Posted on 09/18/2008 4:23:27 AM PDT by MHalblaub
The Pentagon's top weapons buyer said the proposed aerial refueling tankers from both Northrop Grumman and Boeing were "technically outstanding" but differed by almost $3 billion on price.
John Young, the undersecretary for acquisition, technology and logistics, said in an interview at the Pentagon yesterday that under the tanker proposal from Northrop Grumman and its partner European Aeronautic Defence & Space, developing the first 68 aircraft would have cost $12.5 billion, compared with $15.4 billion under Boeing's plan.
(Excerpt) Read more at washingtonpost.com ...
Wow. A 20% price differential.
Then the (the French) would have charged 6 billion in overruns ..... For 1/2 as many aircraft.
One B-2 bomber by Northrup ended up costing MORE than an entire missile ship and weapons for the Navy.
Northrup ending up killing the Seal Team’s little battery-powered ASDS submarine by cost overruns and low-balling its initial bid, without a real design in hand.
Well, Boeing needs to pay its Congressmen somehow.
However, military construction costs associated with the KC-30, which some have said were too low, offset the bottom line for NG/EADS, making the final MPLCC for the two offerings within a couple of million of each other.
For an interesting article that cannot be posted here, read this:
Rob Cook posted: “Then the (the French) would have charged 6 billion in overruns ..... For 1/2 as many aircraft.”
EVERY defense contract has clauses that permit all kinds of ways for the eventual price to run more than the bid price.
Who is to say, at this point, that the Boeing bid did not have $3 billion more in honesty about the final price, than Northrup Grumman.
It is a sure thing that whether $12.x billion or $15.x billion the final deal WILL cost the U.S. Treasury more than what was bid.
The better question is: who had the better deal; whose plane looked “better” (dozens of ways to measure that) right out of the plant and with ten, 15, 20 years of use down the road.
Some say we shouldn’t restrict defense contracts too much to “American” suppliers.
Sorry, as much as “free trade” has it’s economic pluses, that I support, IT CANNOT BE the primary concern in matters of national defense.
If they don’t have to deal with a competing tender, Boeing is going to add $12 billion more ‘honesty’ to their next bid. Which taxpayers will pay for.
Yup and Lockheed had a better plane. The contract went to Northrup just to keep them afloat.
Why do I think some of the savings comes from using Pakistani workers at the Europe plant??
That’s the purchase price. More significant is the projected operating costs.
Union surcharge! ;-)
For those unfamiliar with government contracting, IT IS NOT ABOUT THE BID PRICE!!!!!
1-Are ALL of the requirements defined?
2-Is the bid price realistic?
3-What is the company’s record for delivering on time, on budget?
4-Who is the Prime Contractor teamed with and what is their record?
“If they don’t have to deal with a competing tender, Boeing is going to add $12 billion more ‘honesty’ to their next bid. Which taxpayers will pay for.”
Boeing, or Northrup Grumman would have added more than enough, competing bidder or not. Don’t think the additions would be any more, AFTER THE BID, just because a major bidder was out of the game - it wouldn’t.
I've been in this business for 25 years.
I would not put it past the Europeans to do much creative lying. Remember, the French are behind the Airbus consortium.
I think the USAF has completely and totally screwed up this competition. They should issue an award to one prime with a directed subcontract to the other. Then move on with the program because it is very much a matter of national security.
How would that work, exactly? Order green aircraft from Boeing, then have Northrop Grumman modify it into a tanker, instead of Boeing's Witchita facility? Or have Airbus build A330-200F kits, ship them to Mobile for assembly, then off to Boeing's Witchita for tankerization?
This isn't like the F-35 where you can have one company fabricate the fuselage and another company fabricate the wings. The only win-win in this scenario is to award a split buy for both aircraft.
The $85 billion AIG bailout would have easily paid for both programs simultaneously and we could have replaced ALL of the KC-135s within 10 years.
Because Boeing never bids on contracts that are above their pay-grade, have costs and delivery time blow out with never getting to deliver a working system - except all the time.
JP-129 UAV, 737 Wedgetail AWACS, not to mention the Italian and japanese tankers
Only way I see that working would be to direct Airbus to use Boeing, and existing facilities, for US assembly. Of course, that would cut NG out of all the goodies proposed for Alabama and leave them essentially as overseers of a competitor's work. Not a good situation.
