Forever New Excuses

I have to admit my jaw dropped when I heard that EADS/Northrup Grumman won the USAF’s KC-X competition (I’ve blogged about KC-X before, back in September of last year).  My own brief skimming of the specifications concluded that the A330 was a more robust platform, but the constant drumbeat of Boeing’s PR machine suckered me into believing their delusion—that what the Air Force wanted was a smaller, less expensive (and less capable) plane that it could send to a wider range of airfields.  Problem is, that isn’t what the Air Force wanted at all.  Boeing was apparently too stunned or stubborn to realise it.

WASHINGTON, March 3 (Reuters) – Boeing Co failed to beat Northrop Grumman Corp in any of the key criteria in the $35 billion tanker aircraft competition won by Northrop and its European partner, according to a defense analyst with close ties to the Air Force.

“This was not a close outcome in any sense of the term,” the analyst, Loren Thompson of the Lexington Institute, told Reuters. “Northrop won decisively and completely, and Boeing simply was not competitive in the major measures.”

Thompson said in a report on Monday that Boeing matched the appeal of the Northrop bid only in the area of proposal risk. And that came only after Air Force reviewers pressed Boeing to stretch out its aggressive development schedule for a new version of its 767 jet, which in turn added cost.

— Andrea Shalal-Esa, “Boeing lost air tanker deal decisively – analyst“.  Reuters (via the Manchester Guardian), March 3rd, 2008.

How badly did Boeing lose this thing?  Well, according to the wire feed, EADS/Northrop Grumman could build more planes faster, lift greater payloads farther distances, and better justified their cost estimates.  Boeing’s big advantage was cost, but the Air Force didn’t share the manufacturer’s confidence in its cost estimates.  Oops.  So, subtracting the cost advantage, what does that leave Boeing with?  A smaller, less capable plane that you need more of to accomplish the same mission.  Sounds like a winner!

Here is the nitty gritty, as given by Mr. Thompson:

“The reviewers concluded that if they funded the Northrop Grumman proposal, they could have 49 superior tankers operating by 2013, whereas if they funded the Boeing proposal, they would have only 19 considerably less capable planes in that year,” Thompson said.

Northop’s refueling airlift capacity was deemed superior at a range of 1,000 nautical miles and “substantially superior” at 2,000 miles, he said.

Air Force reviewers also had less confidence in Boeing’s past performance due to “poor execution” in three relevant programs, including long-delayed tanker deliveries to Japan and Italy, Thompson said.

…Boeing had expected to face tough competition from Northrop on cost, but it compounded its problems by failing to adequately explain its assumptions in calculating the cost of developing a tanker, Thompson said.  “The resulting low confidence in Boeing cost projections undercut its claims of lower life-cycle costs,” he said.

…The review found Northrop could accomplish specified missions with nearly two dozen fewer planes than the Boeing proposal, considered a “big advantage,” Thompson said.

For a couple of years now, I’ve been reading weird quotes from Boeing officials in industry magazines and Air Force alumni publications.  Something along the lines of “we looked at tanker variants of the 767-ER and 777, but decided that the KC-X specification did not warrant using those larger, more expensive airframes.”  Maybe not.  But it kinda looks like the Air Force wanted something like them all along.  Somehow EADS got the memo and Boeing didn’t.

Frankly I can’t wait to see how Boeing tries to spin this loss; they should change their corporate motto from “Forever New Frontiers” to “Forever New Excuses”.

And now I have my answer to the “brilliant or stupid” conundrum.

Congratulations, EADS and Northrop Grumman.  You’ve earned it.  I don’t have a lot of love for your aircraft (or company), but at least your sales guys weren’t stupid enough to try and sell the Air Force an orange when they asked for a grapefruit.

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