Skip to comments.Air Force goes European with new refueling planes
Posted on 03/01/2008 7:42:30 AM PST by jdm
The Air Force snubbed longtime partner Boeing and awarded a lucrative contract to Northrop and EADS, the European maker of the Airbus, to build a fleet of refueling aircraft. The decision stunned Boeing and elected officials in the Northwest, who immediately objected to the decision to reject the all-American option. However, officials claim that Boeings submission simply didnt measure up literally:
Air Force officials offered few details about why they choose the Northrop-EADS team over Boeing since they have yet to debrief the two companies. But Air Force Gen. Arthur Lichte said the larger size was key. More passengers, more cargo, more fuel to offload, he said.
It will be very hard for Boeing to overturn this decision because the Northrop plane seemed markedly superior in the eyes of the Air Force, said Loren Thompson, a defense industry analyst with Lexington Institute, a policy think tank. And as the winners of the first award, EADS and Northrop are in a strong position to win two follow-on deals to build hundreds of more planes.
Boeing spokesman Jim Condelles said the company wont make a decision about appealing the award until it is briefed by Air Force officials. Boeing believes it offered the best value and lowest risk, he said.
Stifel, Nicolaus & Co. analyst Troy Lahr said in a research note it was surprising the Northrop-EADS team won given the estimated $35 million per-plane savings offered by Boeing. Lahr estimated the Boeing aircraft would have cost $125 million apiece. It appears the (Air Force) chose capabilities over cost, Lahr said.
In short, Boeing gave a better price, but Northrop/EADS gave more capabilities. It can deliver more fuel or carry more personnel and/or cargo, depending on configuration. That may be a rational trade-off, and the Air Force is the organization best positioned to make that choice. They understand what their missions require and should know which airframe best complements them.
Appeals rarely if ever work, as the GAO assumes the client (Air Force) knows what its doing. It will only have a chance of succeeding if Boeing can demonstrate that the Northrop/EADS offering does not meet the specifications demanded in the RFP, or if the competing bid has unfair pricing or other violations of the process. And even then as I know from personal experience Boeing is unlikely to succeed, and could damage their chances for future contracts.
In the mid-1980s, the FAA put out an RFP for a system to completely replace the air-traffic control system across the nation. Two companies got selected to compete for the prime contractor position, IBM and Hughes Aircraft. The spec had three bedrock requirements: the system had to use all-new components in the ATC suite, it had to be functional at the time of submission (no mock-ups), and it had to use IBMs computer as its core. IBM was required to give Hughes its at-cost pricing to ensure fairness.
IBM won that contract, as it bid significantly lower costs than Hughes. After the debriefing, Hughes found that (a) IBM had priced its core higher for us than for them, (b) their model reused existing components in the ATC suite, and (c) they didnt have a working system. Hughes appealed the decision, which was considered something of a scandal in its own right at the time, but got overruled.
Three years later, IBM gave up on the contract, admitting that it could not produce the system. By that time, Hughes had sold its system to Canada, as well as other nations, while the US remained reliant on ATC computer systems dependent on tubes.
If that deal didnt cause Congress to demand a redirected result, this one wont, either. Congress may have the Air Force explain their decision to send some of their procurement budget to Europe rather than employ Americans, but unless someone turns up corruption or compromised safety, the decision will likely stand and it might just be the best decision in any case, at least in terms of support for the missions the Air Force has to accomplish.
Well of course the Bush Administration Air Force gave the bid to foreigners! Why would one want jobs here in the States?
The beauty and benefits of competition.
America keeps going downhill. Some day, we will be at war with China, and we will have to stop fighting int the middle of a skirmish, to buy bullets from them. Anytime the defense of the country is farmed out to anyplace but home, I have to ask congress WTF?
I don’t think this is a bad decision. And it may work to Boeing’s advantage vis-a-vis EADS in the end.
I also would not be surprised if President Obama cancels the contract altogether.
This is great for Mobile and the State of Alamaba.
But I HATE Airbus.
Alamaba? Where the heck is that.
A-men. Boeing is two for two right now. They need to get their act together.
bye bye boeing refueling jets
When our defense contractors realize that price points and design innovation really matter then they’ll get the business back.
The plane is going to be assembled in Alabama, but the parts will be made mainly in Europe. EADS is charging $35 million more per plane, but giving a superior product.
