Posted on 12/07/2010 7:43:52 AM PST by sukhoi-30mki
Time to Split the Baby
A solution to the Air Force’s tanker woes.
John Noonan
December 13, 2010, Vol. 16, No. 13
Few defense acquisition tales have been as sordid as that of the U.S. Air Force’s new refueling tanker, the KC-X. The tanker acquisition program first popped up on the national radar screen in 2001, when Senator John McCain called into question a no-bid contract that would have leased modified Boeing 767s to the Air Force instead of purchasing a new tanker outright. An ensuing corruption scandal marred the leasing deal beyond recognition. In the years since, the issue has been punted by both the Pentagon and Congress to new administrations and new budgets, tangled up by defense contractors’ waffling between new bids, no bids, and retracted bids, and unnecessarily delayed by elected officials’ squabbling over jobs and pork.
The need for a new tanker aircraft is pressing. The backbone of the aerial refueler fleet, the KC-135, was initially fielded in the 1950s. Though heavy modifications have managed to keep the plane flying into its sixth decade of service, corrosion and age have inflated maintenance costs to troublesome levels. The tanker fleet was originally designed to support Strategic Air Command’s storied bomber force, giving long range B-52s the legs to hit targets deep inside the Soviet Union. Since the end of the Cold War and the rise of America’s new role as chief custodian of global stability, the refueler armada has been tasked with a much broader mission.
America projects military power through two key avenues—air and sea. Tankers provide a capability similar to that of aircraft carriers, in that they provide our fighters and bombers the range to penetrate enemy airspace and return. Refuelers allowed B-2 bombers to strike targets in the Middle East from their home base in Missouri and fighter aircraft to loiter indefinitely over hostile territory in Afghanistan. They transport troops and cargo as well as fuel, serving as some of the most versatile assets in the Pentagon’s inventory.
So it is astonishing that it has taken Congress so long to replace a tool critical to America’s far-reaching global responsibilities. Since the 2001 scandal, the fight to replace the aging tanker fleet has grown uglier. After the corruption investigation resulted in indictments for several senior company officials, Boeing reinvented itself, returning to the tanker fight in the mid-2000s with a snazzy new bid. By this time, an alliance of Northrop Grumman and the European Aeronautic Defense & Space Company (EADS) had submitted a bid of their own, ultimately upsetting the heavily favored Boeing to win the KC-X contract in 2008. Boeing protested through the Government Accounting Office, a political bar fight erupted, Northrop Grumman withdrew its bid, forcing EADS to go it alone, and two years later the Air Force is still without its long overdue replacement tanker.
Both proposed aircraft, the KC-30 built on an Airbus model by Northrop-EADS and the KC-767 constructed by Boeing, have a fair claim to the contract. The KC-30 is a larger jet and can carry 20 percent more fuel, 20 percent more passengers, and 30 percent more cargo than its Boeing counterpart. In short, it’s a more capable aircraft. Further, the Boeing 767 is at the end of its service life. That makes it a somewhat dubious replacement given that the KC-X is intended to fly for the next 40 years.
But the Boeing plane has a strong appeal to those in Congress who are interested in both creating jobs and saving money. Their economic argument is powerful. Innovations in refueling technology allow for the 767 to transfer gas more efficiently, and—being the smaller of the two planes—it consumes less fuel than the EADS bird. Smaller size, says Boeing, is an advantage in that it allows more planes to cram into the crowded flight lines on U.S. bases in Asia. And independent studies have found that the KC-767 would be 20 to 25 percent cheaper to own and operate than the Airbus model. Further, Boeing is an American company and the creator of the KC-135, which has proven to be a fantastic aircraft that has lasted far beyond initial projections. Selection of Boeing’s model means that the tanker fleet’s maintenance and logistical jobs would stay in the States instead of being exported to France. These dueling claims, coupled with an uneven developmental history, have turned the KC-X debate into the Gordian Knot of the defense acquisition world.
Fortunately, there is a way to cut that knot. The Air Force tanker force structure is currently an 80/20 split between “big and little” tankers—80 percent little (the KC-135) and 20 percent big (the KC-10 Extender). This strategy was laid out in a time when the KC-10 was still relatively new. Now that jet is creeping up on its fourth decade of service and is beginning to show its age.
