Posted on 03/01/2008 2:39:00 PM PST by Paleo Conservative
The U.S. Air Force on Friday named Northrop Grumman Corp. and EADS North America to build its next-generation fleet of aerial refueling tankers, spurning a bid from rival Boeing Co. in a surprise decision that could launch a new era of jet production in Mobile.The Air Force made its choice after a fierce competition between the two teams for one of the single largest defense contracts in U.S. history. Estimated at up to $40 billion, the deal includes 179 planes to be delivered over the next 15 years. Boeing was regarded as a heavy favorite by defense analysts and other experts who cited the Chicago-based company's political clout and its legacy of building commercial and military aircraft.
"To say this is a great day for Alabama is a monumental understatement," said Gov. Bob Riley. "This will go down in history as one of our greatest days."
Los Angeles-based Northrop and its partner, a subsidiary of the European Aeronautic Defence and Space Co., plan to assemble and modify their tankers in a pair of new plants at the Brookley Field Industrial Complex, creating 1,500 jobs.
The Air Force, which designated the new tanker as the KC-45A, said the Northrop plane emerged as the winner after a stringent review that began more than a year ago. Initial bids from the companies averaged 15,000 pages and were followed by numerous meetings with Air Force evaluators.
"I can't stress enough what a rigorous evaluation we've been through," Sue Payton, the Air Force's chief weapons buyer, said at a Pentagon news conference. "We had two very competitive offers. Northrop Grumman clearly provided the best value to the government."
Having won the decision, Northrop's challenge may now be to hang on to the prize. Boeing's political supporters vowed to fight the decision, objecting most strongly to the Northrop plane's foreign pedigree. The tanker's airframe is based on an A330 commercial jet assembled in France by Airbus, an EADS subsidiary.
"We are shocked that the Air Force tapped a European company and its foreign workers to provide a tanker to our American military," said U.S. Sen. Patty Murray, D-Wash., who said she looked forward to confronting the Air Force about its choice.
Boeing, which built the Air Force's existing fleet of more than 500 KC-135 tankers, expressed strong disappointment with the decision. The company could challenge the award in a formal protest before the U.S. Government Accountability Office, but said Friday it needed time to review its options.
"Boeing will probably try to overturn the result, but that will be hard because the Air Force did not rate their proposal as superior in any measure," said defense analyst Loren Thompson. "Anyone who tries to raise the 'made in America' banner on Boeing's behalf has to explain why they want to force an inferior plane on America's warfighters."
Alabama officials said they were ready to defend the Air Force's choice.
"There's no doubt whoever is selected is in a far stronger position than the protester," said U.S. Sen. Jeff Sessions, R-Mobile, a former federal prosecutor.
The Air Force said it hoped to avoid a protest because it desperately needs the new planes as quickly as possible. The new tanker is the Air Force's top priority and is designed to replace its aging KC-135s, which average nearly 50 years in service.
"It's absolutely important and critical for us to get on with this," Air Force Gen. Arthur Lichte said at a Pentagon news conference announcing the award.
Throughout the contest, Northrop touted the versatility of its tanker compared to Boeing's KC-767. The Northrop plane's larger size enabled it to carry greater amounts of cargo and passengers in addition to fuel.
Boeing positioned its tanker as the patriotic choice, playing up its American content and its potential to support U.S. jobs. But Lichte, who oversees the service's Air Mobility Command, argued that the Northrop plane's foreign roots were not an issue.
"This is an American tanker," he said. "It's flown by American airmen. It has a big American flag on the tail, and every day, it'll be out there saving American lives."
Boeing won a previous contract to lease 100 tankers to the Air Force immediately after the Sept. 11 terrorist attacks. But the $23.5 billion deal collapsed in scandal two years later when lawmakers led by U.S. Sen. John McCain, R-Ariz., exposed a scheme in with the Air Force and Boeing conspired to inflate the contract's value.
