Northrop and EADS Win Tanker Deal

#1
Northrop and EADS Win Tanker Deal



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By LESLIE WAYNE
Published: February 29, 2008

In a surprising reversal for the Boeing Company, the Pentagon on Friday awarded a multibillion-dollar contract for refueling tankers to a partnership between Northrop Grumman and EADS, the European parent of Airbus.

The deal, which puts a critical United States military contract into the hands of foreigners, at least in part, calls for spending up to $40 billion on the first phase of a multidecade program to replace the nation’s aging aerial tanker fleet, which dates back to the Kennedy and Eisenhower era. The fleet, which now numbers about 535 refitted Boeing 707’s and DC-10’s is one of the largest but oldest fleets of jets in the world. Yet the tanker planes are essential to keeping Air Force and allied fighter jets, bombers, cargo planes and other military aircraft in the air when on critical missions far from airports where they can land to refuel.

And replacing these tankers — essentially flying gas stations that offload their fuel in mid-air — has been the Air Force’s top priority since 1996, when the government first proposed acquiring new planes. Eventually, the contract is expected to be valued at $100 billion, as the Air Force spends the next several decades acquiring new tankers at a rate of about 15 a year. It is expected that nearly 400 new refueling planes will be needed.

Yet for more than a decade the Air Force’s effort to modernize the fleet has been thwarted by global politics, Washington scandals and an aggressive attack by Senator John McCain, now the presumptive Republican nominee for president.

In the end, the scandal lead to the departure of Phil Condit, the chief executive of Boeing, the resignation of James G. Roche, the secretary of the Air Force, and the imprisonment of two Boeing executives, one of whom was the former Pentagon acquisition official that had worked on the program. Another Air Force acquisition officer who was working on the program later committed suicide.

The Air Force, short on cash and wanting to acquire the planes as fast as possible, proposed an arrangement to Congress in late 2001 under which the Pentagon would lease the Boeing 767s in a multiyear sole-source contract that would keep Boeing’s aging 767 production line alive.

But just as the Air Force was about to sign that deal, it came under sharp attack from Senator McCain, a former pilot and a member of the Senate Armed Services Committee. Mr. McCain denounced the deal as a sweetheart arrangement between Boeing and the Air Force that would shortchange the taxpayer and that was arranged with insufficient scrutiny and oversight.

In the ensuring firestorm, embarrassing e-mail messages were made public in which the Air Force secretary, Mr. Roche, said “Go Boeing!” and called opponents of the deal “animals.” Soon afterward, it was reported that the Air Force’s No. 2 weapons buyer, Darleen A. Druyun, had been promised jobs for herself, her daughter and son-in-law in return for steering the tanker contract and billions of dollars of other Air Force business to Boeing. Soon after joining Boeing at a $250,000-a-year post, Ms. Druyun and Michael Sears, Boeing’s former chief financial officer, pleaded guilty in the scandal and received prison terms.

The weight of the scandal caused the Boeing deal to collapse in 2004 and opened the door to competition from the arch-rival European Aeronautic Defense and Space Company, which teamed up with Northrop to promote use of Airbus planes as Air Force tankers.

The Northrop-EADS bid was a bold one that mixed business and Washington lobbying with trans-Atlantic politics. EADS lined up a politically powerful group of senators from Alabama and Mississippi with promises that much of the tanker would be built in their states.

In Paris, at the annual air shows, Airbus officials and Southern politicians proudly displayed the proposed European tanker offering and made the argument that if the United States wants to sell its weapons to European countries, it should also open its doors to foreign suppliers. Politicking reached the highest levels — even Chancellor Angela Merkel of Germany brought up the tanker bid in a White House meeting with President Bush.

Each side spent millions of dollars to sharpen its proposal, hire lobbyists and former generals to argue their case and wage extensive advertising efforts in Washington and at military gatherings in advance the announcement.


WOW, huge shock :eek:
 
#2
Hello petergriffen,

that will go down well in Seattle!
Boeing built it's future on the huge order for 717 tankers.
They have done themselves no favours with their skulduggery.
Unfortunately,there is little British interest in this now that BAE is out of Airbus.

