Posted on 02/24/2010 3:07:35 PM PST by Yo-Yo
Some changes to the contract pricing structure of the KC-X program will be announced later today by the Defense Dept., according to slides of a tanker presentation obtained by Aviation Week.
Both Boeing and Northrop Grumman/EADS North America, the two would-be competitors, complained that the fixed-price demand by the Pentagon for the production lots placed too much risk in the contractor’s lap. Based on the draft request for proposals (RFP) from September 2009, the first five lots would have been locked in at a fixed price.
Now, however, the pricing structure allows for fixed price for only Lots 1-2. Inflation adjustments are now allowed for Lots 3-13.
Pentagon officials say the fixed-price incentive contact structure for the development phase remains as described in the draft RFP. However, more information on the allowances of this structure are coming to light than previously disclosed by defense officials, including a breakdown of how additional costs would be funded if they crop up in the development phase. “The contract geometry is a 60/40 (government to industry) share ratio with a 125% ceiling and a 12% target profit,” according to the briefing. “ This is ample protection to cover potential integration risk during the [development] phase.”
The Pentagon still plans to conduct a pass/fail review of the mandatory requirements. This strategy was criticized by Northrop and EADS officials who said it dumbed down the competition to favor the least capable aircraft. The briefing notes some changes to those requirements.
The Large Aircraft Infrared Countermeasures will now be government furnished rather than included in the contractors’ prices. Also, the requirement for a microwave landing system, which aids with night or bad weather landings, has been eliminated. Officials say the system is no longer needed. Also, adjustments were made to the quick-start requirements and those for the non-ozone depleting fire suppression systems onboard.
Overall, Pentagon officials are expected to characterize the competition as “best value,” though the 1% price gate will still be in place. This means that additional factors that Northrop sees as advantageous to its offering will not be considered unless the two proposals are within 1% of each other on price. Air Mobility Command, which will operate the aircraft, “does not want to pay a significant premium for non-mandatory requirements,” the briefing says. “The department believes that the anticipated value of the 1% gate (potentially in the $300-500 million range) is a reasonable amount to pay for these non-mandatory requirements.”
Northrop and EADS officials had also complained that the draft RFP did not provide a subjective review of program risk, exposing the government to additional cost if a bidder offers an overly ambitious low price.
Defense Dept. officials still plan to use a pass/fail structure of assessing whether bidders can meet the basic requirements of the system. “To be rated acceptable in technology maturity, potential offerors must substantiate that all critical technologies are at readiness level of at least 6 [or tested in an operationally relevant environment], along with an approach to maturing technologies to a level 9,” the briefing says.
Officials say that the systems engineering and technology maturity risk “will be low because both expected offerors have built and tested tankers for international customers,” according to the briefing.
The desired fuel offload rate from the boom is also expected to stay the same at 1,200 gallons per minute (GPM). Boeing officials had questioned this area, but Air Force officials do “not want the KC-X to have less capability than the KC-135” in this area. The KC-135’s boom offers 1,176 GPM offload.
Jean Chamberlain, the vice president of Boeing’s tanker program, says Boeing has been working on a boom that can meet the requirement, but a prototype will not fly until the development phase of the tanker program. EADS’s boom offered for Australia and other nations, which is now in flight testing, can meet the requirement.
Though Boeing has not formally stated whether it would offer a 767- or 777-based tanker, these requirements point squarely to using the 767 as a baseline to monopolize on the reduced cost of the smaller platform.
Air Force officials still plan to buy 179 tankers through KC-X to replacing aging KC-135s. The first deliveries are expected in 2015 with initial operational capability in 2017.
Offerors will have 75 days to respond, and the government will review the proposals for 120 days prior to selecting a winner if there is a competition. Northrop CEO Wes Bush threatened not to bid in a Dec. 1, 2009, letter to the Pentagon because of the company’s qualms with how the competition would be judged.
Initial reaction from Capitol Hill has fallen along predictable lines. Sen. Patty Murray (D-Wash.), a vocal Boeing proponent, appeared pleased with what she learned in congressional briefings. “Our state and nation need this contract now more than ever,” she said in an emailed statement. “The bottom line is that the tanker brings jobs.”
