Friday, 6 August 2010

USAF`S Biggest Contract - KC-X Program

From Weapons and technology

In January 2007, the big question was whether there would be a competition for the USA’s KC-X proposal, which will cover 175 production aircraft and 4 test platforms. The cost for this first phase alone is likely to reach $35+ billion spread over about 20 years, but America’s 40-50 year old aerial tanker fleet demands new planes. Otherwise, unpredictable age or fatigue issues, like the ones its F-15A-D fleet experienced in 2008, could ground its aerial tankers – and with them, a substantial slice of the USA’s total airpower. KC-Y and KC-Z contracts may follow in subsequent decades, in order to replace all 530 KC-135s/ Boeing 707 family (195 active; ANG 251; Reserve 84) that were delivered until 1965, as well as the USAF’s 59 larger KC-10 tankers delivered from 1979-1987.

In the end, it was Team Boeing’s KC-767 Advanced (767-200 derivative) vs. the Team Northrop Grumman KC-30B (Airbus A330-200 derivative), both within the Pentagon and in the halls of Congress. Most observers correctly pointed out that all this lobbying was important, since the financial stakes guaranteed a huge political fight no matter which side won. A fight that ended up sinking, and restarting, the entire program. Recent additions revolve around the KC-X v2.0 draft RFP. The canceled competition is on again, with a decision expected by mid to late 2010.

“US Debating Aerial Tanker Types, Mix” offers in-depth coverage of the lead-up to the KC-X RFP, explaining many of the military & policy issues in play as the USA contemplates its own choices. Then came the contractor decisions, and responses. What would Boeing propose? The KC-767, the KC-777, or both? Would Northrop and EADS elect to play, bringing their Airbus KC-30/A330 MRTT?

In the end, Round 1 was Team Boeing’s KC-767 Advanced (767-200 derivative) vs. Team Northrop Grumman’s victorious KC-30B (Airbus A330-200 derivative). Each aircraft system has its strengths, and each system also had risk factors as lobbying continued right down to the wire. Boeing claimed lower KC-767 operating costs, and received a union endorsement. EADS promised to open production of A330F civilian jets in the USA if it won.

The Airbus A330 MRTT was picked, but an explosive GAO decision brought the competition to a halt.

From Weapons and technology

USAF articles took pains to emphasize that: ”...the department has gone through a rigorous review process for KC-X and has validated that the RFP accurately reflects the requirements as laid out by the warfighter… The RFP includes specific factors for assessing the capability contribution of each offeror” along a set of 9 weighted performance parameters. That did not stop the contract protests, of course, and subsequent revelations that the USAF had not even followed its own guidelines destroyed the USAF’s planned procurement approach.

In the end, the clock ran out on the Bush administration’s tenure, and Secretary of Defense Gates decided to give his new employers in the Obama administration an opportunity to chart their own course on this issue. The KC-X v1.0 competition was canceled. Late 2010 is now the revised date for a 2nd KC-X decision, following an RFP v2.0 release in February 2010.

In the wake of their initial win, Airbus and Northrop Grumman’s primary challenge was to ensure that their own potential industrial base is strongly mobilized, in order to raise the political costs of an all-Boeing reversion. Their secondary goal is to improve their position for KC-X v2.0, including blunting protectionist sentiment that opposes any purchase of Airbus planes. Declarations that they’d accept a “split buy” outcome, so long as they were left with production of 12 planes per year, were a step in that direction.

The USAF has stated its opposition to a split-buy proposal many times, and will work hard to avoid that outcome. They might be convinced to pay that price, however, if they believe that the alternative would be a program that remains stalled for a long time. Events showed them moving toward that conclusion, albeit slowly and fitfully – but then the Round 2 RFP came out, with a clear “winner take all” approach. Events will determine whether that’s a position the USAF can successfully maintain.

The Round 2 RFP certainly clarifies the nature of the competition. Round 1 featured 37 mandatory requirements, and 771 optional requirements that could affect evaluations. Round 2 reverses that ratio, with 373 “go to war on Day 1” requirements that must be met to qualify, and 93 “trade space” requirements that earn extra points.

