Boeing has serious concerns about the fairness of the contract process.
Media: USA Today
Byline: Mark McGraw
Date: 13 March 2008
Boeing has taken a rare step in its business interactions with one of its biggest military customers. The company has decided to protest the Air Force’s decision to award a $35 billion air tanker contract to Northrop-EADS.
I would like to explain why Boeing has decided to protest. We have significant concerns about the Air Force evaluation process. Our concerns include several areas involving the capabilities of our aircraft, the cost and risk of both air tankers, and the evaluation of the bids. We left the debriefing with the Air Force with more questions than answers.
According to the Air Force, in the key category of capabilities, Boeing received the highest rating possible, met or exceeded all thresholds and objectives and was graded as having significantly more strengths than the competition.
But one key question we have: Why did the Air Force evaluators assign more value to our competitor’s bigger tanker than to the smaller Boeing 767?
This is crucial because such evaluation criteria were not included in the bid specifications. If the Air Force was going to give credit beyond the requirements, it should have stated that and given Boeing the opportunity to propose a larger aircraft.
We provided unprecedented insight into Boeing Commercial Airplane cost data for the 767 aircraft. But we have significant questions about how the Air Force evaluated the commercial aspects of our proposal. At the top of the list: our concern about the unequal treatment in the evaluation of each competitor’s cost information. The Air Force chose not to “trust” the information provided by Boeing - a single company with transparent financial systems and a proven production system. But it did trust the cost provided by Northrop and European Aeronautic Defense and Space Co. and their unproven and multiple production methods.
We are a global company and compete every day in the global marketplace.
This decision to protest is so much more than questions of politics, subsidies and jobs. The issue for Boeing is about the fundamental fairness of the evaluation process and whether our proposal was given the same consideration as our competitor’s.
Mark McGraw is vice president, Boeing Tanker Programs.

Comments (18)
"As a European company, we're not supposed to take into account embargoes from the U.S.," says Michel Tripier, with EADS. (as a defense of their attempts to sell helicopters to Iran in 2005...)
http://www.msnbc.msn.com/id/7018071/
So why is this company allowed to compete for Pentagon contracts again?!? Can anybody please explain this?
Posted on March 18, 2008 05:52
Even if Boeing were to have offered a KC-777, it still would not be ready to enter service when the AF stated they needed the new tankers in service. Also wouldn't a KC-777 been too big and expensive compared to the KC-330? I think Boeing should let this round go for 179 tankers and instead focus on winning KC-Y and KC-Z in the future with a KC-787. Our Air Forces planes are suffering due to the delay of this competition, the military is here to fight and win wars with the best equipment money can buy, and the AF has decided the KC-330 was the best. I think recent competitions in Australia, UK, UAE, and Saudi Arabia have shown that the KC-330 is the right choice of plane for the job.
Posted on March 18, 2008 07:09
> met or exceeded all thresholds and objectives
how do you reconcile that with objective 3.2.1.1.4.2?
"The KC-X should be capable of operating from a 7,000 ft dry, hard-surface runway at sea level at maximum weight for takeoff (OBJECTIVE) using FAA ground rules."
your own site says it can't do that
http://www.boeing.com/ids/globaltanker/usaf/KC_767/performance.html
"The ability to take off at near maximum gross weights from an 8,000-foot runway . . ."
Posted on March 18, 2008 11:49
I am finding it difficult to understand the rational behind this decision from a total cost point of view. Prime example. Boeing has spent the last couple of years working with Japan & Italy producing a product that has been thoroughly tested and is now in the process of being fielded. It would seem to me that this testing process alone will save our country a great deal of time & money. The aircraft will get to the warfighter quicker.
If Boeing followed the rules as has been claimed, why would the Airforce wish to take such a big gamble on an untested product that will take longer to thoroughly test & field?
As a nation, we will have have many challenges to face in the future. Challenges that will stretch
our economy, Federal budget & citizens to their limits. At best all this decision by the Airforce did was waste the time and money of the American Taxpayer. At worst, this decision may cost someone on the front line their life. And that is the point of all this, isnt it?
Posted on March 18, 2008 19:45
The US Air Force should evaluate all the facts fairly. We should not be undermining an American company's leadership in an industry that is so critical to our efforts to be a leader in technology. We can't keep sending high-tech jobs off-shore and expect to maintain our leadership role in advanced technologies. The Europeans would just love that. If this contract is to be awarded to Northrop and EADS, it should include a requirement that each aircraft be entirely "Made in USA."