Despite the loss, Boeing is riding high on its commercial success. The company racked up 1,413 plane orders last year and turned a record profit of $4.1 billion. But the loss will hurt in ways beyond the pocketbook, analysts said. The deal could give Airbus, Boeing's archrival, a long-sought foothold in America. It could also establish EADS as a major player in the U.S. defense market.
"This is a stunning blow to Boeing -- not from a financial standpoint but from a prestige view," said Scott Hamilton, an aerospace analyst in the Seattle area.
The tanker award is the second major economic victory for Mobile in less than a year. Last May, German steelmaker ThyssenKrupp AG announced plans to build a massive, $3.7 billion steel finishing plant just north of the city.
"Our state is on a roll economically," said U.S. Sen. Richard Shelby, R-Tuscaloosa. "Bringing these jobs to Alabama will solidify our stellar reputation as an industrial leader and send a strong message to the rest of the world: Alabama is open for business."
State and local governments offered Northrop and EADS $120 million in incentives in support of the planned $600 million assembly complex and an Airbus engineering center already in operation at Brookley. The state will pick up $77.5 million of the total.
The lion's share of the money -- $95 million -- will go toward facility construction, with the rest split between site preparation, dock improvements and workforce training.
Neal Wade, director of the Alabama Development Office, called the deal "a tremendous aerospace shot" for the state and Mobile. "We've been working with suppliers and EADS over the last two years, and met with a number of them," he said. "We are going to be immediately starting to make sure that all suppliers for this project look into (locating) into Alabama."
State and local officials spent a tense Leap Day waiting for the announcement. The Air Force held its choice in secret until disclosing it to key lawmakers shortly after 4 p.m. EST, when U.S. markets closed.
Northrop chief executive Ron Sugar said he got word of the decision in a phone call from Air Force Secretary Michael Wynne around 4:30 p.m. EST.
"He said we made a very compelling offer and congratulated us on winning the KC-45A contract," Sugar said in a phone interview Friday. "It's a very significant, positive step for our company and for the Air Force. And it's a terrific step for Mobile, which is about to be transformed in a way few people there might imagine."
Sweetening the win for Mobile, Airbus has announced plans to shift production of a freighter version of the A330 to the new plant, potentially adding 300 jobs.
"We already have begun the work necessary to expand our U.S. industrial footprint in support of this important program," said Ralph D. Crosby, Jr., chairman and chief executive of EADS North America.
Construction of the factory could begin within the next three months, according to local officials. The Air Force wants its first planes delivered in 2013, and its budget projections call for the purchase of about 15 planes annually.
The assembly jobs are expected to pay salaries of about $65,000, or more than 50 percent above the state average for manufacturing work. Another 5,000 jobs could be created statewide, according to Northrop.
Local business leaders hailed the decision as a triumph for Mobile, which has ambitions of becoming the world's next great aerospace capital. Large aircraft currently are assembled just two places in the world -- the Seattle area, where Boeing's production is based, and Toulouse, France, the home of Airbus.
"Today marks the dawn of a new era for Mobile, and I couldn't be more proud of our city and our state than I am right now," said U.S. Rep. Jo Bonner, R-Mobile. "Neither the Air Force nor the warfighter will be disappointed."
(Brian Lyman of the Press-Register's Capital Bureau contributed to this report.)
Air Force reasoning
Posted by George Altman, Staff Reporter February 29,
2008 6:03 PMAir Force officials said in a press release that the KC-45A represented the best value and will be a significant upgrade from the current "Eisenhower-era" fleet of tankers.
"The KC-45A will provide significantly greater air refueling capabilities," the statement said, adding that the planes will also have new defensive systems that will allow it to enter dangerous environments.
The decision was the result of years of work by acquisitions officials, the release said.
"Through these efforts we believe we will provide a higher-value resource to the warfighter and the taxpayer," said Secretary of the Air Force, Michael Wynne.
