May Offer Tanker Based Off A330 Freighter

It's harder to hit a moving target. Should Boeing be successful in lobbying the Pentagon for more time to develop a larger aerial refueling tanker for the US Air Force KC-X competition -- to offer an alternative to the tanker put forth by a consortium of Northrop Grumman and EADS -- then those parties could also use that time to develop an alternative of their own, Northrop said this week.

BusinessWeek reports insiders at Northrop are studying a tanker based on the upcoming Airbus A330-200 Freighter... which wasn't on the drawing board when Northrop/EADS offered its KC-330 for the KC-X competition in 2006. Though similar in size to the passenger version of the A330 on which the current plane is based, building the tanker off the freighter platform would save time and money, while also offering an incremental increase to the amount of fuel the tanker could carry.

That proposal is part of a long-term strategy for EADS to develop a foothold in the US defense market, and go toe-to-toe against Boeing on cost. "We are looking at all of the options available to us," Northrop spokesman Randy Belote told BusinessWeek Thursday.

As ANN reported, Boeing threatened two weeks ago to pull out of KC-X bidding completely, saying it needed more time to develop an aircraft better suited to the Pentagon's criteria on the tanker bid -- which it believes will favor the larger KC-330, over Boeing's KC-767. If it submits a revised bid, Boeing says it may consider a tanker based off its larger 777 commercial airliner, or the long-range 767-400. 

It is indeed likely the Pentagon will determine the larger Northrop/EADS KC-330 offers the most bang for the procurement buck. In particular, Air Force officials were swayed by the fact the KC-330 can hold significantly more fuel for offload than the smaller Boeing KC-767... despite the fact the Boeing plane matched the USAF's original KC-X contract terms almost to the letter.

Many analysts believe Boeing's threat to pull out of the competition to be a thinly-veiled political move, noting Northrop employed a similar tactic in January 2007 when that company felt the Air Force was giving preferential treatment to the homegrown offering.

If Boeing withdrew, it would leave the Pentagon in the awkward position of having only one competitor to chose from... which doesn't give the DoD much leverage. Conversely, such a withdrawal also poses significant issues for Boeing, as well, including the fact such a move would put out a de facto welcome mat for Northrop/EADS to move into the US defense market.

At this point, it's likely Boeing is pushing towards a stall -- pressuring the Pentagon to give them more time to develop another, more competitive offering. There's little reason to doubt Northrop would use that time to its best advantage, as well.

"If they do intend to offer a different platform, they would benefit from the same kind of reasonable timeframe for development of proposals that we have requested," said Boeing spokesman Daniel Beck. "So why should they be so adamant that this be rushed?"

Boeing said it would defer a final decision after seeing the Pentagon's revised criteria for the contract, which might come some time next week. The Department of Defense also said this week it would give both companies more time to submit proposals based on that criteria.

Politicos note such a delay would push the final decision on the matter into the next presidential administration and Congress... which could prove problematic for Boeing, if John McCain wins the November election. The Republican senator led the investigation that scrapped Boeing's original tanker victory in 2003, after revelations of shady dealings came to light.

FMI: www.northropgrumman.com/kc45, www.af.mil, www.defenselink.mil, www.newglobaltanker.com