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.

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