Boeing loses $40B air refueling tanker bid to Northrop, EADS
http://www.freerepublic.com/focus/f-news/1978836/posts
EADS/Northrop upsets Boeing in Air Force tanker competition — analyst
http://www.freerepublic.com/focus/f-chat/1978471/posts
Northrop/EADS wins [Air Force] tanker contract
http://www.freerepublic.com/focus/f-news/1978473/posts
Alabama And Mobile Excited Over $40 Billion Deal (Air Force Tanker)
http://www.freerepublic.com/focus/f-news/1978655/posts
Congress in turmoil over Air Force tanker decision
http://www.freerepublic.com/focus/f-news/1978622/posts
U.S. Job Creation Not a Factor in Tanker Contract Award
http://www.freerepublic.com/focus/f-news/1978620/posts
Shoot-It’s worse than I thought. I thought Alabama would get a couple thousand jobs, but they are not assembling all the planes-only a few.
The decision was the result of years of lobbying by Airbus.
Well, Senator Murray, perhaps you should have stayed a bit closer to the project. Confronting the AF after the horse has left the barn? You should be ashamed of yourself. To you, the government is supposed to provide jobs and you were asleep at the wheel.
I think Boeing will shut down the 767 line if it can’t get any more commercial order orders for it. The line has been running at about the minimal economically sustainable rate of 12 per year just to keep it warm for the KC-45. Boeing really shot itself in the foot with the leasing scandal. If that hadn’t happened perhaps Boeing would have already built most of the initial 100 767 tankers and the USAF would have already been able to start retiring the KC-135E’s. Perhaps the KC-30 is the best tanker available four years from now from a new factory built in Alabama, but the existing 767 line had the spare capacity five years ago. The point of the leasing arrangement was to decrease the upfront acquisition costs and get more tankers built more quickly. As a pure KC-135 replacement at existing bases, the 767 is probably superior due to the need for minimal changes to hangers.
The Air Force is doing all it can to keep capacity available.
Lockheed got the fighters, but lost the C-5 upgrade and the antisub. Boeing got the antisub and will probably get the C-17 deal, but lost the tankers. Now Northrop got the tankers, to keep them in the game for this round.
Last time around, Northrup got bombers, Lockheed got the cargo and anti-sub, and what is now Boeing had the fighters (and the tankers).
Something for everyone maintains at least a minimal strategic base.
"One lawmaker called the decision to award the contract to Northrop Grumman a blow to the American defense industry and an economic boon for European countries.
"These are the same European governments who are unwilling to support us in the global war on terror and over the last few months refused to provide even an additional 100 soldiers apiece for Afghanistan operations," said Rep. Duncan Hunter, R-California.
"Instead, we have to send 3,200 additional U.S. Marines to Afghanistan while they take $35 billion in American taxpayer contracts."
of the $40 billion How much goes to the EU?
Northrup’s site says 42% of the project is to be done in the EU; Tolusee France.
Today a dollar is 0.661% of a EURO.
http://www.northropgrumman.com/kc30/operations/section.html
The KC-135R's have to go into the depot for heavy maintenance every four or five years for something like 9 months. The GAO had a report suggesting that with about 430 KC-135R and C-135R aircraft in the USAF inventory that about 100 National Guard KC-135E's could be converted to KC-135R's and just get engines with planes entering depot maintenance. That way perfectly good CFM-56 engines wouldn't just be sitting on aircraft undergoing mainentance.
Last time around, Northrup got bombers, Lockheed got the cargo and anti-sub, and what is now Boeing had the fighters (and the tankers).
Something for everyone maintains at least a minimal strategic base."
Which of the above projects were made in partnership with a foreign nation?
I'd like 100% of the project made in Alabama.
Once the Alabama line is up and running, Airbus will likely shut down the 330 line in Europe. Some parts will continue to come from there, but it will be as much an American plane in 10 years as the Boeing would have been.
