"Airbus" Wins Air Force Tanker Contract

Lots of folks are upset about this, but Boeing shouldn't have assumed the contract was theirs for the asking. We have competitive bidding for good reasons, and sometimes the underdog wins.

The Associated Press: Air Force: Foreign Tanker Bests US Rival:
"The European refueling tanker that won a $35 billion Pentagon contract last week 'was clearly a better performer' than its U.S. rival, Air Force Secretary Michael Wynne told lawmakers Wednesday.

Speaking at a Senate Armed Services Committee hearing, Wynne said the plane offered by European Aeronautic Defence and Space Co. and its U.S. partner, Northrop Grumman Corp., was determined to be less expensive and less risky than the plane offered by Chicago-based Boeing Co.

The planes were judged on nine key criteria, he said, and 'across the spectrum, all evaluated, the Northrop Grumman airplane was clearly a better performer.'
. . .
The contract calls for the Air Force to buy 179 in-flight tanker aircraft over the next 15 years as it replaces its Boeing-built KC-135 tankers, which are on average 47 years old.

Boeing had been heavily favored to win the new contract, and the Air Force's decision helps EADS — maker of Airbus — break into the world's largest military market and opens the door to possible follow-up contracts.

The EADS/Northrop Grumman team plans to perform its final assembly work in Mobile, Ala., although the underlying plane would mostly be built in Europe. And it would use General Electric engines built in North Carolina and Ohio.

The contract award could still be challenged by Boeing or members of Congress."

It is important to read the RFP you're bidding on, and even to use your contacts to get an idea of what the customer wants. The article below indicates that Boeing made a fatal assumption, that suited their desire to keep profiting on the 767 airframe. On the other hand, if Boeing read the RFP correctly, then the Air Force has some explaining to do.

Boeing Had Different Tanker Contract View From US Air Force:
"CHICAGO -(Dow Jones)- Boeing Co. (BA) expects to get a debriefing on Friday from the U.S. Air Force on why the defense giant lost a major contract award that it was widely expected to win, Jim Albaugh, head of Boeing's Integrated Defense Systems unit, said Wednesday.

After that, Boeing will decide whether to make a formal protest.

On Friday, the Air Force awarded a contract worth up to $40 billion for new refueling tankers to a team of Northrop Grumman Corp. (NOC) and EADS (5730.FR), the European parent of Airbus.

Boeing's reading of the Air Force request for proposals was different from that of the Air Force, Albaugh said at the Citigroup Global Industrial Manufacturing conference, webcast from New York. 'We didn't think they wanted a bigger plane. We thought they wanted a replacement for the KC-135,' the current Boeing-made fleet. That's why Boeing based its offering on a similarly-sized aircraft, the 767, he said.
. . .
Albaugh said Boeing believes its tanker, based on the 767 commercial aircraft, would be more flexible in flying to smaller airports, more reliable, since it would be built by one company, and lower cost. He said the Boeing bid came in below the final price tag announced by the Air Force. As well, "we were discouraged from offering the 777," a bigger aircraft which would have been more comparable to the winning bid. Albaugh added that "the requirements were pretty clear, in our view," saying he couldn't go into further detail."