Pentagon chief: EADS tanker $3B cheaper than Boeing’s
Top Pentagon weapons-buyer John Young gave an interesting interview to the Washington Post, published today, explaining his controversial decision to award a $40 billion contract for aerial refueling tankers to Northrop Grumman and Airbus parent European Aeronautic Defence & Space Co., instead of Boeing, a decision that has since been put on hold.
Both planes were “technically outstanding,” Young said, but the Northrop/EADS proposal would have cost $3 billion less to develop, and would have provided “more tanker capability.”
“Frankly,” he said, Boeing’s tanker “was smaller and should have been cheaper. . . . A member of the American public might conclude that Boeing sought to charge more than the Defense Department reasonably expected” to pay.
Young acknowledged that the Air Force should have been clearer in laying out its requirements for the program. Confusion over requirements fueled a successful Boeing protest to the Government Accountability Office, which delayed the project. Those delays, in turn, led to last week’s announcement that the tanker contract will be put on hold and re-bid by the next Presidential administration.
A Boeing spokesman declined to discuss Young’s comments.
Having been in the procurement business for some time, I have found that when a bidder is dramatically cheaper than the other competitor, there usually is an error in the low bid. Considering that Airbus would build the major fuselage sections in Europe and then ship them to the U.S. to a plant yet to be built the costs would be astronomical. Also Airbus bid on a bigger aircraft with more expensive engines so some red flags should have gone up right away. My suspicion is in light of the fact that Airbus is in a conflict with the U.S. Trade dept. over government subsidies they may have played a factor in the Airbus low bid.
The Air Force is already under a cloud of suspicion for a faulty bid process, that was not carried out well, this comment just adds to that cloud.
The old rule ” If something seems to good to be true, then it probably isn’t “
Did the $3B include the costs to upgrade the airports for EADS’s larger plane?
Larry the Cable Guy.
It is also possile Boeing blew it or got too confident they would get the order. To make your philosphy exactly true you would need as third bid.
Also remember it was Boeing that got caught doing unethical stuff with the air force, not EADS….
Larry,
The main reason for the difference s that the development cost of the KC-30 has been paid for by 5 other the governments that have purchased that tanker.
The US was the 6th country in a row to select the KC-30 tanker over the KC-767. The price seems to be in the same ball park as other countries.
The KC-767AT that Boeing put forward is very different from what the developed for Japan (that aircraft has no wing pods for example), the KC-767AT is based upon the 767-200LRF, that aircraft has never been built, let alone fully developed. The boom on the KC-767AT is not the same as that on the KC-767 with Japan, that also needs more development.
Also EADS is the single biggest export customer of the US aerospace industry. 45% of all their aircraft components come from the US (from sheet metal, rivets, major wing components of the A330/A340, to the engines and avionics). When customers select US engines, and US avionics, the content by value like the KC-30A goes up to about 60%.
FYI in 2002 when people from Boeing went to jail for unethical dealing with the USAF, EADS also had the lower offer.
John Young needs to read the GAO’s findings regarding the botched tanker selection. Boeing’s proposal as submitted had a lower cost than Northop/EADS, not higher. The GAO sustained Boeing’s protest that the Air Force had improperly and without basis increased Boeing’s cost to be greater than Northrop/EADS. Further the GAO also found that the Air Force evaluation of most probable life cycle cost was unreasonable which the Air Force admitted and agreed that Boeing’s plane had the lower life cycle costs.
Face it, NG had a better offer. The only thing Boeing has proven is that it has tremendous purchasing power when it comes to pocketing politicians.
This is just more of USAF and Mr. Young’s double talk. The USAF should have threw out EDAS bid before the bids were opened, they should also be investigated for insider information due to the fact USAF allowed then and told them what adjustments were needed in their bid. Bottom line…the whole thing STINKS!!!!
That is all nice. But read the report. The EADS/Northrup team plane does not have the ability to service all the planes the US has flying. The EADS/Northrup team even though has won contracts for other countries does not have a working boom. Critical component for a tanker.
Two senior USAF leaders have already been replaced in large measure due to the corrupt process used to select a new tanker. If Mr. Young continues to try to salvage his reputation by making inaccurate comments to the media and by refusing to acknowledge the GAO findings, then he should be the next to go. It is obvious that he cannot be unbiased when evaluating any proposals from Boeing. Also Sue Payton needs to be held accountable for giving false testimony to the Congressional hearing when she said the process was very fair and transparent. The GAO and the facts do not support this statement.