Tons of info here. I hadn't thought of this as an attempt at a back-door shifting of A330 production out of Europe....

Is the recent shake up of top Air Force brass by Sec. Gates in any way related to the tanker fiasco?

WA Ping

Some are speculating that, but I haven’t seen any concrete evidence.

Ping!

I’m fairly sure it was related specifically to the USAF handling of nukes, of late.

Ping!

I really hate to post, ping and run, but my boss has this crazy idea that I get work done while at work. I just so rarely come across a good article that hasn't been already posted to FR, that I just had to jump and be the one to post it!

I'll check back later.

Is the recent shake up of top Air Force brass by Sec. Gates in any way related to the tanker fiasco?

It would also be interesting to know whether any of the upper echelon Pentagon guys who had input on that tanker contract have Swiss bank accounts...

It would also be interesting to know whether any of the upper echelon Pentagon guys who had input on that tanker contract have Swiss bank accounts...

Exactly, our hope in that case is that their accounts were with Bear Stearns.

Can somebody explain to me why the mucks in the AF wanted this to happen so badly that they, well, what the hell would you call it? Uhm, were deceptive I guess? What is the motive here, I just don’t get it.

I’m more interested in the congresscritters with Boeing stock and freebies.

There are some of those, no doubt. However, the good of having Boeing build the tankers outweighs that consideration, IMO.

There was some talk about the handling of contracts for the Thunderbirds as well.

Don't forget that Little Tommy Daschle's wife was lobbyist for Boeing the first time the AF solicited proposals and bids for tankers.

And that some Boeing people got caught greasing some palms, iirc.

Just like Boeing’s attempted lease scam would have worked.

Nobody ever points out the Boeing execs fired or put in jail over that one ;)

Yeah, but it’s American greed! See? (laugh)

LOL

Our greedy politicians are better than your greedy politicians!

EADS has very little, if any credibility left to contest the award again

EADS? Boeing are the side that lost the tender, and have been whining to their paid-up minions in Congress every since. Boeing tried to insert their spare 767 capacity into the tender and ended up offering a smaller plane than EADS.

What a biased article. I bet the article-writer owns Boeing stock.

What a biased article. I bet the article-writer owns Boeing stock.

I concur.

Thanks for the Ping!

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Boeing tried to insert their spare 767 capacity into the tender and ended up offering a smaller plane than EADS.

In a final twist of irony, it may turn out that Boeing will need all of it's 767 capacity for the next several years to build aircraft and loan to airlines in compensation for lost capacity resulting from the 24 month delayed 787.

If so, then there is no capacity left to build KC-767ATs.

On the other hand, if the Air Force decides on a split buy, which is becoming more and more likely, then Boeing can negotiate to sell the Air Force refurbished 767s that it gets back from the airlines as it delivers 787s. This gives Boeing the ideal way to unload all those low-hour 767s.

I like it! Let NG/EADS deliver first, and let Boeing deliver in 4-5 years.

I think it was pushed from the WH as a favor to Sarkozy.

That “backdooring” A330 production to the U.S. was never going to happen. It was always a ploy. Keep in mind who OWNS EADS and Airbus.

EADS? Boeing are the side that lost the tender, and have been whining to their paid-up minions in Congress every since.

Sounds to me like it is the EADS minions whining. If Boeing purportedly lost fair and square to the better plane then "EADS Minions" shouldn't mind this being rebid so as to be ACTUALLY fair and cure manifestly and blatantly unfair treatment...

Boeing tried to insert their spare 767 capacity into the tender and ended up offering a smaller plane than EADS.

The A330 was EADS "spare capacity" as well. So no big moral high point for you there. And larger size wasn't supposed to be a decisive factor. In fact, Boeing was reassured precisely that, and that is the only reason they didn't offer the 777:

Boeing Vice President Mark McGraw told reporters:

Speaking in a teleconference in April, McGraw said that, in his last meeting with KC-X evaluators, he sought clarification on the size issue.

McGraw reported having asked, "We’ve gotten the maximum we can? You can’t get any more credit for going above the objective, right?"

The answer, McGraw said, came back, "Right. There is no credit for exceeding an objective."