With Airbus and Boeing producing capable aircraft with unique advantages, Congress could split the baby with a 50/50 buy from Airbus and Boeing, replacing both the KC-10 and the KC-135. It should also be noted that the Air Force rejected a mixed-fleet replacement for the KC-135 in 2007, claiming that it would unnecessarily inflate costs. But that math is fuzzy and didn’t factor in replacing the KC‑10 as well. With a budget to buy 15 airframes a year, splitting the fleet would force strong competition between Boeing and Airbus to control construction and sustainment costs.
One fact that has emerged from the gnarly world of defense acquisition is that competition is a proven cost-control mechanism. The so-called F-16 “engine wars” during the 1980s ended up saving the Pentagon billions, as did comparable fights over cruise missile and Navy systems contracts. As the KC-X program is projected to last 40 years, allowing for either EADS or Boeing to have a monopoly on logistics, maintenance, and refurbishment, contracts could significantly inflate both the ownership and operation price tag.
Further, this approach makes the most sense from a capabilities standpoint. In 2008, the entire fleet of C‑model F-15s was grounded owing to a structural flaw. As a result, Canada’s limited inventory of CF-18 interceptors had to take over a significant portion of the North American air defense mission. A similar flaw in the new tanker, should we hold ourselves to a single model, could be catastrophic. F‑15Cs have a sole mission: air interdiction. The KC-X will have many. The effects of a grounding would be felt throughout the entire military, and it would instantly reduce the combat capability of the rest of the Air Force fleet, hamper our capacity to transport men and materials to overseas stations, and also restrict the range of Navy and Marine aircraft that rely on Air Force refuelers. Pragmatic redundancy in the military world is never a bad thing; indeed, it is one of the guiding principles of modern warfare.
Given the deep complexities of the KC-X fight, there is no silver bullet here. But both Congress and the Pentagon should be careful to keep the interests of our fighting men and women at the forefront of this debate. A hybrid fleet of Airbus and Boeing planes provides the best solution to a tough problem, both from a cost perspective and—more important—from a capabilities standpoint.
In the end, the real enemy is further dallying. The Air Force needed this jet a decade ago; the longer we wait, the more the overall buy will cost. Crafting a strong, annual competition between Boeing and EADS, replacing both the KC-135 and the KC-10, and swiftly standing up squadrons of new tankers should be a top priority of the new Congress.
John Noonan is a policy adviser at the Foreign Policy Initiative.
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One can’t blame the USAF for not looking at the subsidies issue-that is not their turf in legal terms. That was cleared by the DOD itself. Issues such as life-cycle costs and simulations can be debated for years with each side making claims of having the better/cheaper/efficient product.
I’ve been saying all along that the final solution would be to split the contract between the two companies, thus guaranteeing that the Air Force will get fewer aircraft for more money that had it been a single-source deal.
Airbus viewed the data sent to it by mistake (by the USAF), whereas Boeing didn't even open the disk. . .saw what it was and re-sealed the package and notified security, locked it up and reported it to USAF. Just who is the honest broker here? Not Airbus.
Life cycle costs are computed all the time in major DoD bids, and in this case, the USAF is not accurately reviewing that data and even ignoring factors that must be considered.
Loren's arguments stand on the facts.
Where did the subsidies come from? If they were paid by a foreign country, I say great. It's about time someone outside of the USA pays a bit for the defense we provide to the world.
As for building new KC-135 and KC-10 airframes, why not, the C-130 is still in use and is still being made. The airframes are proven, add newer avionics, engines, and advanced materials and you have a familiar airframe with increased capabilities.
Now on to the tinfoil hat part of my rant. Tankers are what allow us to project power (in addition to the Navy of course). No tankers and our ability to project power is severely limited. Methinks those that want the USA neutered have a hand in the delays with this program.
Change of Air Force leadership and all is forgiven, and complete change in Boeing leadership (and proven integrity in this recent case), and Boeing still sufferers from the stink-eye?
That was my point in post #12.
Change of Air Force leadership and all is forgiven, and complete change in Boeing leadership (and proven integrity in this recent case), and Boeing still sufferers from the stink-eye?