The resulting RFP is best described as a cost-driven, best-value competition, using fixed-price bids. It’s worthy of note that the prices aren’t entirely fixed, for good reason. Imagine, for instance, that the US dollar devalued sharply over the contract’s life and imported materials became more expensive, or inflation skyrocketed and labor rates changed accordingly. Forcing the manufacturers to absorb those losses would be unfair, and could induce serious financial problems for the company. Provision 836 AESG/H025 provides a formula for adjusting prices if key inputs fluctuate, in order to create an adjusted payment price. With this safety valve acknowledged, the “fixed-price” bids as submitted will form the baseline.

Those bids are just the starting point. “Total Adjusted Price” (TAP) reflects bid price as adjusted through 3 main filters: the same IFARA model used in Round 1 to evaluate the contenders, fuel efficiency, and military construction.

The IFARA model will use updated scenarios to cover the expected range of contingencies, and there are several ways to have one’s costs adjusted. A larger plane that could cover a given scenario with fewer planes, for instance, might get its TAP lowered. A smaller competitor might gain under another scenario, where range, basing, and capacity suit it better. Those adjustments will be summed, and applied.

Fuel burn will use 489 average flight hours per year rather than 750 in Round 1, as 489 is the actual average flown by the KC-135 fleet to date. This may seem to disadvantage the KC-767 slightly, but there’s another key variable that makes the effect far less clear. Fuel burn will also use the mission profiles and mission percentages laid out in the IFARA model. Again, contenders will have their bid price adjusted accordingly, depending on their fleet’s estimated fuel burn costs over a 40-year cycle.

From Weapons and technology

For military construction, the USAF picked 11 relevant KC-135 bases – which are not necessarily the tankers’ future homes, since that’s a separate decision. Aircraft that would require changes or improvements to ramps, taxiways runways, hangars, at those 11 air bases would have their bid price changed accordingly in their TAP. Actual aircraft of the submitted types will be used at these locations, in order to make the evaluations.

If there’s more than 1% difference in the TAPs, the government buys the ‘cheaper’ airplane. If there’s 1% or less difference, the USAF will look at the 93 optional “trade space” requirements and their accompanying points, adjusting the TAP accordingly, and then buy the ‘cheaper’ airplane. Each trade space item is worth a certain number of points, and is either met or not met. The one exception is fuel offload, which gives between 2-10 points as different levels of capability are reached (total extra weight is therefore 1/10%). There are 103.05 total trade space points, which includes 4 requirements worth 10 points each, 6 worth 4 points, 19 worth 1 point, 49 worth 0.333 points, and 15 worth 0.25 points. The result would be a new adjusted price, and, again, the ‘cheapest’ bid selected.

Because IFARA also ties into fuel burn, and additional range and fuel offload capacity do not factor in except through IFARA, the IFARA model looks set to be the hinge on which this competition will turn. In addition, all qualified bid teams will have access to the IFARA model. Which means one can expect arguments about some of the parameters, once the contending teams have crunched their performance through the models and gone over the criteria.

On another likely lobbying front, the KC-X v2.0 RFP takes no position with respect to the ongoing Boeing-Airbus trade subsidies dispute at the World Trade Organization. This refusal is explicitly stated, but the RFP does include the 836 AESG/H018 clause. It states that any financial or other penalties assessed by the WTO are entirely the manufacturers’ responsibility, and cannot be passed on to the USAF in any way.

During the now-canceled round 1 competition, Airbus’ A330 was matched against Boeing’s 767. In a new wrinkle, Air Mobility Command was brought into the RFP draft process, and the USAF said that:

“the Air Force also intends to take full advantage of the other capabilities inherent in the platform, and make it an integral part of the Defense Transportation System.”

Both contending aircraft offer substantial improvements over the KC-135’s extra capacity for cargo or people, in addition to their tanker roles.