If Boeing was listening to senior serving generals, its notions about size were probably reinforced. Privately, top USAF officers frequently said they were looking for an ability to put many tankers on forward runways at once, since strike packages involve many airplanes, and each tanker can only refuel one other boom-receptacle airplane at a time. (Both the KC-30 and KC-767 can simultaneously refuel two other aircraft if the receiving airplanes are equippe d with probe-and-drogue type refueling gear). However, those generals were quick to point out that they had no say in the acquisition process, and the outcome of the competition bore that out.

More's the pity evidently, that those with the MOST experience and relevant positions...were frozen out of the process.

What a biased article. I bet the article-writer owns Boeing stock.

I have no reason to believe they do from their statements or alleged bias. You can be an american partisan without being a stockholder of Boeing.

No. Not particularly biassed at all. Just factual. Perhaps you should read up on the contract from the Air Force Association's viewpoint, here

then Boeing can negotiate to sell the Air Force refurbished 767s that it gets back from the airlines as it delivers 787s. This gives Boeing the ideal way to unload all those low-hour 767s.

But they'll then be KC-767As. Less capacity than the KC-135 and speed limited to M.79. Foreign sales? The US gov. may be able ro give them away to Pakistan.

Pardon me for combining two of your posts in one reply.

That “backdooring” A330 production to the U.S. was never going to happen.

Yes, I'm sure it was, because it was not cost effective for NG/EADS to open a final assembly line in Mobile for 12 KC-45A aircraft a year, which is the procurement rate for the first 80 aircraft. EADS hoped to have this line subsidized by the tanker contract and by NG, then use the excess capacity to assemble A330-200F, which are currently assembled in France as passenger aircraft then sent to Madrid to be converted into freighters. The advantage to Airbus is to have an assembly facility where the costs are in US Dollars, instead of Euros. Aircraft are priced in US Dollars, which is why Airbus is really hurting right now. Their costs are in Euros but their revenues are in Dollars.

In fact, Boeing was reassured precisely that, and that is the only reason they didn't offer the 777

That was Boeing bluff, because they knew that they never could deliver a KC-777 in the timeframe required in the RFP. Also, their is no unsold slots in the 777 assembly line, so how are 777 airframes for the USAF going to get built? And finally, if the A330 is too big, as Boeing claims, then what does that make the 777, which is a much better replacement for the KC-10?

No reason that Boeing could build the "FrankenTanker" version of the 767, which is the 767-200 fuselage, -300 wings with -400 flaps, and -400 cockpit.

Then later gut the interior and put in the tanker gear.

Boeing has converted many civilian 707s and even a 747 for other countries in the past, so it's no big deal.

Otherwise, Boeing is going to have a boatload of gently used 767s on their hands in about 5 years.

No reason that Boeing could build the "FrankenTanker" version of the 767, which is the 767-200 fuselage, -300 wings with -400 flaps, and -400 cockpit.

Except Boeing has been suggesting the 767-300ER as interim.

I don't see airlines going for the smaller 767-200LRF and waiting until Boeing builds it and gets it CAA/FAA certified.

Here are some quotes from your referenced AFA editorial.

The Air Force’s credibility is on the line in the tanker procurement. The service’s original plan, to lease tankers from Boeing, blew up when it was discovered that Darleen A. Druyun, a top USAF acquisition official, had secretly been doing contractual favors for Boeing, some of which involved the lease.

Then came the combat search and rescue helicopter contract. The Air Force picked Boeing to build the CSAR-X in late 2006, but losing competitors successfully argued to the GAO that the service had failed to follow its own rules in making the choice. The contract was set aside, and the CSAR-X went back into competition.

With two strikes against it, the Air Force has bent over backward to ensure that the tanker contest would be as problem-free as possible, according to Sue C. Payton, the service’s acquisition executive. If that turns out not to be the case, though, the Air Force’s ability to run a big acquisition properly will be in question.

Payton insisted that the two offerors knew "exactly where they have stood all along in all of the various factors, as we were evaluating them." She said the Air Force has had the Pentagon inspector general, as well as the GAO, review its processes "and take a look at all of our audit trail" from setting requirements through the request for proposals. There has been "tremendous peer review" by the Office of the Secretary of Defense, and the selection team included acquisition experts from the Army and Navy, she said.

