Airbus/Northrop Threat Revealing

The Air Force has issued a preliminary Request for Proposal (RFP) specifying how companies can bid on the $35 billion contract to build the next fleet of air refueling tankers. A final RFP is due out soon.

The two bidders reviewing the preliminary RFP are Chicago-based Boeing, and a team made up of Airbus, based in Toulouse France, and Northrop Grumman, based in Los Angeles.  Boeing has proposed building a tanker on its medium-sized B-767 commercial jetliner platform, while Airbus and Northrop have proposed building a tanker on Airbus’s larger A-330 commercial jetliner platform.

The last competition was overturned after the Government Accountability Office issued a report highly critical of the Air Force’s conduct, which they found had favored Airbus by conducting separate and unequal negotiations, offering Airbus extra credit for criteria Boeing was not made aware of. And, importantly, the GAO noted that the Air Force had waived critical requirements to keep the Airbus in the game.

This second competition was meant to offer each bidder clearer criteria, and treat both equally.  Now, Airbus and Northrop are threatening to pull out of the competition unless the Air Force changes the RFP criteria to favor its larger, more expensive, less capable, and less survivable airplane.

On several fronts, Airbus’ threats to pull out unless its demands are met takes real nerve.

For starters, consider that Airbus has recently been found guilty by the World Trade Organization of taking illegal trade subsidies from European governments.  Airbus has used these subsidies to undercut competitors like Boeing in bids just like the one being conducted by the Air Force.  In what could only be called an abundance of generosity, the Air Force has said it will ignore Airbus’ illegal subsidies.  This alone should be enough for Airbus to sit down and be quietly grateful, but apparently the French firm has come to feel entitled to the American defense contract, having been so pampered during the last competition.

Secondly, it’s a simple fact that the larger Airbus offering cannot operate from a large percentage of the runways currently used by Air Force tankers.  This would mean the A330 tanker would either be less available, or US and allied airfields around the world would need to be reinforced and widened at huge expense.  The previous competition did not take these construction costs or opportunity costs into account.  This time around, these costs are being taken partially into account, for the very good reason that they will eventually have to be paid.  If a homeowner were deciding between two boats, and the larger of the two would not fit in his garage, requiring him to build a new larger garage, then the larger boat might well be a poor bargain, no matter what its sale price might be. Same with the tanker.  New runways and hangars are expensive, and the Air Force should take that into account up front.

Third, the larger Airbus A330 is less maneuverable than the Boeing B767, and — as HUMAN EVENTS Editor Jed Babbin reported in July 2008 — is unable to perform “breakaway” and “overrun” maneuvers critical to the safety of its mission.  If for any reason, the tanker and the aircraft it is refueling fly too close together, the tanker is supposed to climb and accelerate, while the aircraft receiving fuel dives, thus ensuring a clean, safe separation, called a “breakaway.”  The problem is that an Airbus A330 laden with fuel cannot climb and accelerate steeply or quickly enough to perform this maneuver.  Its larger size and weight also prevents it from being able to speed up and “overrun” aircraft that end up positioned in front of the tanker, rather than behind it, at their rendezvous point. These are not trivial issues: they are essential to safe flight operations.

The Airbus-Northrop team has attempted to portray the larger size of the A330 as an asset, claiming that it carries more fuel, which is certainly true, and that it would also have lots of cargo and passenger space, which it would.  But a tanker should first and foremost be a tanker.  Secondary missions as a cargo or passenger plane would distract from its primary mission.  Conducting secondary missions, and fitting on fewer runways means that the A330 tanker would be less available as a tanker, and all the extra fuel in the world does not help if it is not where it needs to be, when it needs to be there.

So, what Airbus and Northrop are demanding is that the Air Force ignore Airbus’ illegal trade subsidies, that it ignore all the additional construction and opportunity costs the A330 would add to the tanker program, and that it ignore the inability of the A330 to perform important safety maneuvers.  And, Airbus and Northrop are also demanding that secondary missions are to be counted in their favor, even though warfighters are not asking for those secondary missions.

In other words, Airbus and Northrop seem to be demanding that the Air Force do what it did last time — rig the bidding process so that Airbus can’t lose.  Or else, they will not even bother to offer a bid.  This is a haughty attitude indeed.  The Air Force should not dignify the threat with a response.

Airbus has been given every conceivable courtesy, to the point of receiving unfair advantages in this competition.  If with all these advantages it still cannot compete, and cannot even be polite, then the Air Force should thank them, and move on.