Says Company Needs More Time To Develop Larger Entrant
Citing the length of time needed for the company to develop a
competitive entrant for the Pentagon's revised KC-X contract bid
for a new US Air Force tanker, Boeing says it will likely opt-out
rebidding for the $40 billion deal -- ceding the competition to
rival Northrop Grumman, and that company's partners at EADS.
The Wall Street Journal reports Boeing needs more time to crunch
numbers on a plane larger than its current 767-200 -based offering,
that would be able to hold more fuel. That larger aircraft would
either be derived from the planemaker's 777 widebody airliner --
an idea Boeing put forth back
in September 2006 -- or the long-range
767-400.
Boeing says it needs six months to offer the larger plane; the
Pentagon stipulated six weeks for Boeing and Northrop to submit
their revised bids, though Pentagon officials say the Department of
Defense may add another 15 days to that timeframe. But that still
won't be enough for Boeing.
"I think the option we would have if we were not given the six
months, there is a really high likelihood that we would no-bid the
program," said Jim Albaugh, head of Boeing's defense unit.
This isn't the first time Boeing's hinted it would opt out of
the bid... and may be a calculated ploy to force the Pentagon's
hand.
As ANN reported earlier this month, Boeing
said it would defer a final decision after seeing the Pentagon's
revised criteria for the contract, which should come sometime next
week.
It seems likely, though, that the Pentagon's list of priorities
will mirror those cited by the US Air Force in the original KC-X
bid, which determined the larger Northrop/EADS KC-30 offered the
most bang for the procurement buck. In particular, Air Force
officials were swayed by the fact the KC-30 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.
That disparity led Boeing to challenge the KC-30 win, protesting
to the Government Accountability Office... which ruled,
essentially, that Boeing had a point, and that
the Air Force showed favoritism to the larger aircraft.
In July, the Pentagon threw open the bid once again, although on
an accelerated schedule. The Pentagon also stripped decision-making
authority from the USAF.
Should Boeing opt out of the deal, it would leave the Pentagon
with the admittedly easier -- but politically thorny -- choice to
award the de facto sole-source contract to Northrop. It's widely
believed the Pentagon would prefer to have two competitors,
however... which could lead the Pentagon to give Boeing the time it
needs to develop a larger tanker.
"This is an airplane that's going to be in the inventory 40
years," said Boeing's Albaugh. "What we're asking for is an
additional four months to have a meaningful competition."
It's worth noting that Northrop/EADs made a similar threat to
back out of the original KC-X competition in January 2007. Those
parties later agreed to bid the contract, after the Air Force added
language to the plan, that considered the KC-30's greater fuel
capacity as a selection point.
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