I can't think of any other major American forces buy of European (non British) aircraft,helicopters excepted.

tangosix.
 
#3
tangosix said:
Hello petergriffen,

that will go down well in Seattle!
Boeing built it's future on the huge order for 717 tankers.
They have done themselves no favours with their skulduggery.
Unfortunately,there is little British interest in this now that BAE is out of Airbus.

I can't think of any other major American forces buy of European (non British) aircraft,helicopters excepted.

tangosix.
Tango, yeah, I thought BAE were a little silly to give up their stake in Airbus, but they had reasons,
 
#4
Well that is a surprise. It's guarenteed that Boeing are going to sue over the decision, whichever side lost was expected to according to a couple of articles I read in the FT. Now whether they have a leg to stand on is another matter.
 
#5
Hello petergriffen,

BAE did do rather well to sell Airbus when they did,given the problems it has had since.
It may not be such a good move in the long term though.

I must correct myself,the wings are to be manufactured here.
This may have some influence on the selection of tanker for the Royal Air Force,if that decision has not already been taken.

tangosix.
 
#6
The plan as it stands is for a PFI solution for the RAFs requirement to replace their VC10 and TriStar tanker/transport aircraft.

The company that has been selected to provide the service is called AirTanker and it is actually up to them to decide which aircraft they which to use to provide the service. As it happens, their bid utilizes the Airbus A330 MRTT, which is based on the same type of aircraft from which the KC-45 will be derived.

However, contract signature for the PFI has been repeatedly delayed due to ongoing negotiations. The fallback option for the RAF, if the PFI solution does not suceed, is unknown. A while ago it might have possible for the MoD to get a good deal directly from EADS - to help them break into the tanker market. But now they have won the big one, the little RAF requirement seems like small beer.

ARRSERs may be a little more interested in this situation if they realise that this is also the aircraft that is intended to provide the Afghanistan airbridge.
 
#7
The Afghanistan airbridge in how many years to come.
No disrespect Alfei, but jam for the troops in 5-6-8- years?
What was Blair's original ideas of cost of his Iraq & Afghanistan adventures ? I forget it was that laughable.
It's all typical Labour, Nue or Old, spend now and the babies and youth of today will pay.
john
 
F

fozzy

Guest
#8
More importantly, why are we faffing about with a PFI when we can hop on the back of the US contract for our 14 airframes?

Yes I know the flying boom system is incompatable with our AAR, but I've seen mods to existing tankers where they can deploy a drogue from the boom.

Lets stop arseing about with kit on the never never, and buy an additional 14 airframes off the US run - may even bring the unit price down
 
#9
Well, as expected, the Congressional bun-fight has already begun.

John McCain might have to start worrying about Kansas in November. It was he who led the charge to scupper the lease deal with Boeing a few years ago after some DoD civvies and USAF officers, who persuaded the powers at be that a lease deal was the most cost-effective option, were found to be on the take.
 
#10
fozzy said:
More importantly, why are we faffing about with a PFI when we can hop on the back of the US contract for our 14 airframes?

Yes I know the flying boom system is incompatable with our AAR, but I've seen mods to existing tankers where they can deploy a drogue from the boom.

Lets stop arseing about with kit on the never never, and buy an additional 14 airframes off the US run - may even bring the unit price down
No need for the boom at all, Fozzy. The big advantage of the A330 is that it has a common wing with the early versions of the A340s (4 engines). This means that the pods for the probe and drogue system can be fitted without any adverse effects regarding the fatigue life of the wings (as opposed to the mods to the VC-10s).

What may cause a headache for the RAF is the question of where their A330s are going to fit in in the waiting list. The Spams pretty much have their hands on their cheque books, while Broon and his assorted band of inept, nepotistic, mentally-challenged throbbers are still umm-ing and ahh-ing on parting with a sizable wedge that might otherwise be spent on minority, differently-abled, lesbian community empowerment initiatives. Once again, Crab Air may end up playing second fiddle to the export market, as was the case with the al Yamamah deal with the Saudis.
 