The KC-135s can carry up to 6 standard 463L cargo pallets, 53 people, or about 18 medical litters. Just under 2% of American aerial tankers currently carry cargo loads, but that number is likely to increase. The existing aerial tanker fleet is being handled gently, given its age and the consequences of structural issues. Once those issues are removed, however, the frequency of current C-17 flights involving people and standard pallets rather than heavy cargo, will make more frequent tanker/cargo flights an attractive trade-off, despite the additional fuel costs.
AIR A330 MRTT Thales Airtanker Concept

According to the EADS/NGC KC-30 team’s official brochure [PDF], the A330-200 derivative can carry up to 226 passengers, or 108 medical litters, or up to 32 standard 463L cargo pallets, or some combination of the above, in addition to its full fuel load. At over 250,000 pounds capacity, it also carries more fuel than the 767, which is a particular advantage in the Pacific sector with its wide over-water expanses. On the other hand, its advanced 1,200 gallon/minute ARBS refueling boom did not actually transfer fuel to another aircraft in the air until March 2008. Competition delays have allowe Airbus to improve this gap, and an A330 conducted boom refueling in 2009.

On the flip side, the KC-30 is a larger aircraft than the 767, which requires a slightly longer runway at full load, takes up more “footprint” on limited-space tarmacs, and costs more to operate on a per-plane basis. In response, Team KC-30 stresses costs and efficiency on a per-mission basis, such as deploying a full fighter squadron with personnel and equipment, or deploying an Army combat team using transport aircraft with tanker accompaniment. They argue that if larger tanker aircraft, with more fuel and cargo space, mean fewer sorties required, the cost figures may look more equal once the mission the tankers are supporting is complete. There had also been some speculation that Airbus might be prepared to offer a very heavily discounted price, in order to close the buying price gap between the cheaper 767 and the A330. Some post-competition reports even pegged the KC-30 offer as cheaper.

From Weapons and technology

The RFPs included more exacting data as each team made its case to the USAF, as well as final pricing. For example, Fleet Effectiveness Value (FEV), one of the 5 key source-selection evaluation criteria, is designed to communicate aerial refueling performance. The current KC-135 fleet is the baseline, with an FEV of 1.0. Calculated over 5 mission scenarios specified by the USAF, and using prescribed airbases, ramp space and resources, Northrop’s air mobility sector vice-president Paul Meyer says the FEV submitted with its KC-30 Round 1 bid was 1.62.

There has been some talk at Northrop Grumman of using the A330-200F freighter version instead as the base KC-X aircraft, which would be a departure from KC-30s bought to date. A switch would add new timeline risk and certification issues, as well as fuel efficiency penalties, in exchange for much better cargo performance. A330-200F aircraft add 11,000 pounds of zero-fuel weight to the base A330-200 design, and cut fuel capacity by 12,000 US gallons, in exchange for boosting cargo weight capacity by 60,000 pounds to 141,000. First flight will take place late in 2009, with initial civilian deliveries in 2010. So far, the 200F has only been suggested as a potential improvement or variant option after the contract is won. Northrop Grumman told that they are still working to fully understand the current v2.0 RFP, and the decisions regarding base platforms and capabilities are yet to come. Now that EADS North America is bidding alone, they face the same decision.

Team Boeing’s KC-767 Advanced in Round 1 used a 767-200ER fuselage; a 767-300F freighter wing, landing gear, cargo door and floor; and a 767-400ER’s flaps and flight deck (derived in turn from the 777). A new fly-by-wire boom with remote viewing would expand the tanker’s effective refueling airspace, and offload more fuel. Engines would be 2 Pratt & Whitney PW4062s, with 62,000 pounds of thrust each.

Round 1’s optimization had penalized Boeing, due to the additional risk and certification work involved. Their KC-767 “NewGen” is a sharp contrast, as Boeing decided not to discuss their plane’s features. This makes assessments of Boeing’s Round 2 offering inexact and approximate.

Earlier Round 2 comments indicated a more standard 767, but pictures and videos appear to show lengthened wings and wingtip winglets, in order to deal with previous “flutter” issues and add cruise efficiency. What is known, is that Boeing is keeping the PW4062 engines. The firm still says it’s using a new fly-by-wire boom design, but the structure is now based on the larger KC-10 boom, in order to meet the fuel offload target of 1,200 gallons/minute. The other clear change involves replacement of the 400ER’s 777-derived flight deck with one that includes flight displays from the new 787 Dreamliner.

