5:17: Northrop Grumman has released a short statement:
Northrop Grummanacknowledges that today it has received the final Request for Proposals for the U.S. Air ForceKC-X Tanker Modernization Program.
Northrop Grummanwill analyze the RFP and defer further public comments until its review of the document has been completed.”
5:10: Boeing has released this statement:
“Boeing has begun the process of closely studying the details of the KC-X Tanker final RFP. Today’s release of the final RFP is an important milestone for our Air Force customer. Not only does it mean that the KC-X competition can proceed, it also is a strong signal that America is moving forward on replacing its air refueling capability – a critical enabler for projecting power and protecting this nation.”
“We’ve said consistently that it is up to the Air Force to determine the KC-X requirements for a new generation of tankers. It’s our responsibility to respond to those requirements. While we appreciated the open dialogue with the Air Force throughout this process, we are disappointed that the RFP does not address some of our key concerns, including Airbus’ unfair competitive advantage derived from subsidies from its sponsor European governments – subsidies that the World Trade Organization has found to be illegal and harmful to U.S. workers and industry – and how fuel and military-construction costs over the life of the tankers will be factored into consideration of the competing bids. We will review the RFP in its entirety and in detail before offering further assessment.”
5:08: Press conference has concluded. The Pentagon has legal options it can pursue if Northrop decides not to bid, says Bill Lynn, undersecretary of defense. He declined to elaborate on what those options are. It raises an interesting question: Can DOD force a private company to submit a bid for a contract in the name of national security? I don’t know the answer, but I’m checking. [UPDATE: Quick answer from Lynn's spokesperson: No.] Other important notes:
- First deliveries of production aircraft will not occur until 2018
- Four aircraft are involved in the system development and demonstration phase, plus 179 aircraft in 13 lots of production
4:14: KC-X RFP document now available
3:46: It’s almost time to tune into press conference with Lynn, Carter and Donley at the Pentagon.
3:04: Senator Pat Roberts, of Kansas, releases video endorsing final RFP, and says: “Some European airplane company isn’t very happy. Tough for them. Good for us.” Meanwhile, Senator Richard Shelby, of Alabama, says the same document “discredits the integrity of the entire process.”
2:43: How do the competing tankers compare to the USAF’s fuel offload requirement in the draft RFP?
Using Boeing and Northrop’s marketing material, I’ve compiled the fuel offload for all three eligible platforms. Keep in mind, bonus points are awarded only if evaluated price of the bids come within 1% of each other. As you can see below, if Boeing proposes the KC-767, Northrop is at a disadvantage unless it can match or beat Boeing’s price. All data is based on 10,000ft takeoff roll and 1,000nm mission radius.
Minimum threshold: 94,000lb
4 Bonus points: 106,000lb
6 Bonus points: 120,500lb
8 Bonus points: 130,000lb
10 Bonus points: 147,000lb
KC-45 offload: 153,000lb
KC-777 offload: 199,000lb
2:06: I interviewed Jean Chamberlin, Boeing’s new KC-7A7 program manager, in Orlando last week. For what it’s worth, Chamberlin predicted a very tight race with Northrop. “It will be a tough competition, and I do see it as neck and neck,” she told me. So tough, in fact, that Boeing is re-evaluating how much information it can reveal before contract award. “This is a really tough competition,” she says. “I’m going to have a hard time thinking about how much I’ll disclose now.”
1:51: Bloomberg/Business Week has strongest legislative reaction so far. “I don’t think it looks promising for Northrop” — Representative Mike Rogers, Alabama
1:42: Associated Press takes the, er, optimistic angle on the final RFP story.
1:26: John Bennett at Defense News has already posted an excellent overview of the current situation. Bennett, I believe, also is the first to specify the only mandatory requirement (out of 373) dropped in the final RFP: an all-weather precision landing system based on microwave. I suppose tanker pilots will have to make-do with ILS approaches.
1:10: Lynn’s presentation says the highest-priced bidder can still win the competition. The question remains whether that will satisfy the Northrop Grumman/EADS North America team. Northrop is also concerned that the requirements tilt the US Air Force’s selection towards a smaller aircraft. The company has even opined the existing KC-135R would beat both the 767 and A330 under the evaluation criteria proposed in the draft RFP released on September 25. We now know that the final RFP contains only minor changes to the requirements, so Northrop’s biggest concern may still remain.
12:56: Amy Butler at the Ares blog may have the answer about the important pricing change (see 12:41 entry). She reports the Pentagon has added an incentive fee to the fixed-price structure, and offered to split the bill for any cost overruns 60/40 with the contractor.
12:49: I asked Richard Aboulafia, aerospace analyst and executive vice president at the Teal Group, two questions this morning by email. Here’s the exchange – note Aboulafia’s artful dodge of my attempt to paint him into an absolute corner:
Question: Do you think Northrop Grumman will submit a bid? (yes or no)
Answer: Probably not, unless the RfP changes in a meaningful way, which it probably won’t.
Do you think the US Air Force will eventually operate A330 tankers, regardless of who wins KC-X contract? (yes or no)
Answer: Probably not, but there’s a decent chance they’ll operate some kind of Airbus eventually.
12:41: Bill Lynn’s brief says there is “an important changeto the contract pricing strategy” that would be described by AshtonCarter, undersecretary of acquistion, technology and logistics. Butthere’s no mention of Carter’s comments in the brief posted on DODBuzz.So we’ll have to wait a bit longer to know this critical piece ofinformation. Northrop Grumman says one of its biggest concerns with thedraft RFP is that it could lead to a “race to the bottom” on price, asopposed to rewarding more performance.
12:30pm: Hi folks. Big day, of course. If you want to read the brief DOD Undersecretary Bill Lynn gave Congress this morning, download it at DODBuzz.com. I’ll be live-blogging updates for the rest of the afternoon, including the 4pm press conference at the Pentagon, which you can watch at the Pentagon Channel.