Which of the above projects were made in partnership with a foreign nation?
F-35 clearly fits that definition. But let me ask a clarifying question:
Do you consider the Chinese parts in the 737/P-8 to be made by companies that are free of governmental influence?
And Boeing probably could have won that contract in a fair competition. By paying the bribes, they ended up tainting the whole deal.
Absolutely. It cost Boeing big time along with their president and other high ranking empolyees.
Many people simply won’t hear that the KC-45A is the choice.
This has more to do with pride then knowledge.
P.s. Rumors said that EADS closed some of it’s european factories last year to bring ‘em to Alabama. Not only for the KC-45.
P.p.s. Why did nobody rumor when MD ( now part of Boeing ) sell european fighter jets AV-8 Harrier to the marines ?
“Which of the above projects were made in partnership with a foreign nation?”
I’d guess almost every ‘conventional’ project got done this way. The only thing i know for sure is that almost every modern ‘US’ Air-to-Air missiles guidance system is at least designed in germany by diehl. For the AIM-9 Sidewinder i know that at least the ones the navy purchased are even built in Germany by diehl defence systems.
It is also known that BAE (British Aerospace) is building some integral parts of the F-35 JSF.
It also works in the other direction.
Diehl sells the Predator UAV to european armies as
Rheimetall sells a modified globalHawk UAV to european armies.
It’s simply bussiness poker and boeing pulled the ‘american pride’ joker card, hoping to get over the better value/price of EADS with it.
More importantly they lost the edge. Back then they had the technology - a boom equipped tanker in the air. Northrop-Grumman/EADS had a promise to develop the A-330 tanker and a boom system
Three years on. EADS has it's boom equipped KC-30B (same as the KC-45A) for the Australian order in the air, and is flying the first aircraft for the US order ("We get the order, this actual aircraft is yours, if not then it goes into the British, Austalian, Saudi, or UAE order")
Meabwhile Boeing is promising to turn the 767LRF (itself under development) into the 767AdvancedTanker - with new engines, cockpit, and other stuff
The USAFs's perception of program risk (hardware vrs development) has changed.
The USAFs's perception of program risk (hardware vrs development) has changed.
The 767LRF was a pretty simple upgrade of the 767-200ERF based on components already developed for the 767-400ER. The upgraded cockpit has been flying for years as well as the wings and landing gear. Probably the changes in the proposals were a response to the performance of the KC-30 in lifting larger fuel loads. The 767LRF wouldn't have matched the KC-30, but it would have fit in the same apron space as a KC-135 and been able to use the same hangers with minimal modifications to the doors. Also when supporting combat missions the ability to have more booms in the air is more important than having more fuel per tanker.
Can someone provide an accurate assessment of who the prime contractor is for this award?
Is it Northrop-EADS or is it EADS-Northrop?
Is it Northrop-EADS or is it EADS-Northrop?
I think it's Northrup/Grumman-EADS. Northrop/Grumman is the lead contractor, and they are the company that actually designed the equipment that actually makes the plane a tanker rather than just a cargo plane. The bid rules required that the planes had to be built in the US by a US company, and that US company had to be the lead contractor. Northrup/Grumman sought out EADS to supply the airframe, because there's really just two choices for large commercial transport airframes Boeing or Airbus. Northrup/Grumman has experience putting complex military systems in other manufacturers aircraft.
Grumman before it merged with Northrup built the E-8 which does for coordinating ground combat what the E-3 AWACS does for air combat. The biggest problem they had with the program was putting it on used 707 airframes that had been retired by airlines. By the time they refurbished them and replaced all the corroded metal, they spent more money than they would have if the USAF had bought brand new 707 airframes off the E-3 line. By the time the problems with the old air frames became apparent, Boeing had already closed the 707 line with the completion of the last E-6 aircraft for the US Navy.
Boeing had its own aircraft and had partnered with other companies for systems for its tanker bid.
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