He went on to claim that the loss of tanker know-how in the US will result in a more vulnerable nation, and "we cannot allow this to come true. We must have an American tanker built by an American company with American workers. Congress must act to save the Air Force from itself."

Statements from various unions, including the International Association of Machinists and Aerospace Workers, struck similar themes.

So, what happens now? The GAO sets a very high bar in adjudicating protests of contracts. Even if it’s discovered that the Air Force did make some errors, the GAO won’t set aside the award to Northrop Grumman if it considers those errors immaterial to the outcome of the competition. In order for Boeing to get the award set aside, it must prove not only that the Air Force made mistakes or showed unfair preferences, but that those mistakes or preferences were key to the outcome of the contract.

If the GAO finds for Boeing, there are numerous remedies at its disposal, depending on the severity of the problem. It can order that some portions of the contract be re-evaluated by the Air Force, or rescored to reflect more accurate information. It can direct both offerors to resubmit certain data, or direct a change in some of the evaluation methodology or modeling. It can also throw the whole award out and tell the Air Force to start over.

If GAO allows the award to stand, Congress could still intervene, potentially directing the Air Force to split the buy between the two companies, or run competitions for each lot. During the KC-X contest, the Air Force ruled out such an approach, saying it would cost $2 billion extra up front and another $4 billion to set up a separate logistics capability for an additional tanker. Since the lots are expected to be for 15 to 18 aircraft, the Air Force said, there isn’t an economy of scale to justify two sources for the tanker.

However, if Congress does intervene and take some or all of the tanker work away from Northrop Grumman, it could have a chilling effect on prospects for sales of American-made military products or airliners on the other side of the Atlantic, worsening the aerospace trade dispute with Europe. That, in turn, could sink the chances for a NATO buy of, for example, C-17s, making that aircraft more costly for USAF to purchase.

Yes, I'm sure it was, because it was not cost effective for NG/EADS to open a final assembly line in Mobile for 12 KC-45A aircraft a year, which is the procurement rate for the first 80 aircraft.

That low rate of procurement...was apparently all that the USAF thought it could eke out of the budget requests from the Congress. So if it wasn't cost-effective...they shouldn't have bid on it. But then, this never has been about normal profit venture capital operations, has it? Its always been about getting the US taxpayer to be suckered into supporting European pork barrel.

EADS hoped to have this line subsidized by the tanker contract and by NG,

Perhaps. Which would only reinforce my previous point, if true. The Chief of EADs told his own press that the cost of assembly was only 10% of the total cost of the plane. The subcomponents manufacture and delivery costs was thus 90%.

...then use the excess capacity

SUBSIDIZED Excess Capacity it needs to be pointed out.

... to assemble A330-200F, which are currently assembled in France as passenger aircraft then sent to Madrid to be converted into freighters. The advantage to Airbus is to have an assembly facility where the costs are in US Dollars, instead of Euros.

Since only 10% of the cost is assembly, it would appear their savings are diminimus or nonexistentng, with transhipment as an additional cost to be factored in...let alone in Euros. This is about a transfer of wealth from the US to Europe to prop up their money losing operations.

Aircraft are priced in US Dollars, which is why Airbus is really hurting right now. Their costs are in Euros but their revenues are in Dollars.

I believe that those dollar-denominated contracts only applies to their U.S. sales. Which are not that large a percentage as compared to their world sales. At any rate, they need to be charging more. This should break the back of their subsidized underpricing scam. We need the market to correct itself freely without further governmental interference...especially U.S. taxpayer-funded Government... propping up their subsidized porkbarrel. They need to fish or cut bait. If they can't sell any of them without these subsidies...they should go out of business...

That, in turn, could sink the chances for a NATO buy of, for example, C-17s, making that aircraft more costly for USAF to purchase.

That is a talking point the author made which is simply not terribly significant, and I find unpersuasive.