#11
Still, might actually get the Crabs to make a decision on this project - it's dragged on for years now, and the Tristars are not getting any younger....come on Jock Strap, buy some planes that we actually need!
 
F

fozzy

Guest
#12
crabtastic said:
fozzy said:
More importantly, why are we faffing about with a PFI when we can hop on the back of the US contract for our 14 airframes?

Yes I know the flying boom system is incompatable with our AAR, but I've seen mods to existing tankers where they can deploy a drogue from the boom.

Lets stop arseing about with kit on the never never, and buy an additional 14 airframes off the US run - may even bring the unit price down
No need for the boom at all, Fozzy. The big advantage of the A330 is that it has a common wing with the early versions of the A340s (4 engines). This means that the pods for the probe and drogue system can be fitted without any adverse effects regarding the fatigue life of the wings (as opposed to the mods to the VC-10s).

What may cause a headache for the RAF is the question of where their A330s are going to fit in in the waiting list. The Spams pretty much have their hands on their cheque books, while Broon and his assorted band of inept, nepotistic, mentally-challenged throbbers are still umm-ing and ahh-ing on parting with a sizable wedge that might otherwise be spent on minority, differently-abled, lesbian community empowerment initiatives. Once again, Crab Air may end up playing second fiddle to the export market, as was the case with the al Yamamah deal with the Saudis.
just done some research:

The US are getting 179 airframes for £20 Bn that's £ 111 M per airframe

If we include our batch of 14, thats 193 airframes in total = £ 103 M per airframe

Under our smart procurement led PFI, were buying 14 airframes for £13 Bn. That's £928 M per airframe.

Errr......

Err.......


Can someone explain why we're getting essentially the same aircraft for 9 times the cost than buying from the US batch??
 
#13
Spanner said:
Still, might actually get the Crabs to make a decision on this project - it's dragged on for years now, and the Tristars are not getting any younger....come on Jock Strap, buy some planes that we actually need!
Err, the RAF selected the A330 to fulfil its Future Strategic Tanker Aircraft (FSTA) project about 8 years ago to replace the VC10 and Tristar fleets. Unfortunately, we have been repeatedly told that it must be a PFI purchase and this is where the sticking point lies. Given that aircraft must be equipped to operate into potentially hostile airspace and airfields, very few companies are willing to share these airframes with the UK military at an affordable price.

As far as probe/drogue v boom refuelling goes, wing pods are only suitable for fast jets and cannot be employed for AAR by larger aircraft such as AWACS, Nimrods and C-130s. The same is true for the boom drogue attachment (BDA) 'condom' which can be fitted onto a boom.

However, the A330s have a centreline drogue for this task which can remain in place even with a boom. I'm not sure if the KC-45 has this arrangement but USAF KC-10s certainly do. The RAF also has both the E-3D AWACS and C-17 which are boom refuellable (not much need for the C-17 to do this but boom AAR is common and indeed the preferred method for the E-3D). If we purchase the RC-135W Rivet Joint to replace the Nimrod R1 in the SIGINT role, that will also be boom capable.

The continuing delays with the FSTA are imho the biggest single gap in UK defence right now as it is directly affecting all 3 services. The Tristar and particularly the VC10 fleets are in a very poor state and the knock on effect to in theatre logistics and personnel moves is considerable.

If the money is not there fine. If that is the case the I would can the money being spent on the A400M and get the A330 tankers in asap, and NOT via a PFI which will only cost more money in the long run.

Of course, politicians don't care about anything beyond about 4 years.

Incidentally, the RAAF have also just bought the A330 based tanker.



Regards,
MM
 
#14
The Government (not the RAF) decided that it wanted to fund the FSTA programme using a PFI about 8 years ago. It was decided that the MoD would purchase a complete AT/AAR service for a period of 27 years, and the contract would cover maintenance, training et al. The competing companies were free to offer whatever aircraft they wished, provided that the minimum capability as laid down by the MoD was met.