767-200ER based planes can carry up to 190 passengers (-16% vs. KC-30), or 54 medical litters (-50%, NGC claim)/ 97 patients (-11.3%, Boeing claim), or up to 19 standard 463L cargo pallets (-41%), or some combination of the above, in addition to its full fuel load. The company claims that its strengthened floors allow the KC-767 to carry a similar weight of cargo, however, and it would be interesting to see validated statistics compared to the A330F. Boeing could have submitted the 767-300, which is 19 feet longer, but their calculations determined that the extra capacity didn’t justify the extra procurement and operating expenses. That turned out to be a mistake, given the criteria the USAF followed in round 1.

Northrop Grumman calculated a Round 1 FEV score of 1.35 for the rival KC-767, but Boeing did not release its number. Indeed, the exact amount of fuel that the US KC-767 Advanced can carry is not public; the base figure of around 200,000 pounds is similar to the existing KC-135, but the additional body tank option from Sargent Fletcher is a wild card. The KC-767’s advanced refueling boom has a 900 gallon/minute capacity and been tested successfully in live air-air refueling, including night operations. On the other hand, Boeing’s hose-and-drogue system is a technical risk factor that has undergone almost 2 years of redesign, and been a persistent problem for the Italian tanker order.

As their relative capacities demonstrate, the KC-767 is a smaller aircraft than the KC-30. One positive consequence is that it can take off from slightly shorter runways. The USAF requires the ability to take off from an 8,000 foot runway, but would prefer 7,000 feet as this makes more runways available. The KC-767’s size can also mean the difference between, say, 5 or 7 aircraft that can fit on the tarmac at a forward base. Boeing touts the KC-767 as 22-24% cheaper to operate and maintain than the KC-30 on a per-plane basis, and its base aircraft is cheaper to buy on the civilian market.

From Weapons and technology

For Round 2, Boeing was openly contemplating a KC-777 offering, depending on the RFP’s criteria weightings. A KC-777 would offer 22.5% – 30% more offloaded fuel than the A330/KC-30 at 1,000 nautical miles, with the ability to carry up to 320 passengers (+42.6% vs. KC-30), or 156 patients (+44.4% vs. KC-30), or up to 38 standard 463L cargo pallets (+18.75% vs. KC-30), or some combination of the above, in addition to its full fuel load.

These statistics are impressive, but Boeing would have faced 3 big hurdles if it wished to offer a KC-777.

One is the 777’s cost, given the way the v2.0 RFP is structured. Boeing has almost certainly run the IFARA model to make sure, but on the face of it, the renewed RFP made a KC-777 offering unlikely. The RFP’s focus on cost, and lower value placed on extra points for the 777’s additional cargo, transport, and fuel capabilities, made the KC-777 look like a losing game. The 2nd issue was timeliness. Unlike the KC-767 and A330 MRTT, any KC-777 would have to be designed, built, tested, and certified from scratch. To add to that timeliness risk, Boeing already has a backlog of commercial orders for the 777. That 3rd issue leaves Boeing with choices that include some combination of: adding time and risk by investing or partnering to expand their production rate, convincing commercial customers to accept delays, or facing constraints on their delivery rate to the KC-777 military conversion and fit-out line.

In the end, those hurdles convinced Boeing to offer the KC-767 once again.

Before its KC-X win, the KC-30/A330 MRTT had been ordered by Australia, Saudi Arabia, and the United Arab Emirates, as well as Britain’s unusual FSTA public-private aerial tanker partnership. None of these aircraft have entered service yet, but the ARBS full refueling boom system finally completed its first live “wet transfer” from an A310 aircraft in March 2008. The first live “wet transfer” from an A330-MRTT boom finally took place in October 2009.

EADS’ goal is 60% American content, to which must add American content for corollary sales of civilian A330F freighters as production moves to Alabama. Other national beneficiaries of a US A330 MRTT order, in declining order of impact, are Spain, Germany, the UK, and France.

There are differences between the consortium that bid on the KC-X v1 proposals, and the team that bid on the v2.0 RFP. The v2.0 team is quite extensive; main players include:

EADS North America – American lead and systems integrator. Replaced Northrop Grumman in this role for the v2.0 bid.

EADS – A330 aircraft, and Air Refueling Boom System (ARBS). Key American locations: Mobile, AL, Bridgeport, WVA (ARBS and SF hose-and-drogue), and Arlington, VA. Aircraft would be militarized and final assembly would take place in Mobile, AL, which would also become an assembly center for worldwide civilian A330-200F freighter sales.