(It would, however, preserve the myth that NG actually had a role beyond being the front man.)
In response to a couple of other posts here:
I think this is the first time AF has claimed a noteworthy price difference, in past they've indicated that evaluated prices were very close.
It is incredibly difficult to do cost analysis and comparison between US and European firms. Legal and accounting process' are different, the Euros don't much care about our little requirements, and many don't apply anyway.
Finally, along with clarity of the requirement, the buyer is required to apply same (known) cost and technical criteria to both bidders, and provide both with the same (timely) information. AF appears to have missed on all those counts.
I still believe that Boeing was along only to help the feds 'prove' that canceling the earlier lease deal was a proper action - that Boeing was never intended to win.
Interestingly enough, from Flying Wing through YF-17 that role was assumed to be reserved for the old Northrop Company.
Perhaps I have overlooked a post that makes my point but the Airbus is a larger plane requiring numerous modifications to forward airbases. The Boeing offer requires very little with respect to increased costs to infrastructure not to mention operating costs.
Seems to me we need only look at the American Auto industry as in big SUVs.
It's the winner's aircraft that gets built, just that some of it is done at the loser's facility. Obviously there is some technology transfer but this is no problem because by the time this program is over 20 years will have elapsed.
An arrangement like this assumes that it's all about the money to the losers, and not their own airplane, and basically that's true.
I can imagine Boeing signing onto something like this if they were declared the winner. NGC and Airbus would love to build parts of the 767 and makes lots of money doing it.
I can imagine Boeing not participating if the tides were turned.
It's happened many times in the past. Boeing already outsources most of its work anyway. They retain systems engineering responsibilty but outsource 45% of the rest.
Yes, I know it's easy to by cynical but again, in the end, to each corporation, it's about money, although to Boeing I expect it's about pride, also.
And why would the Government do it? To avoid another long, drawn-out expensive procurement that takes 2-3 years. Protests after the next one might tie up Congress and the GAO for years. And the USAF never gets its tanker.
And if you want my real opinion, I thought that Boeing NEVER had a chance of winning this competition, regardless of price or airplane. After the lease deal fell through, the resultant controversy, and the indictment of their executive (and former USAF Acquisition Executive) Darlene Druyun, the chances of Boeing winning were nil.
If you're a Boeing employee, I'm not trying to get your hackles raised. I'm neither an employee of Airbus or NGC but I've been in the defense industry for 25 years and have been in the boardrooms where strategic decisions like these are made,and have also observed first-hand acquisition decisions which reflect these realities.
Boeing’s main objective was to prevent Airbus from starting an assembly line in North America. Had NG/EADS prevailed, Airbus would have moved civilian A330-200F production to the same Mobile assemby plant that was to be built for the KC-30. Airbus would have benefited from having a facility where costs were in the same US Dollars that their aircraft are priced in. Same strategy that the European and Japanese automakers have used for the past twenty years.
But again, the original purpose of the KC-X was to get a fastracked tanker by specifying a COTS airframe converted to a tanker. As such, the airframe is already being manufactured, and is not a candidate for the same sort of Prime Contractor/Lead Subcontractor that the F-22 and F-35 programs used.
As for being about money flowing to the manufacturers, Boeing has over $400 billion in backorders for their 777 and 787. The $35 billion KC-X contract would have meant little to their bottom line. But the reason spelled out in paragraph one above ment a whole lot to their bottom line.
And in spite of being flamed by several America First types here, I also supported the KC-30 offering after I actually saw the responses to the bids. NG/EADS offered more plane for the same money. EADS/Airbus may have lowballed the airframe in order to get their foot in the US Defense Procurement door, but the US taxpayer benefits. With the exception of the airframe itself, all of the refueling equipment, engines, and avionics were to be US sourced, so there was no danger of being ‘cutoff’ by a miffed France. As for industrial base, Boeing isn’t going to go away if they lose the contract. Their industrial base will be more than sustained with their 747-8, 777, and 787 programs, as well as their upcoming replacement for the 737.
The only downside to choosing NG/EADS over Boeing was to the IAM that is currently on strike.
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