The bidding process boiled down to 2 companies - Air Tanker offering new A330 MRTT aircraft and TTSC offering converted ex-BA Boeing 767s. In early 2004, Air Tanker was selected as the "preferred bidder" effectively ending the competition. Since then, the process has been primarliy focussed on negotitating a contract between Air Tanker and the MoD. The project went through "Main Gate" last year, but the contract has yet to be signed. Whilst that has been going on, EADS has developed the A330-200 into the MRTT with the RAAF as the lead customer, but the aquisition of the aircraft is a matter for Air Tanker Ltd. The concept of the service sees a core fleet of 9 aircraft operated day-to-day by the RAF, with Air Tanker aquiring a further 5 airframes that it can operate itself or lease on to airlines. Given a certain notice period,the RAF can call these aircraft into service in times of "surge".

Undertaking this project as a PFI was deemed as carrying less risk for the MoD, but of course it is breaking new ground so Air Tanker and the MoD have had to deal with issues of technology transfer and insurance of assets owned by a third party. The credit crunch has not helped the process.

In simplistic terms this whole concept is a bit like using a Contact Hire Plan to aquire a new car, rather than stumping the money up front. In fairness the price comparison quoted is not vaild, as the FSTA cost includes all the maintenance, training and support activities - including infrastructure - for 27 years.

I believe that the RAF did not choose this method of aquisition, but it was forced on them by a Government witha penchant for this type of project, to ensure that the assets are not on their balance sheet. Unfortunately the aircraft are needed right now to support a long term Herrick airbridge - another unforeseen requirement.
 
#15
Northrop will assemble the aircraft in Mobile,Al. After Boeing's scandal it should have been obvious that they wouldnt get the final award. The deal will create 25,000 jobs across the country.The 330 is a more capable aircraft than the 767 so if Boeing appeals they wont prevail.
 
#16
tangosix said:
Hello petergriffen,

that will go down well in Seattle!
Boeing built it's future on the huge order for 717 tankers.
They have done themselves no favours with their skulduggery.
Unfortunately,there is little British interest in this now that BAE is out of Airbus.

I can't think of any other major American forces buy of European (non British) aircraft,helicopters excepted.

tangosix.
Have you not seen the heards of brit contractors in Toulouse, Seville, St Nazaire ....... why do you think so many aerospace contracts are taking so long to deliver the goods? Anyone with any aircraft experience (and some without ) are going off to live the better life abroad (over £1000 after tax per week for doing absolutely feck all in some cases) only things stopping me are Mrs RHC and el bambino
 
F

fozzy

Guest
#17
So, looking at what MM and Alfie have written we are effectively locking ourselves into a very strange PFI that doesn't (IMHO) really give us a viable solution and VFM. I'm amazed that we are having to look at sponsored reserves to fly these things as they may be on lease to Civ Div when needed. Barking.

This is typical Treasury and Gumint spin and slight of hand. The PFI deal hasn't delivered, its late and isn't cost effective. These jets are needed now.

I agree with MM, let's cancel the A400M and spend the money on this (and More J's and C-17s)

The MoD needs to re-evaluate this deal ASAP, especially as Uncle Sam has now taken the plunge. We (US/UK/Australia etc) should operate a commonish fleet of aircraft with huge economies of scale. I guess that some of the USAF tankers would operate from Mildenhall in the UK? Well, why not share training and simulator costs with the RAF?
 
#18
Front page news here in Seattle. Big.

The political fight now begins. It's going to be nasty in the next few months.
 
#19
I knew about the Boeing Scandle but I never thought the Yank would buy what is 'Mainly' a 'Frog' a/c.
Harrier and before that Canberra, bought as best buy.
Says a great deal about democracy in the States.
john
 
#20
tomahawk6 said:
Northrop will assemble the aircraft in Mobile,Al. After Boeing's scandal it should have been obvious that they wouldnt get the final award. The deal will create 25,000 jobs across the country.The 330 is a more capable aircraft than the 767 so if Boeing appeals they wont prevail.
That all depends on who's sitting on the House and Senate Defense Appropriations Subcommittees and the Appropriations and Armed Services Committees in January.

It also depends on who the new President, SECDEF and Secretary of the Air Force are- and it also depends on which way states like Washington, Kansas and Alabama vote in November. At a guess, I'd say that if the Democratic candidate wins, we could well see the decision being reversed.
 

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