicly before the latest bidding started, and EADS officials said on Friday that they knew about it. But they say it was one of several rule changes that could help explain how Boeing, America’s top aerospace firm, reversed its prospects on the bid after faltering so badly in 2008.

EADS, bidding with Northrop Grumman, won the earlier contest only to have government auditors block the award after Boeing filed a formal protest. The auditors found that the Air Force had been too subjective in evaluating the bids and had given EADS too much credit for some of the extra features of its plane.

The successful protest rattled the Pentagon. It had already been embarrassed after an effort to lease tankers from Boeing in 2001 collapsed in a corruption scandal, and it was wary of the intense advertising and lobbying campaigns that both sides had mounted.

So top Pentagon and Air Force officials sought to make the evaluation more objective this time, creating a mathematical formula that weighed the bid prices, how well each of the planes met war-fighting needs and the 40-year operational cost estimates.

EADS executives said on Friday that they had no reason to question the Air Force’s selection. Louis Gallois, the chief executive of EADS, told reporters that he was “disappointed” and “perplexed” by the decision. But he said EADS would not consider its next steps until the Air Force briefed the company on Monday about the award.

EADS has 10 days after that to protest if it decides that the Air Force deviated from the bidding rules. The company, which planned to build an assembly plant in Alabama if it had won, has strong support from lawmakers in the gulf states counting on the jobs to help the region recover from Hurricane Katrina.

EADS supporters say that the size of its plane, about 25 percent bigger than Boeing’s, had impressed Air Force officials in 2008. The plane could carry up to two dozen pallets of cargo along with the fuel needed to transfer to bombers and fighters in flight.

But since then, the Air Force revised its needs, saying it already had more cargo planes than required.

The Air Force also penalized Boeing more substantially than EADS in 2008 for not being as far along in developing its tanker. This time, the Pentagon insisted on a fixed-price contract and did not deduct any points from either bidder for possible production delays.

Representative Dicks acknowledged in an interview that his push to weigh the operating costs over 40 years rather than 25 “may have made a big difference,” and independent analysts agreed.

The Air Force plans to buy 179 tankers, and it has assumed that fuel prices will rise by an average of 2.5 percent annually over those decades.

Boeing’s supporters had said earlier this week that Boeing thought that rate should be higher, and they contended that parts of the Air Force’s formula seemed to favor EADS.

But Edmund S. Greenslet, publisher of the Airline Monitor, an industry newsletter, said commercial models similar to the EADS tanker burned about 1,900 gallons of fuel per hour, while Boeing’s plane used less than 1,500 gallons. With fuel costs rising, that difference could have offset any advantages for the EADS plane, he said.

Both the EADS and Boeing planes could carry more fuel than any of the aging tankers in use today. Analysts also said the Air Force would have had to make greater operational changes if it had bought the EADS plane.

Boeing held a celebration Friday at its plant in Everett, Wash., where it made production changes last year to cut costs. As she left the rally, Senator Maria Cantwell, Democrat of Washington, said in a telephone interview that Boeing had “used sweat equity to get down to brass tacks” and lower its bid.

Hundreds of Boeing workers attended the rally, cheering that the contract would save many of their jobs and add thousands more. A job at Boeing, once seen as a ticket to a comfortable life, has become dicier as competition has intensified in the aerospace industry.

Boeing’s tanker is based on its 767 passenger jet, and the company had planned to end production of that plane if it had not won the tanker contract. The passenger version of the 767 will be replaced by Boeing’s new 787 Dreamliner.

Mr. Greenslet noted that the long delays in the 787 program had prompted Boeing to keep the 767 line open longer than planned. And if the new plane had not been delayed, Boeing might not have been in as good a position to bid for the tanker work, he said.

Boeing officials had also feared that EADS, which is partly owned by European governments, could rely on subsidies to undercut Boeing’s price or to absorb losses if it won the contract with a low bid.

But Guy M. Hicks, a spokesman for EADS’s North American unit, said that while the company’s bid was low, it had still projected a profit. He also said that EADS might have had a more realistic sense of the costs than Boeing, since it is building more tankers for other countries. 

http://www.nytimes.com/2011/02/26/business/global/26tanker.html?_r=1&adxnnl=1&sr...