Posted on March 18, 2008 20:57
With out a doubt if this were a commercial airliner choosing a plane the A330 would have been picked hands down. But the Air Force is not a commercial profit making enterprise. In other words the lowest cost and most reliable airframe that meets the requirements should be the winner. Hence the 767. No doubt that the A330 is more advanced, but plain and simple---- a tankers role does not require any of the fancy electronic stuff all it need to do is haul gas. I especially like the fact that the A330 burns 25% more fuel than the 767. This only leaves me to believe that if you give the Air Force more $$ they will recklessly spend it on not need equipment.
The biggest question that I have here is financial stability. Airbus just posted millions of losses for FY07 and the A380 needs 409 orders just to break even, currently there are only 192. Then there is EADS, which also posted Euro 446Milion in losses with their A400M. The biggest yet is the Dollar Decline. The Dollar is expected to keep getting lower in at least the near future of 3 years. Airbus has even said that for every 10cent drop in the dollar to the Euro is 1 Billion in Euro in losses to airbus. They have already slated to cut R&D development, lay off 10,000 employees, and has dropped their Stock dividend by 83% sense 2005. With that in view there is a big doubt that Airbus will be able to supply the A330 at the quoted price for many years to come.
Posted on March 19, 2008 03:52
The life cycle costs are almost the same at a little over $11B for the KC-767 and KC-30 because the AF didn't like Boeing's cost data and added a couple billion on their total.
Posted on March 19, 2008 06:50
My father flew KC & RC-135 aircraft for over 10 years, and I personally have a love affair with Boeing aircraft. But when (as an outsider)I learned that the 767-200 was going against the A-330, I knew that the A-330 would win. It's just the better aircraft. If Boeing would have put up the 777-200 has it's offering, I think Northrop / EADS would have lost the competition. Boeing, stop being a sore loser. We need the new tankers now! Stop waving the flag, and let the Air Force have the best they can get. Then go out there with a 777 or 787 in the next round and kick EADS rear-end.
Posted on March 19, 2008 11:24
D (CA):
> "Even if Boeing were to have offered a KC-777,
it still would not be ready to enter service
when the AF stated they needed
the new tankers in service."
This doesn't "fly".
"Boeing Begins Major Assembly of First New 777 Freighter"
http://boeing.com/commercial/777family/news/2008/q1/080129e_nr.html
Just add a boom, some drogues,
and some FAA paperwork,
and you have yourself a KC-777 Freighter/Tanker.
Since two of the KC-767s have now been
delivered and accepted by Japan,
doing a KC-777 "demonstrator" (or four of them)
can't be hard, or take very long.
Then ramp up from there...
> "Also wouldn't a KC-777 been too big and
expensive compared to the KC-330?"
Wrong question...
Would a KC-777 be big enough to
greatly reduce the number of sorties needed
to transport all the "extra"
fuel, freight, passengers and/or patients
so that the number of days or weeks ("velocity")
needed to get units into theater (for example)
is also greatly reduced, and thereby also
greatly reducing the Commander's mission cost
since far fewer transport sorties are needed
than with C-17s (fuel guzzlers) and/or KC-30s?
> "I think Boeing should let this round go
for 179 tankers and instead focus on
winning KC-Y and KC-Z in the future
with a KC-787."
Or with a KC-777.
Thank you,
Eddie Maddox
Posted on March 19, 2008 11:35
I think Boeing is paying the price today for unethical practices with USAF higher ups several years ago.
-------------------------------------
Air Force Pitch for Boeing Detailed
E-Mails Show Pressure by Roche
http://www.washingtonpost.com/wp-dyn/articles/A63815-2004Nov19.html
Posted on March 19, 2008 19:12
Perhaps the AF would have chosen the Boeing tanker if it had been what they had asked for.
Posted on March 20, 2008 18:05
The stated purpose was to replace the KC-135 with an aircraft that could access the same bases.
Yes the KC-30 can carry more of everything. But it is also to large for many of the airfields it would be required to operate from.
The strategy is to put more booms in the air allowing greater flexibility. If you only have room for a few BIG KC-30s you will still have planes that need tanking waiting in line.
Add to the operational shortcomings the fact that by awarding this contract to EADS thru NG. We have given the governments that hold stakes in the EADS political leverage to hold over us.
If you do not think that will happen you are plain DUMB. The fact is the U.S. does this very thing with our Foreign Military Sales. Those countries that purchased from us depend on us for spares and support. That is political leverage.
