Notes Progress Against Foreign Competitor For KC-X Bid

Boeing announced on Monday it was making progress on delayed aerial refueling tankers for Italy and Japan, adding US Air Force officials could take a lesson from what it has learned.

Reuters reports Boeing realizes slowdowns in the two programs will be factored into the Air Force evaluation of Boeing’s performance in its competition with Northrop Grumman Corp. to obtain a contract for new US tankers worth $40 million.

"Nobody said it was not important," said Boeing's tanker program manager Mark McGraw.

As ANN has reported, Boeing is fielding its KC-767 -- a derivative of the commercial 767 airliner, and the same basic aircraft bound for Italy and Japan -- in the Air Force KC-X contest, against an Airbus-sourced offering from EADS/Northrop Grumman based on the A330.

McGraw notes Boeing is already building KC-767 tankers. Northrop, which is teamed with Europe's EADS, had not yet delivered any KC-30 tankers to date.

"We have some past performance, even though it hasn't been great, on those programs," McGraw said in a teleconference, adding, "We're really happy with the progress of late."

EADS continues to work on manufacturing refueling tankers for Australia, but those deliveries are not planned until 2009. "We've learned a lot of lessons by going through those programs. If we can improve our process, the Air Force will get the benefit of that," Boeing's McGraw said.

McGraw said Boeing is now on schedule to deliver two tankers to Japan in January -- about two years later than planned -- and to Italy by mid-2008.

An Italian military official at a military airlift conference in Rome suggested its tanker would not be delivered until spring 2009, but Boeing spokesperson Bill Barkdale said he had no such information.

McGraw said Boeing would shift work on military modifications to the foreign tankers -- originally planned to be completed in Italy -- to its plant in Wichita, KS to meet delivery schedules.

"We felt moving the work back to Wichita was the best way to do that, even though it hurts our offset commitments to Italy," said McGraw. He also said that Boeing would shift other non-tanker work to Italian companies later.

Final bids on the KC-X contract are due in January. US Air Force Secretary Michael Wynne said an award was due in the first quarter of 2008, but perhaps as early as February.

McGraw didn’t comment on whether Boeing would protest if it lost to Northrop, but did say that if the orders were split between the two... everything would start over from scratch.

It likely won't come to that... as Wynne has repeatedly stated the Air Force isn't interested in splitting the deal, and funding isn't available to pay two manufacturers.

FMI: www.boeing.com, www.northropgrumman.com, www.af.mil