Sen. Richard Shelby (R), whose Alabama state would be home to final assembly work on the earlier Northrop-EADS plan, slammed defense officials for not changing the RFP enough. “The final RFP discredits the integrity of the entire process,” he said on Senate Web site. “Additional capabilities that would better protect the lives of our men and women in uniform were neglected in the draft RFP. Substantial changes that bring those factors into consideration in the final RFP are necessary to have a full and transparent competition, yet the Air Force did not make a single revision to the key warfighter requirements.”
- Amy Butler ~abutler@aviationweek.com
Photo credit: Northrop Grumman
If we buy AIRBUS (EADS is AIRBUS ) and ship the bulk of our military aerospace manufacturing offshore, we deserve to be the lackeys of France and China.
When the KC-X was first bid, the contract for 179 tankers was estimated to be worth $40 billion.
After NG-EADS won the first KC-X go around, they bid $35 billion, less that what Boeing bid.
Now that the RFP is out, and the changes that NG-EADS wanted were not made, they probably won’t bid, leaving it to Boeing.
Look for the KC-X to once again be a $40 billion contract.
- speed of aircraft is neglected
- faked mission profiles are used for fuel calculations (for aircraft wear different mission profiles are used)
- use as an airlifter is not properly considered (1 % of all missions)
-Air Force neglects the fleet effectiveness value for fuel costs
Calculation of the Military Construction (MILCON) costs is also doubtful because the fleet effectiveness value is also not considered.
NG should protest against such a consciously distorted program at GAO and withhold an offer.
The thing that really bothered me in this SRD and in the previous bid that NG-EADS won, is that in calculating takeoff performance, they specify max gross takeoff weight, instead of “takeoff with at least 200,000 lbs of fuel.”
The A330-200 could operate out of 6,000 ft fields at the same fuel load as a maxed out KC-767, which needed 10,000 ft.
What’s wrong with paying a premium to have the aircraft made in the US (I know EADS is setting a production line somewhere in the south) by a US company?
They are doing final assembly of the fueling system.
The airframes will fly over from europe.
Only the first 4. The rest have been produced in Mobile right in the same way as the 787 in Everett.
The wings are made in Germany, the fuselage barrels in France,Spain,and Italy, The engines in France.... The list goes on
Same thing for fuel reserve after landing in percent of fuel load at takeoff instead of fuel for e.g. 2 hours.
Still to be found within the latest RFP.
By that well known French firm General Electric
Stop making stuff up.
CFM, CFM56 and the CFM logo are all trademarks of CFM International, a 50/50 Joint company of Snecma (SAFRAN Group) and General Electric.
NG-EADS bid the General Electric CF6-80 for their KC-45, not the CFM-56 that the KC-135R currently uses. Boeing bid the PW-4062 last time around.
And many parts of the 767 are made outside of the US.
the bids were not $5B apart.
The AF abitrarily added cost to Boeing’s bid for risk. The GAO found a math error in the AF numbers and the Boeing bid was actually the lower bid.
this is even after the AF neglected real world issues like ramp space.
A330 wings are built in the UK.
I think the major assembly work was going to be done in Alabama. Apparently the Air Force was told to keep changing the contract until Boeing got the job.
Whose only product is the CFM-56, an engine in the 18-34,000lb range. And yes GE builds them to power the Boeing KC-135R and Boeing P-8
However the NorthropGrumman/EADS KC330/KC-45 needs engines of 72000lb thrust. They are General Electric CF6-80s
The core technology is the design and how to make the pieces, not how to follow assembly instructions.
The competition by NG-EADS brought the costs down to $35 billion.
The tanker Boeing bid was based on a civil Boeing 767-200LRF, which has never been built, which violated the spirit of the requirement that the tanker aircraft be based on COTS airframes.
The NG-EADS tanker was the same airframe as is being delivered to the RAAF.
And for this bid, the requirement is for a boom that can deliver 1,200 GPM. The A330 MRTT boom can deliver 1,200 GPM. The Boom that Boeing built for the Italian and Japanese KC-767s can only deliver 900 GPM.
If Boeing wins this contract, they will have to develop a 1,200 GPM boom, causing extra uncertanity in their ability to deliver on time.
The core technology is in the engines (US built,) the refueling boom (US built,) the wing and centerline refueling hose and drouges (US built,) and the military-specific avionics (US built.)
The fact that Boeing can rebuild wings for the Fairchild Republic A-10 tells me that the sheet aluminum ain't all that complicated.
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