EADS-CASA in Spain is responsible for the design, testing and production of the ARBS boom, and is also likely to see work at its facilities near Seville, Cadiz, and Madrid. Manufacture of the Airbus aircraft is conducted all over Europe, with integration at Toulouse, France and/or Bremen, Germany. If final integration of the A330-200F freighters switches to Mobile, AL as promised, and the KC-45 program ends up substituting the A330-200F for the A330-200 as the base airframe, the amount of American content would rise slightly.

GE Aviation – CF6-80E1 engines. The CF6-80E1 is rated at 67,500 pounds of thrust, and power a number of commercial A330-200/300s. Key locations: Evendale, OH. Estimated total value for GE units from the KC-45 program: $5 billion. Unchanged in Round 2.

GE subsidiary Smiths Aerospace – Flight Management System; indeed, they are the supplier of choice for common Flight Management Systems for the KC-X tanker, no matter who wins. Key locations: Grand Rapids, MI.

Cobham plc subsidiary Sargent Fletcher Inc. – Air refueling hose and drogue systems; their products are also used on the KC-135, KC-10, KC-130J, MC-130H and F/A-18 E/F. The pods carry their own power system, and their 90 foot long hoses can offload approximately 420 gallons of fuel per minute. Key locations: El Monte, CA; Bridgeport, WVA. Estimated total value of Cobham win: $1 billion. Unchanged in Round 2.

Eaton Corp. – Actuators, pumps, valves, nozzles and other aerial refueling equipment. Mentioned in Round 2 team.

Goodrich Corporation – “Various aircraft systems”. Mentioned in Round 2 team.

Honeywell – Radio Management System, Mission Avionics Suite, and Mechanical Systems. Key locations: Albuquerque, NM; Phoenix, AZ; Redmond, WA; and Torrance, CA. Unchanged in Round 2.

Moog, Inc. – Flight control systems. Mentioned in the Round 2 team.

Parker Aerospace – Air Refueling Receptacle, a.k.a. Universal Aerial Refueling Receptacle Slipway Installation (UARRSI). This allows the KC-30 itself to be refueled in the air. Similar Parker UARRSI systems are currently used on the U.S. Air Force’s B-1B bombers, C-130 & C-17 transports, and KC-10 tanker aircraft. Also providing hydraulic system equipment, fluid conveyance products and fuel components. Key locations: Irvine, CA.

Vought Aircraft subsidiary Triumph Aerostructures – Wing structures. Mentioned in the Round 2 team.

From Weapons and technology

To date, the Boeing KC-767 had been ordered by Italy and Japan, but both customers have experienced long delivery delays while Boeing has worked to iron out technical problems. Japan’s boom-equipped KC-767s are operational, but Italy’s aircraft with hose-and-drogue systems haven’t completed their military acceptance tests; delivery is hoped for in 2010.

Boeing recently added civilian 767 orders to keep its production line going, which creates a much more comfortable time cushion if the KC-X process drags on. Nevertheless, a KC-767 order would effectively become the sole support to the production line over its lifetime. American content would be about 85% for any US order, with British firms picking up much of the balance.

The question for Team Boeing was what the team might look like for Round 2. If the 777 had been offered instead, there were reports that the preferred General Electric GE90-series engine would have to compete with the 777-certified Pratt & Whitney PW4000 and Rolls-Royce Trent 800. Boeing opted for an unspecified 767 base instead, but reports have emerged that Boeing is looking for savings throughout its supply chain for Round 2, in order to offer a more competitive bid. Boeing remains in negotiations for Round 2, and is offering few details until terms are reached. The list below sets the confirmed Round 2 partners apart, then covers the key Round 1 partners for reference.

Boeing – lead integrator, 767 aircraft.

Pratt & Whitney – PW4062 engines. Confirmed for Round 2.

Finmeccanica subsidiary DRS – Joined for Round 2. Design, build, and integration of Aerial Refueling Operator Station (AROC). Appears to replace Innovative Solutions & Support Inc’s AROCD; Boeing would not confirm.