Quite the contrary. I use to work for Boeing, I am proud of my time there and the services and product we provided. My point is (the same point 'pecos' made earlier) that this has been one of the biggest screw ups in procurement history (and a lot of the players f'd it up at different points in the saga).
Oh, I don't know about that. This mechanic says that two parts inventories and supply-chains, two sets of training manuals, two sets of procedures, service bulletins, etc. isn't exactly an unalloyed blessing for military logistics. Then there are start-up costs to disburse over smaller production runs and twice the cost of contract administration and quality control.
The real world is full of trade-offs, always.
Life-cycle costs can be assessed from a variety of angles, size of product being one of them. The Airbus will have access to a more active logistics chain given the fact that the civilian 330 will be in production (given the delays to the 350) and service longer than 767, which adds up to costs savings.
Which is why I said arguments over life-cycle costs as well as simulations cannot be seen as decisive as both sides have valid arguments.
Frankly, I don’t give a damn if “Chicago” or something or someone else in the United States will benefit from either deal.
I only care about what would seem best, in the long run FOR THE UNITED STATES AIR FORCE and FOR THE UNITED STATES.
I am not concerned about giving too much priority to playing politics with Europeans over our military contracts when they have spent so little on their own military for over 50 years. If they don’t have a robust military equipment industry, without our contracts, that’s their fault.
However, if keeping a semblance of that trans-Atlantic comity alive is really needed, I would make the deal split as is the current inventory - 80/20 - with 80% going to the cheaper to maintain, somewhat smaller capacity Boeing and 20% to the larger capacity Airbus.
Cool. I was unaware of this, which is why I am not an engineer. Thanks for the information...and for not “laughing”. ;-)
Much like the current KC-135/KC-10 split. . .interesting thought.
We are in violent agreement.
;-)
It did so by exceeding clear size requirements of the original RFP...that's a no-no.
USAF had requested a specific replacement for the 135 and not for the KC-10. The original selection had to go outside terms of the RFP, which should have triggered a new proposal cycle from both parties.
Now, a decade later, a split procurement might make sense but a 50-50 split would probably be too heavy on the larger AC. And, remember that any reduction from the tendered numbers will increase the unit cost for each version.
I don’t think Airbus would be pleased with 20% of the deal. For one, it would be expensive to set up manufacturing lines and other offset arrangements to manufacture 30-40 aircraft. The alternative to that would be assemble the aircraft in Europe, which be absolutely foolish for obvious reasons.
Facts are facts and the Airbus (i.e., french) tanker is too large and too costly, and vulnerable to a parts embargo by the french/Europeans if we do something they don't follow. . .like perhaps fighting in support of an ally they would rather see be murdered off (Israel, for an example). Not a secure American future if we have to rely on the french/Europeans.
Almost as bad as the Russians, the french are criminally corrupt and would not hesitate to turn off the logistics and supply train, thereby soon grounding the fleet.
The question is not whether Boeing will remain behind for logistics supports. But costs will increase as it does with all systems which are aging or being taken out of service. In this case, the civilian 767s which will go out of service over the next two decades compared to the A330.
About Airbus providing spares, I thought the KC-X RFP mentions that all vital systems are to be sourced from the US manufacturers?? About the Europeans yanking support, sure they can, they are more reliant on the US than the other way around. Even a split buy would make the KC-X EAD’s largest contract. Far too much at stake to pull the plug. And its not like Boeing doesn’t source parts from outside the US.
I can't provide specific US/overseas content of either AC but both would have been assembled in the USA, both contain/contained both US and other's components.
Boeing has a painfully strong union work force and I don't think that applied to the NG/EADS original proposal.
The Boeing offering was based on more proven technology IIRC.
Just my opinion, but I think the whole thing took place becausse some in the DOD (and John McPain) thought Boeing had gotten too good a deal in selling and maintaining the C17.
They also hated the idea of a lease although it was working for other users (UK).
When the government's procurement princess retired and got herself (and her daughter) a job at Boeing the axes came out.
If they can’t make any profit on manufacture of 30-40 aircraft, then maybe it costs too much in the first place.
On the other hand, from someone I know in the industry, most of these big deals have the largest profits in all the years of continued re-supply of the parts used in maintenance, over the life of the aircraft. Maybe those long term revenue streams on the 30-40 working aircraft would be enough to keep those parts lines profitable.
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