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Boeing win $35Bn AAR contract

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Boeing win $35Bn AAR contract

Old 4th Mar 2011, 16:43
  #81 (permalink)  
 
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Yes indeed, fly3test! Amazing that, having dicked around using the much-delayed Italian KC-767Is for their own boom R&D purposes, it seems that Ol' Bubba is planning on using a totally new design on the Frankentanker....

Last edited by BEagle; 4th Mar 2011 at 17:04.
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Old 4th Mar 2011, 19:32
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EADS concedes KC-X contract award to Boeing

From Flight:

"EADS North America has decided not to protest the KC-X contract award," EADS NA chief executive Ralph Crosby says.
EADS concedes KC-X contract award to Boeing

Smart move - now watch Ol' Bubba fail to deliver anything on time or budget and the consequential rise in costs and screwing over of the US taxpayer....

Will we laugh....
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Old 4th Mar 2011, 20:28
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Originally Posted by BEagle
From Flight:



EADS concedes KC-X contract award to Boeing

Smart move - now watch Ol' Bubba fail to deliver anything on time or budget and the consequential rise in costs and screwing over of the US taxpayer....

Will we laugh....
And that would be an impossible outcome had EADS gotten the contract? You people are funny.

Originally Posted by Brain Potter
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'nuff said
And most of you who are saying EADS should have gotten the contract are located in Europe. 'nuff said
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Old 4th Mar 2011, 20:36
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BEagle
Smart move - now watch Ol' Bubba fail to deliver anything on time or budget and the consequential rise in costs and screwing over of the US taxpayer....
Umm I believe this is a fixed price contract.
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Old 4th Mar 2011, 20:50
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Umm I believe this is a fixed price contract.
Yeah, they never get revised...

Or perhaps they'll stick to the price but just get massive co-incidental R&D subsidies via the back door to cover development snags - like Boeing usually do to stay "competitive".....

Boeing's KC-X spec still remains a secret

Does this secrecy mean:

a) the frankentanker is actually all just old technology with no upgrades to keep it cheap
b) the bits that (still) don't work on the Italian 767 are not US sourced (rumoured to be UK sourced)

Boeing don't want to admit this until the dust has settled as

a) people will criticise them for delivering old obsolete tech to the "warfighter"
b) the touted "US" tanker is actually less US than they'd like you to believe

It seems that Boeing are clearly embarrassed about the spec, or its potential poor PR impact for them to be so cagey about it. Or perhaps they plan to change the spec after contract award after they have won with a cheap bid, and ramp up the price during a pre-delivery block upgrade?!?!

If its rumoured to be $4Bn cheaper than the EADS bid thats 12% overall (if 1% was $330M) - I assume this must include all costs (fuel/crews) etc. through life. Is it right that the competition rules assumed a 1 for 1 comparison for tankers on a given mission and ignored the fact the 330 has > capability of a 767, so you also could in effect have a smaller fleet for the same AAR capability? I know frame numbers have a value in themselves, but its still should have been rather relevant to the comparison shouldn't it?
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Old 4th Mar 2011, 21:17
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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."
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Old 4th Mar 2011, 22:01
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...Boeing’s well-seasoned 767 wide-body jetliner...
'Well-seasoned'? What wonderful spin - of course they mean 'old-fashioned'....
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Old 4th Mar 2011, 22:34
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ftrplt: Care to elaborate?
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Old 5th Mar 2011, 03:20
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Airbus A330, which is larger than the 767, could also carry soldiers and cargo seemed to be a selling point.
Uh, why would that be a selling point when the USAF already has more C-17 than it wants or needs? Not to mention, neither plane is competitive with 747s, 757s, 767s and DC-10s used by contract haulers.

If any are even needed, the only rational refuelers are half-life, service proven airliners. The last I heard, the KC-10A has for years been the most reliable airplane in the USAF.

New KC-10A maybe made sense at the time, because McDouglas needed to fill its production line to keep it going, so they gave the USAF a sweetheart price, or so they said.

GB
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Old 5th Mar 2011, 08:14
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Well, considering that boeing promised to deliver at a total cost of only 20.6 billion $, and airbus only went down as far as 22.6, it seems airbus tried only to force boeing into making a scarcely if at all profitable bid. And they were successfull with that strategy too, after all the price dropped by around 14,4 billion dollars during the bid. And it is a fixed price, however as the A400M disaster shows that doesn't prevent a change in price if needed.
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Old 5th Mar 2011, 10:39
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Airbus A330, which is larger than the 767, could also carry soldiers and cargo seemed to be a selling point. Uh, why would that be a selling point when the USAF already has more C-17 than it wants or needs?


