Says Ordering Boeing, EADS Planes Would Be Too Costly
When it comes to selecting new aerial refueling tankers... the
US Air Force will pick a favorite, thank you very much. A senior US
defense official said this week the Pentagon will not split the
lucrative KC-X contract between offerings from Boeing and EADS.
Sue Payton, head of acquisitions for the USAF, told The
Financial Times splitting the deal would prove too costly, at a
time when the service is having to keep close eye on its
budgets.
"Because we are trying to do so much, we don't have the money
upfront that it would take to carry two or three [tankers] through
development and then into procurement," she said.
The Air Force is slated to announce later this year whether it
will award the contract to Boeing's KC-767, or the KC-30 offered by
EADS and Northrop Grumman. Both aircraft are based heavily on
commercial planes -- Boeing's 767 and the Airbus A330, respectively
-- and each has its strengths. The KC-767 is cheaper, though
smaller; the KC-30 offers more cargo room and fuel capacity, but at
a price premium.
There's also the matter of national pride. If selected for KC-X,
the KC-767 would be manufactured in the United States, by an
American-owned company. While Northrop would be responsible for
outfitting all KC-30s stateside, in Alabama... the airframe
itself would be manufactured in France.
Teal Group analyst Richard Aboulafia says Payton's comments come
as a blow for the European aerospace consortium. EADS had
reportedly lobbied Congress to consider a split bid, hoping to
improve its odds against Boeing's homegrown offering as it seeks a
greater presence in the US market.
"Given the odds against them, a split buy would have been very
welcome news. It's better to get half of a sure thing than to be on
the wrong side of 3-1 odds," he said. "Losing the tanker bid would
follow the Joint Cargo Aircraft loss. That would leave the Light
Utility Helicopter and Coast Guard patrol planes as their flagship
programs, with few US opportunities on the horizon."
The USAF is expected to follow its initial 80-plane order with a
second for 99 more planes, as it replaces its fleet of aging KC-135
air tankers. Payton says to split the order -- and the resulting
need for parts, and training on two aircraft types -- would be
cost-prohibitive.
"We would need billions and billions and billions more dollars,"
Payton said. "It is a balancing act of the entire portfolio of
warfighting capabilities that we need because we are catching up on
the peace dividend. And we can't afford to put all the money in
tankers that it would take to do something like that."
That viewpoint contradicts a report in Reuters last week, that
former Clinton-era Pentagon acquisitions chief Jacques Gansler
concluded the Air Force could save 30 percent by splitting the
initial order.
But that study was funded by EADS... and only considered
acquisition costs and not support, according to Lexington Institute
analyst Loren Thompson.