I suspect they are going to take a bath though. With the dollar going down, it may end up costing less than what Boeing was going to charge depending on how the contract was written.
It may be that part of the way thru this contract, EADS will find it financially advantageous to move a lot of the fabrication to the Alabama facility, rather than doing it in Europe.
It does sound as if the production of the airframe will be moved to the US for both military and commercial version..so we may be gaining in the longer run.
EADS is admitting that Eurolabor is non-competitive.
Another note..maybe Washington State and Illinois(Corp HQ of Boeing)..needs to elect more republicans to defend their interests with the next republican administration.
I wonder if this will be brought up in the election?
This is a slap in the face to the American worker...They had Jeff Sessions saying that it was a good deal because Alabama gets a plant...maybe 2000 jobs. What an idiot, this contract is worth billions. I guess they think Americans are stupid. I noticed as always the GOP (stupid party) was out there defending this decision. The Democrats were no where to be seen.
Right between Greogia and Mippississi.
Everybody knows that. ;-)
>With the dollar going down, it may end up costing less than what Boeing was going to charge
Unless the EAD bean counters are brain dead, any production and sales in foreign currency have FOMEX hedges against currency swings.
Of course the hedges would only be partial, and I suspect that the higher price per unit reflects that expense to EAD.
The bulk of the plane will be made in Europe. Only a few token jobs will be sent to Alabama.
Yeah, I suspect that they thought about the declining dollar, but I also suspect that they determination to get the contract led them to look at it from an optimistic viewpoint. They probably have some protection in the contract. They probably have some hedging protection. But most importantly, they are probably counting on their government to bail them out if they misjudged.
This just stinks. We should not reward any company that France is involved with. Remember them. The French were involved in the oil for food scheme in Iraq. Then spit in our faces when we ask them for help and they told us that there money was more important than an ally. If any total American aircraft was not good enough, they should have been told to come up with a better plane. Tax payer money should be should only be spent for American jobs.
“This is a slap in the face to the American worker...”
For which, among a multitude of other slaps, the GOP will pay in November.
Sorry in the long run the few piddly dollars going to Alabama do not offset the billions going to Europe. This is a disaster and will surely prevent John McCain from winning the presidency. Free trade has decimated the Midwest. The high tech ‘good’ jobs promised by free traders did not materialize or have been given to the H visa crowd.
One poster suggested that Illinois residents vote for more Repubs, I don’t think this will be necessary after the next election.
Yes, they will. What is wrong with the GOP? They have begun to believe their own nonsense. Free trade is largely unpopular with all Americans-not just Democrats.
> But most importantly, they are probably counting on their government to bail them out if they misjudged.
Have to agree with that 100$.
“They have begun to believe their own nonsense.”
They sold out America for money. They talked about Americanism and American values, about a Judeo/Christian society and then they sold us out for money, anybody’s money from anywhere. As it turned out it was mostly Mohammedan and Red Chinese money.
This is exactly right. Foreign companies are valued by their government and bailed out on a regular business. American companies are crippled by the demand placed upon them by Washington and when they get in trouble, Washington sneers and says we don’t need you anyway.
As John McCain reportedly said in Michigan,’the manufacturing jobs aren’t coming back’. Well deal with this Repubs-if you support unpopular ideas you will lose and those jobs won’t come back either.
If the European contractor can do a better job with American labor, super. But politics shouldn’t enter into this at all. Nothing wrong with objective oversight, but the military should know what it needs and who to procure it from. A functioning air force is infinitely more important than drumming up business for Illinois, inc.
Yeah, the Repubs want to sell out our country. The Dems want to give it away. Either way, the country loses. I am totally furious about this. I was kind of thinking maybe I would have to hold my nose and vote for McCain-now no way. I may not vote for any Repubs because of this disgusting act.
We all saw how well thats working with the A-380. This story isn't over my friends.
Sorry, that is total nonsense. I am sick of hearing about how profit is the only reason for any decision. There are other issues. Our government needs to stand up for its manufacturing base as all other countries do. It is an unpatriotic stance to award jobs to foreign companies.These are my tax dollars at work. I don’t want my money going to Europe. Keep the money in the US. You know only two Repubs have ever won the presidency without Ohio...Do you think McCain can win Ohio now?
Thats exactly right. The GOP has sold America out, thats why the Commie Dems gained control of the House and Senate.
“Either way, the country loses.”