This is yet another U.S. DoD contract heading offshore disguise under the banner of U.S. corporation. Add to that the prestige of Marine One based on EADS 101 helicopter (which as usual for Lockheed the cost for the program are already being increased) or the purchase by the Army of huge fleet of Eurocopters (that are having many of the same issue that U.S.C.G. Dolphins were having and had to retrofitted add increased cost) and of course the U.S.C.G. notorious for buying foreign has purchased the CASA aircraft a subsidiary of EADS (funny thing is this aircraft is also all screwed up).
Posted on March 20, 2008 18:41
I honestly do not want my tax dollars to fund a foreign built aircraft, for our military. What's
also amazing is that one year ago, the KC767 was the
no.1 choice for the airforce. Over the last year,
Washington DC received more than 1.6 million dollars
in lobby money from EADS. Taking into account the lawsuits the U.S. has against the E.U., and EADS,
how can this entire deal be legal?
Posted on March 20, 2008 20:13
Storm You Could See:
Well, who did not see this coming? This procurement was lost long before the submission of proposals to the USAF. Since the USAF 'courted' EADS in as much as they needed prodding to submit a bid in order for the USAF image of looking 'fair' and 'impartial' after the Druyun affair. Back in those early days when the Tanker Lease package was getting tossed out EADS had NO product sell. In the intervening years EADS has spent a ton of money to develop something they can now sell at a much lower risk. Who's fault? I'd say the USAF simply because they needed another player to dance against Boeing and they did not care where that party came from. I am sure they would have courted Antonov or Tupolev if they had a working wide body or IFR system. But alas, it was Airbus.
Stating the Obvious:
The sad part in all this is the continued loss of aerospace manufacturing to the Europeans. The recent win of 322 UH-72's to fill the Army Domestic Utility Helo to EADS and of course the win by the Lockheed 'Consortium' building the next Presidential Helo using the Agusta/Westland EH-101 as the basic airframe are the two most glaring examples of this practice of "Branding". Putting a US Major in front of a European airframe and then calling it a 'domestic' product. A practice I feel is a simple con game used to garner the placement of a U.S. flag on their product. We don't have the manufacturing capacity to be giving it away to anyone much less the Europeans. And once that capability is lost, it is not so easy to get it back again.
Going Forward:
I fear the only way to keep our Military programs in America is for the Congress to pass a Law that dictates domestic origin. My fear comes from the fact that we have to rely on the Congress to do that and they will only make a mess of things as they do when ever they get involved.
No doubt the USAF is hurting for a replacement for the KC-135's as they are not cheap to operate and maintain. But it's their fault that this is now an emergency. They put off starting the replacement for this airframe while they were buying more and more 'Stealth' products, bombers and fighters both. None of them cheap by the way, and all of which need to feed off a non-Stealth tanker. A real waste of all that stealth capability.
Makes you wonder.
Posted on March 21, 2008 06:28
If the process was clear, transparent and obective, shouldn't the scores of aviation analysts pointed to the correct choice before the USAF had to anounce it?
Taking off a 7000' runway at MTOW? Shouldn't it be, taking off a 7000' runway with at least X-gallons of fuel.
I had assumed that the smaller wingspan of the 767 gave it the clear advantage. Otherwise Boeing would have used the raked wingtip with greater span and more efficiency.
I was looking forward to the 767 "Frankentanker".
Is that the nose of the 1950 stratotanker on the new 737-900ER? Did Boeing put a 737-800 wing on the 737-700BBJ? Does the A330-200 derive from the A300 or was it a clean sheet design?
Posted on March 21, 2008 10:01
Your company should not have tried to milk the government for millions , if not billions of dollars the first time around. This is why they probably do not trust your figures and bookeping. I know people were held accountable for their actions and delt with accordingly, but a huge bond of trust was broken and this may be how that wound will heal.
Posted on March 24, 2008 10:48
Boeing's proposed tanker is not airborne, in testing, or even built.
Bottom line -- the unbuilt, untested Boeing tanker that the company proposed would have been a "Frankenstein" aircraft. The proposed tanker is not the same airframe sold to Italy and Japan. The aircraft proposed to the USAF was actually a new design integrating components never before connected including a 767-400 nose, 767-300 wing, and 767-200 fuselage.
Clearly, people need to complete their own research regarding the proposed tankers and not rely on one-sided information.
Posted on March 25, 2008 09:10
Phil (Mobile, AL):
"Perhaps the AF would have chosen the Boeing tanker if it had been what they had asked for."
Your statement does not make any sense.
The RFP from the Air Force for the new tanker was for a mid-sized tanker, ie the 767, not a large tanker as proposed by EADS (the A330).
Posted on March 28, 2008 15:49
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