If anything, the foreign purchasers are the ones who get the benefit of the tail-end economies of scale. Not to mention the lower dollar. They would be spurning for erroneous retalatory reasons ...the comparatively low-costs of the previously U.S.-paid-for production. They would be cutting off their own nose to spite their face. This competition is not over. And the EADs team, or at least the USAF procurement "team" now simply has to play by, and follow the rules. If they ultimately lose...they should have lost. End of story. For them to retaliate would be a clear sign of European bad faith, especially after we have given them Marine One, the JCX Joint Cargo transport business, and many other things that probably are equally suspect of being "gifts." I know for a fact that Sikorsky probably should have won the Marine One contract, but once again, the signs of a White House "fix" appears to be in play...where W tried to reward Tony Blair with pork barrel at US industrial, and our warfighters... expense. The British chopper cannot fit in our transports...the Sikorsky would have.

If Congress wants to order some C-17s out of a sense of national security, in spite of the White House intransigence [pretending we have enough C-17s] let them do so, and do it with some reasonable concern for the production economics.

Meanwhile, apparently Boeing is currently making components for some future C-17s on its own dime...gambling that a superior transport of its status will be marketable somewhere despite a skinflint [When it comes to U.S. DOD procurement] White House.

Bah! The whole thing makes me sick.

First: put the engineers back in the top positions in Boeing and move the peanut counters back where they belong.

Second: Don’t outsource military weapons to foreign countries.

On second thought reverse these comments.

JMHO

Perhaps. Which would only reinforce my previous point, if true. The Chief of EADs told his own press that the cost of assembly was only 10% of the total cost of the plane. The subcomponents manufacture and delivery costs was thus 90%.

You forget that the airframe is only 50% of the total cost of the tanker. The tanker equipment and military avionics account for the other 50% and all will be US made (if not US designed.)

Since only 10% of the cost is assembly, it would appear their savings are diminimus or nonexistentng, with transhipment as an additional cost to be factored in...let alone in Euros.

You can't argue on the one hand that Airbus wants to have a subsidized US manufacturing plant, then argue on the other hand that they wouldn't save any money doing it. If so then there would be no point in having the manufacturing capability here in the first place.

I believe that those dollar-denominated contracts only applies to their U.S. sales.

That is a fundamental fact in aircraft sales. Please do some research and you will find that all aircraft sales worldwide are priced in Dollars, and with the plunging Dollar in recent years, Airbus is hemorrhaging cash because their costs are in Euros. here is a Google search to get you started.

Also, why is Airbus opening up an A320 line in China, if only 10% of the cost of an aircraft is assembly?

You forget that the airframe is only 50% of the total cost of the tanker. The tanker equipment and military avionics account for the other 50% and all will be US made (if not US designed.)

Nope. I don't forget. Tell it to the EADs chief. And then talk to the people at Northrup Grumman. Their chief of the project stated that the monies from the contract would be split 50% to Northrup Grumman and its subcontractors (and who pray tell is paying for the transhipment, not a trivial cost? H'mmm?), and the other 50% to EADs. H'mmm. Looks like you can toss those 58% US-Content numbers.

That is a fundamental fact in aircraft sales.

I would have thought they had corrected that some 3 years ago by now when these stories first popped up. That is just something they will have to get over, a failed aspect of their anti-U.S. predatory business pricing model. They easily could switch to Euros nowadays. Otherwise it is merely a self-inflicted denouement.

But I will shed few tears for them. The sooner Airbus joins the ranks of failed companies the better. A state-supported, state-subsidized corporation has no business competing in the private marketplace, and the sooner it goes out of business the better. Where does it end? EADs/Airbus is an obscenity, and hopefully Europe will someday realize that it isn't worth the ongoing and escalating billions in subsidies.

Also, why is Airbus opening up an A320 line in China, if only 10% of the cost of an aircraft is assembly?

That is easy: The Chinese demanded it. They will learn valuable insights from it. And Airbus was only too eager to leverage the surrender of the assembly portion in exchange for additional immediate Chinese sales of Airbusses while they try to out-sell Boeing.

They easily could switch to Euros nowadays.

Have you offered to be their CFO?

Have you offered to be their CFO?

Have you?

All lightness aside...the reason for the trade formerly being dollar denominated was its strength. With the tables clearly turned on that...it makes no further sense...especially not for Airbus...which btw...is complaining about Boeing's "aggressive price discounting" thanks to the lower U.S. dollar.

T'sk, t'sk.