So they only need the one plane to deploy as opposed to a freighter AND a tanker. The sophisticated European Air Forces have been doing this for years as it significantly reduces costs "overall" using the one aircraft as opposed to a quartet.
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Old 5th Mar 2011, 11:52
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So they only need the one plane to deploy as opposed to a freighter AND a tanker. The sophisticated European Air Forces have been doing this for years as it significantly reduces costs "overall" using the one aircraft as opposed to a quartet.
Yes but overall lifecycle cost wasn't the reason Boeing was chosen. Oh, ooopps.
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Old 5th Mar 2011, 13:03
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Competing was a win-win for EADS.

If they stayed out, Boeing would have a more profitable, less risky deal that would carry part of its manufacturing overhead.

If they won, they had a low-risk profitable deal.

Even losing, they have almost certainly forced Boeing to reduce its price and carry more risk, and may have pushed Boeing into something that will cost them a lot of money and further downgrade their reputation. However, losing doesn't make EADS look too bad, because most of the world assumes the fix was in.

The key was that the tanker was a must-win to Boeing, not so much to EADS. Strategically that is a bad place to get caught in.
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Old 5th Mar 2011, 15:43
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Originally Posted by LowObservable
Competing was a win-win for EADS.

If they stayed out, Boeing would have a more profitable, less risky deal that would carry part of its manufacturing overhead.

If they won, they had a low-risk profitable deal.

Even losing, they have almost certainly forced Boeing to reduce its price and carry more risk, and may have pushed Boeing into something that will cost them a lot of money and further downgrade their reputation. However, losing doesn't make EADS look too bad, because most of the world assumes the fix was in.

The key was that the tanker was a must-win to Boeing, not so much to EADS. Strategically that is a bad place to get caught in.
I've yet to see any of you recall that EADS won round 2. Regardless of your predispositions, that should be evidence enough that it was not a shoe-in for Boeing.
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Old 5th Mar 2011, 16:05
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I've yet to see any of you recall that EADS won round 2. Regardless of your predispositions, that should be evidence enough that it was not a shoe-in for Boeing.
So, you don't think it was fixed when
a) EADS won
b) politicians didn't like it
c) competition CHANGED to favour Boeing solution

I run a load of competitions, and you can't normally just go changing the goal posts* once you have firm bids in. No matter how you dress it up, the outcome was effectively determined by the shift in criteria to favour a smaller, 767 based, offering.

For the reasons LO allude to though, it seems EADS (though not Northrop, interestingly, who have no relevant civil aerospace interest) were content to go along with it to squeeze any potential excessive profit/"subsidy" to Boeing.

* not without exposing yourself to legal challenge, bid costs etc. Did Northrop recover their costs under the 2008 award?
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Old 5th Mar 2011, 17:11
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Originally Posted by JFZ90
So, you don't think it was fixed when
a) EADS won
b) politicians didn't like it
c) competition CHANGED to favour Boeing solution

I run a load of competitions, and you can't normally just go changing the goal posts* once you have firm bids in. No matter how you dress it up, the outcome was effectively determined by the shift in criteria to favour a smaller, 767 based, offering.

For the reasons LO allude to though, it seems EADS (though not Northrop, interestingly, who have no relevant civil aerospace interest) were content to go along with it to squeeze any potential excessive profit/"subsidy" to Boeing.

* not without exposing yourself to legal challenge, bid costs etc. Did Northrop recover their costs under the 2008 award?
If I remember correctly, the RFP sent out for round 2 favored a platform about the size of the 767, but the scoring criteria for round 2 ignored the RFP profile and that was why Boeing's protest was upheld.

* I have no idea what NG's profit margin was for the 2008 proposal.
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Old 6th Mar 2011, 16:01
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EADS lowered their bid by $3.4 billion from last time, and Boeing lowered their bid by about $7 billion... but Boeing only ended up with a $2 billion margin?

That means that when the competition was restarted as "price-first", if nothing had changed, EADS would have had the lower bid by ~ $1.6 billion.

Looks like the RFP was expected to still favor EADS to me.
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Old 6th Mar 2011, 22:44
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The tanker is arguably the critical lynchpin of America's strategic doctrine of global reach and rapid response. It was a colossal mistake to ever open bidding to any other than an American prime contractor.

I regret EADS was dragged into the process. I have no problem with EU, China, or anyone else limiting their sourcing of such systems to their own industrial base; it's only logical.

For the record, I point out again that both Boeing and EADS had their awards overturned over the ten years this acquisition has meandered along, lest anyone be unaware of that fact.
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Old 7th Mar 2011, 05:08
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The tanker is arguably the critical lynchpin of America's strategic doctrine of global reach and rapid response.
Ironic quote of the month.
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Old 8th Mar 2011, 15:22
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It was a serious assertion, no irony intended. Could you point it out to me please? I'm American, you know, and perhaps not capable of refined irony, but I'd like to improve.
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