In my otherwise very conservative mind, I want to believe that you are wrong and that the country loses only with a McCain, that the revolutionary change that a fellow like Obama might bring has a chance of being productive and good, but frankly, I think you are right, either way the country loses. So, either way, we need a revolution of some sort. The excesses of both parties have gotten out of hand.
“The GOP has sold America out, thats why the Commie Dems gained control of the House and Senate.”
Yup; and in November it will be filibuster proof control.
I wonder if Boeing will even survive. Perhaps they will end up like steel, garment etc. Some GOP politician will stand up and say, ‘the jobs aren’t coming back, and you know we don’t need Boeing;McDonald’s is hiring’.
I do not trust to have ANY aircraft being used for OUR Air Force to be made in another country.
What’s to say the following scenario might happen:
In a war with say, China, a few years down the road, we have a flight of these new tankers refueling fighter jets near a war zone.
Somewhere in Beijing, some general enters a code to be sent to a satellite, which then broadcasts a signal, activating a special code hidden deep in the software of all these new tankers...code that was put there by Chinese agents after paying money to certain sympathetic (and greedy) people within Airbus while the jets were being built.
Without warning, every tanker’s jet engines suddenly die in midflight, causing all of them to become huge, heavy gliders which crash, killing our pilots and crew. Those that are on the ground no longer operate, no matter what our maintenance people do. The Chinese have just cut our mid-air refueling capability without too much effort.
Now, I know this argument is very tin-foil hat, but with the way things are...it may be within the realm of possibility.
And yes...I understand that the same scenario might be accomplished on American soil with a disgruntled liberal worker (or workers) doing the same thing, but somehow I think it less likely than what could happen with a foreign-built aircraft.
Never mind the economic standpoint of Boeing’s loss...what about seeing this from a NATIONAL SECURITY standpoint? If it flies for AMERICA, build the WHOLE DARN THING in AMERICA!!!
Someone at the Pentagon needs to get an uppercut from the Clue Fairy.
Thanks for helping me out.
I want to believe that Obama might really address trade, but I fear it is political posturing...I think both parties are in the tank for the globalists. I wonder how much money this foreign company donated to the Repubs. We know Jeff Sessions got 2000 jobs or so in Alabama...wow one dinky plant.
That is why I hate the Airbus angle on this.
I have said before the the loss of manufacturing is a national security issue. The greedy robber barons of our time see only dollars or in this case euros...not the big picture. Profit is great, but to maximize short term profits at the expense of the country as whole is stupid. No one in business today thinks about the long term effects of their decisions.
I do to. I am furious. The Lou Dobbs show had the twit from Alabama on his show. Actually Lou wasn’t there. the Guest host asked the Alabama Senator how this huge contract was awarded and all America got was one dinky plant. He kept smiling this big smile and repeating the mantra ‘ hey we got a plant in Alabama’-big deal.
Speaking of self destruct...only the GOP would do something like this in an election year. Don’t they watch the news? Haven’t they heard The Dems promise to review Nafta and other free trade agreements in order to win votes in the crucial state of Ohio?
Heck if that's the only thing the Air Force wanted then stick a bunch of fuel bladders in and a boom on a 747.
Am I to understand that not a one of the planes has flown, even as a modified model for testing?
My husband says this is the case. He is an engineer. He says there is no evidence that the design will really work.
Have you ever tried to review lines of code to look for mistakes?
I dabbled breifly in programming a few years ago, and it was tough to find mistakes in a couple hundred lines of code.
Now, think of the millions of lines of code it’d take for operating one of those jets. Even if we did review it, something might be missed. The enemies of the United States are sneaky, and despite what we’d like to think, we aren’t invincible...and we can be fooled.
(I personally hated typing that, but that is the truth.)
I flew Boeing refueling for years, great planes a big mistake here, there will still be a fight although they need their peepee whacked. Mrs. Daschle is very disappointed
I have heard this free trade lingo for too long. Whenever jobs are awarded to foreign companies...the claim is American companies don’t make the grade. Baloney, the GOP accepted big money one way or the other and got one dinky plant and sold out their country. Patriotism does not mean making speeches and singing pro-American songs. A true patriot does not support screwing his country for money and does not defend the practice.
We also have no control over who works on these planes. I don’t trust Europe -completely politically correct- to make sure no bad guy gain access to the code and/ or to the planes. If it’s not made here by an American company, we have no control over these matters.