Not that it will matter much to many who will not be interested in facts but here is another look by what I am sure will be described as a pro-Boeing paper.
Analysis: Why Boeing won Air Force tanker deal | Dayton Business Journal "How did The Boeing Co. win a tanker contract that everyone seemed to think it would lose?
That’s been a subject for many bloggers and pundits since Boeing’s (NYSE: BA) success Friday in landing the first section of a long-sought $35 billion contract for 179 tanker aircraft, which are used to extend the effective range of jet fighters. Unless there’s an upset, those tankers will now be based on Boeing’s well-seasoned 767 wide-body jetliner, and the model will be designated the KC-46A. Many people had thought Airbus would win the deal, or a consortium led by Airbus and Northrop Grumman Corp. (NYSE: NOC).
Boeing and European Aeronautic Defence and Space Co., the European parent of Airbus, had been vying for the KC-X — the Air Force’s next generation airborne refueling contract — award since turning in their initial proposals last July.
Why did Boeing score its surprising win? The answer has many parts.
For starters, 2011 is a radically different fiscal environment than 2008, when Boeing lost the contract to a consortium made up of Northrop Grumman and Europe-based EADS. Back then, the fact that the Airbus A330, which is larger than the 767, could also carry soldiers and cargo seemed to be a selling point.
This time around, the Air Force kept its focus on the refueling mission. Its precise bidding formula made Airbus’ size a liability, after both aircraft met the essential contract requirements. Here’s what the New York Times has to say about the focus and the fuel.
In his own blog, Teal Group analyst Richard Aboulafia called the difference between the 767’s 1,550 gallons per hour, compared to 1,900 for a comparable A330, “an operating cost difference wide enough to drive a truck through.”
On top of this, U.S. Rep. Norm Dicks, of Washington, the highest ranking Democrat on the House Appropriations Committee’s defense subcommittee, persuaded the Air Force to make a critical change in its viewpoint — that the life cycle of the new aircraft will actually be 40 years rather than the 25 originally in the contract. Some of the Air Force’s current KC-135 tankers, based on 707s, are now close to 60 years old.
With fuel prices projected to increase, the change to a 40-year life cycle may have given Boeing a $4 billion to $10 billion advantage, Dicks said in an interview in the Joplin Globe newspaper, in Joplin, Mo.
Then there’s the efficiency factor, which could prove to be one of the sweeteners coming out of Boeing’s long process of making the much-delayed 787 Dreamliner.
Several years ago, as the tanker contract bidding process dragged on, a big worry for Boeing and supporters was that orders would run dry for the 767 and the production line would die before the Air Force ever made a permanent decision on the tanker purchase.
But three years of 787 delays forced airlines to look elsewhere for capacity. While Airbus’ A330 was the primary beneficiary, Boeing’s 767 kept winning orders, some of them highly discounted to assuage disgruntled Boeing 787 customers such as All Nippon Airways.
In fact, Boeing’s 767 orders in February were strong enough, although just 50 planes, for Boeing to announce it would increase production. That move signaled to the government the vitality of the program.
In addition to keeping 767 orders coming, another side effect of the 787’s problems was to spur Boeing to move the 767 production line to a much smaller space on the north side of its mammoth Everett facility. Smaller means more efficient, and in concert with Boeing’s increased focus on lean manufacturing, this move helped the company trim the price.
Lastly, there’s the poker factor.
Boeing officials seemed remarkably sanguine about the widespread notion that EADS was about to win the contract. Were they bluffing?
Maybe the seeming Boeing resignation made EADS bidders too cocky, and let some inflation creep into their bid.
We may never know.
The Aeronautical Systems Center, based at Wright-Patterson Air Force Base, has been working with the U.S. Department of Defense to manage the competition for the new refueling tanker program. Both Boeing and Airbus have offices in the Dayton region that service Wright-Patt."