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Rockwell Collins – Flight deck electronics, incl. CNS/ATM suite, TACAN, Link 16, radios. For Round 2, they confirmed offering the same flight deck technology supplied for the 787 Dreamliner, along with the KC-767’s Communication, Navigation, Surveillance/Air Traffic Management (CNS/ATM) systems, aircraft networks, and other electronics.

Spirit Aerosystems – Sectional pieces of the 767 airframe: Section #41, nose section. For Round 2, they describe only a “forward section.” Spirit designs and builds parts of every Boeing commercial aircraft currently in production except the 717, including the new 787 Dreamliner. They also manufacture licensed spare parts for Boeing aircraft.

Firms that were featured as part of the Round 1 team include:

Cobham plc subsidiary Sargent Fletcher – body fuel tank system to extend fuel capacity

Delta Techops, a division of Delta Air Lines – Parts support and fleet management support.

GE subsidiary Smiths Aerospace – The common KC-X flight management system, the mission control system which interfaces with the refueling system, hydraulically-powered hose and drogue refueling pods, boom actuation system for air refueling boom system (refueling boom itself is by Boeing).

Honeywell – Lights, auxiliary power, ground proximity warning, ECS.

Vought Aircraft Industries – Sectional pieces of the 767 airframe: Section #48, lower lobe, doors.

Partners from the KC-767 version previously offered to the USAF under the canceled lease deal, who may also remain as minor players for KC-X, also included:

* BAE Systems – CsLEOS real-time operating system for boom control.
* Innovative Solutions & Support Inc. – flat panel Pilot’s Mission Display (PMD) and Aerial Refueling Operator Control Display (AROCD).
* Rockwell Collins subsidiary Kaiser Electro-optics – head-mounted display systems for the remote aerial refueling operator.

Boeing media, which is usually very savvy, did not compile a single public page outlining regional economic benefits for the initial competition. A number of items related to the economic dimension can be found on this KC-X releases page, however, and both firms submitted detailed data as part of their RFPs.

Aug 4/10: US Aerospace/ Antonov is disqualified for late submission. Aviation Week quotes Pentagon press secretary Geoff Morrell:

“The proposal was late and by law we are not allowed to consider it. We are considering two proposals and U.S. Aerospace is not one of those being considered.”

The magazine adds that:

According to an industry executive, the company’s messenger arrived at the Wright-Patterson AFB gate at 1:30 p.m. July 9 (30 minutes before the deadline) and was denied entry, given bad directions and told to wait by Air Force personnel. As a result, the Air Force stamped the proposal received at 2:05 p.m.”

On Aug 2/10, U.S. Aerospace filed a bid protest with the Congressional Government Accountability Office, citing “unreasonable” conduct by the USAF. The firm’s bid had reportedly revolved around an “AN-112” based on the 4-engine AN-70 turboprop transport.

July 13/10: The Hill reports that the KC-X bid cost EADS North America $75,000 in final printing costs alone.

July 9/10: Boeing delivers its KC-X v2.0 bid. Its release mentions that its design will contain cockpit displays from the 787 Dreamliner, which may not be a change from the first round.

July 9/10: Antonov?!? US Aerospace announces that it has submitted a joint KC-X bid with Antonov at $150 million per plane, following SEC notification of an agreement with Antonov and intent to bid on July 1/10. That agreement would give US Aerospace lead contractor status and final American assembly rights only under a KC-X contract, while Antonov would be the technical lead and manufacture components.

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Unlike the March 19-22/10 UAC/ IL-96 hoax, this report has much more backing behind its assertion of a bid. The question is whether it makes any more sense, or would even qualify under Round 2’s mandatory criteria. Reports indicate a bid based on the modernized AN-124-100 “Ruslan” super-heavy transport, which would offer heavy airlift options that beat the C-17 hollow, but terrible operating efficiency as an aerial tanker. Reports of a custom designed “AN-112” make even less sense, given the years-long development and certification timelines. Unlike Ilyushin, Antonov doesn’t even have a base civilian airframe in the right size category. Defense News may have the answer the explains the hype:

...a May 24 SEC report filed by U.S. Aerospace signals it is in financial trouble. A number of factors “raise substantial doubt about the company’s ability to continue as a going concern,” the firm told federal regulators.”

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